Should my husband's business pay my business?
It depends on the finances involved, but particularly if you're not billing anything right now and may have no revenue this year, it's probably a good idea to bill his company. This is in part because some deductions or other tax treatments are only allowed if you have revenue and/or income.  The biggest example I can think of is the Solo 401k - you can only contribute up to your self employed income.  If you're planning to contribute to one (and you should, they're amazingly powerful tools for saving for retirement and for reducing your tax burden), you will have to have some revenue in order to have something to pay yourself with. I don't believe you have to charge him, though, if it makes more tax sense not to (for example, if his business is operating at a loss and cannot benefit from expensing it, but you'd then have to pay taxes on your own income from it). "Is it worth it for me to ""charge"" him? I can think of two reasons why you might want to charge your husband:" "I agree with some of the points of the other answers but why not avoid all the guesswork? I highly recommend you not charge him now. Wait until the end of the year when you have much more information about both of your companies and then you can run the numbers both ways and decide if it would benefit you (collectively). If either of your businesses runs on a cash basis and you decide to invoice, just make sure the check is deposited before Dec 31. Update: If you want to do this for 2016, at least your husband's business would have to be using an accrual basis (since it's too late to take the deduction on a cash basis). Simply run the numbers both ways and see if it helps you. If it doesn't help enough to warrant it for 2016 you could rerun the numbers near the end of 2017 to see if it helps then. Diclaimer: I think it's OK to do this type of manipulation for the scenario you described since you have done (or are doing) the work and you are charging a reasonable fee, but realize that you shouldn't manipulate the amount of the invoice, or fabricate invoices. For example, you shouldn't ever think about such things as: ""If I invoice $50K instead of $3K, will that help us?""" Just from my own experience (I am not an accountant): In addition to counting as 'business income' (1040 line 12 [1]) your $3000 (or whatever) will be subject to ~15% self-employment tax, on Schedule SE.  This carries to your 1040 line ~57, which is after all your 'adjustments to income', exemptions, and deductions - so, those don't reduce it.  Half of the 15% is deductible on line ~27, if you have enough taxable income for it to matter; but, in any case, you will owe at least 1/2 of the 15%, on top of your regular income tax. Your husband could deduct this payment as a business expense on Schedule C; but, if (AIUI) he will have a loss already, he'll get no benefit from this in the current year.   If you do count this as income to you, it will be FICA income; so, it will be credited to your Social Security account. Things outside my experience that might bear looking into:  I suspect the IRS has criteria to determine whether spousal payments are legit, or just gaming the tax system.  Even if your husband can't 'use' the loss this year, he may be able to apply it in the future, when/if he has net business income. [1] NB: Any tax form line numbers are as of the last I looked - they may be off by one or two.
or just input it in my accounting software along with receipts, and   then when I'm doing taxes this would go under the investment or loses   (is it somewhere along that line)? Yes, this. Generally, for the long term you should have a separate bank account and charge card for your business. I started my business (LLC) by filing online, and paying a fee for a   registration, and that makes it a business cost right? Startup cost. There are special rules about this. Talk to your tax adviser. For the amounts in question you could probably expense it, but verify. "From the perspective of a small business owner:  First there are no entry level positions.  There are only lower paying positions and higher paying positions.  Get the idea that employers are supposed to be your post secondary education out of your mind.  Replace that with working your ass off and impressing employers with your skill set.  The reality is I make a hiring decision based first on these two accounting factors. #1 How much do I have to invest in this person to make them effective #2 How long until this person is covering his/her own overhead and begin to turn a profit. Then you get into ""is this person going to fit with my team"" etc..  I am always going to choose the person that has the best return formula for my business.  Here's a hint, it's the same formula for choosing vendors and making capital purchases.  It's also the very same formula that my customers use when they consider buying from me.  Even a single person in my organization that doesn't fit that formula will cost me business through the loss of customers or not getting a customer we're going after.  