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Firing Your Spouse from Your Small Business

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Jun 07

fighting with your spouse at workGoing into business is tough – going into business with family members, especially your spouse, can be downright damaging to your relationship.  Without a clear sense of purpose and direction, employees can feel like the couple’s children trapped in a bad divorce with daily arguments over policy, process and duties. It’s important to recognize when it’s time to ask your spouse to step aside and allow you to lead the business alone.

 

What are the warning signs that two of you is just one too many at the helm?

1.    Drama - Increased emotion in the workplace can cause friction between you and your spouse, your employees and ultimately, your customers.  If you’re finding that there’s just too much daily disagreement resulting in heated tempers, public arguments and discord, it may be time to have a serious conversation about where the business is headed.  Seriously ask if you’re both still happy working at the company together.  Remember that just because you decide to sever your working relationship doesn’t mean that everything you’ve worked for must come to an end.  Take time to reflect on why you married your significant other and have compassionate discussions.  If your spouse joined the company to help grow the business in the start-up phase, several years may have passed and the company is now more established.  Allowing your partner permission to follow his or her passion outside the company can reignite a joy that will be contagious for your business and personal life.

2.    Lack of enthusiasm.  When you started the business together, it felt like there were new ideas and limitless positive energy.  Several years later, your spouse comes to work grumpy and is obviously unhappy.  Sara Schoonover is vice president of TicketKick, a legal service that helps drivers contest traffic tickets through the mail.  She and her fiancé, Greg Meunder started the business several years earlier and lately she’s noticed a negative attitude from Greg that’s trickeling down into the workforce.  “I had to fire him,” says Schoonover.  The couple sat down for a serious heart-to-heart conversation.  “I had to convince him that while he was awesome at starting businesses, he gets burned out from the day-to-day stress [of running a company] and becomes toxic and negative.” Schoonover realized that she needed to get him back out where he was happiest so the business could continue to grow and thrive. Today, she’s taken the reigns of TicketKick and Greg is actually pursuing his passion for race car driving while building new companies. "He's happier with me running the company and he has a much more positive attitude about the business overall," says Schoonover.

3.    Lack of Diversification - Working in the same company puts your family's financial "eggs" all in one basket. Especially true in today’s volatile economy, there’s greater risk if both partners are working in the same company.  “If something happens to the business or the industry goes through downfall, all of your income is at stake,” says Carol Roth, a business strategist, self-confessed recovering investment banker and author of The Entrepreneur Equation. “Dual-income families can benefit from the spouses working in different companies and industries,” she continues.  Whether it to secure health care benefits, increased salary, or just to allow space and a more fulfilling personal life, working apart can bring financial and emotional benefits to a stale working relationship.

4.    Power struggles – Battles over authority often happen with two powerful personalities trying to live and work in the same space.  The underlying reason for these fights is often due to a lack of communication or clearly defined roles between the couple.  If you’ve tried to assign roles and one or both spouses just cannot seem to stick to his or her own tasks, then it may be time to ask one partner to step back.

 

Many of these interpersonal issues become apparent when looking at a small business’ accounting.  “If one partner is making only some of the financial decisions and the other partner is making others, there will be discrepancies in the books that can result in cash flow, tax and other issues,” says Steve Feinberg, CPA a PASBA member and owner of Appletree Business Services in Londonderry, NH.  “All areas of the business will begin to suffer if the management team isn’t on the same page with regard to spending, policy making and business strategy. As small business accountants, we often become more than just a financial officer in the business, but enter into business counseling mode to help the partners define roles or even help the owners make the decision to have one partner step out of the business,” continues Feinberg.

 

Spousal business partnerships can be highly successful when both partners are good communicators who share similar vision and goals for the business. There are those occasions when the business arrangement just doesn’t work out and allowing one partner to leave the business can be the best solution for you, the business and your relationship.

 

PASBA member accountants bring the collective resources of a nationwide network of Certified Public Accountants, Public Accountants,  Enrolled Agents and other practitioners available to answer your tax and financial questions and streamline your business accounting, bookkeeping, and payroll operations.

 

To find a trusted accountant in your area, visit  www.SmallBizAccountants.com.

Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice.  Any information contained in this article does not fall under the guidelines of IRS Circular 230.

Copyright Information 2011 Professional Association of Small Business Accountants

 

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