For me it works, for candidates looking for a career guidance councilor, it does not. In the capitalist economy my job is to make sure the lights are on, the products or services are good, and your paycheck clears.  If you like me doing my job, then your job is to make me more money, keep my customers happy, and bring new customers to the company.  Entry level doesn't do that so there are no entry level jobs in my company." "&gt; Do you even know these people and their history to know that they are ""undeserving"" of higher pay?  if they were worth more, other businesses would offer them higher higher pay. they aren't forced to work for walmart. but if their work makes a business $10/hr, it makes no sense for businesses to offer them more than that - it's a loss to the business.   &gt; Your comments show immense naivety and lack of empathy.  i'm just a med student, but i plan on giving a lot in charity once i'm working. and i'll bet you my charity givings will do many times more good than the gov't would do with it. watch just 2 minutes from this speech. it explains my views.   http://www.youtube.com/watch?v=18zqtVcGxAA#t=7m55s" Uh, yeah, it's all good because... I'm the consumer. My role is to pay for and receive a product or service I've deemed worth my dollar. Where in this are you confused? I'm not chief of Sharia morality police for corporate officers, I'm a guy going to the airport. And if United has the best flight to get me where I'm going I'll take that plane, too. I'm about getting the best product or service for the money spent, not trying to start a VC firm with no ROI by propping up businesses that don't offer what I want. Should I go slap a hundo down at the farmers market, too, and walk away without any food just because I like their business practices even though it's 15 miles out of my way compared to my grocery store across the street?   People get so up in arms about corporate operations now that instant data transfer allows you to become an alleged expert in a company's internal operations mere moments after a story breaks. The beauty of the market is I get to spend my dollar where I want to and you get to spend yours where you want to. If you don't like it, I hear North Korea is nice this time of year. They are already indirectly paying these expenses.  They should be built into your rates. The amount per job or per hour needs to cover what would have been your salary, plus the what would have been sick, vacation, holidays, health insurance, life insurance, disability, education, overhead for office expenses, cost of accountants...and all taxes. In many companies the general rule of thumb is that they need to charge a customer 2x the employees salary to cover all this plus make a profit. If this is a side job some of these benefits will come from your main job. Some self employed get some of these benefits from their spouse.  The company has said we give you money for the work you perform, but you need to cover everything else including paying all taxes. Depending on where you live you might have to send money in more often then once a year. They are also telling you that they will be reporting the money they give you to the government so they can claim it as a business expense. So you better make sure you report it as income. "This kind of investment is called ""sweat equity"".  It is sometimes taken into account by lenders and other investors.  Such investors look at the alleged value of the input labor with a very skeptical eye, but they often appreciate that the entrepreneur has ""skin in the game"". The sort of analysis described by the original poster is useful for estimating ""economic profit"" -- how much better off was the entrepreneur than if he had done something else with his time.  But this sort of analysis is not applicable for tax purposes for most small businesses in the United States. It is usually not in the entrepreneur's interest to use this method of accounting for tax purposes, for three reasons: It requires setting up the business in such a way that it can pay him wages or salaries for his time.  The business might not have enough cash resources to do so.  Furthermore, setting up the business in this way requires legal and accounting expertise, which is expensive. If the entrepreneur does set up the business like this, the wages and salaries will be subject to tax.  Wage and salary tax rates are often much higher than capital gains tax rates, especially when one considers taxes like Social Security taxes, Medicare taxes, and Business & Occupation taxes. If the entrepreneur does set up the business like this, the taxes on the wages and salaries would be due long before the hoped-for sale of the company.  The sale of the company might never happen.  This results in a time-value-of-money penalty, an optionality penalty, and a risk penalty." Call me old fashioned, but that sounds less like a marriage and more like a business partnership. Maybe there are business tools that would be useful. not if it's only Bob and a couple others that are having the problem.  The company is spending more money on the wages of the guy helping him out than what Bob brought to the company with his purchase.  There's no sense in paying for a customer.