Make Your Spouse a Partner in Your Small-Business Partnership

If you are a sole-proprietorship, all of your profit is subject to the 15% self-employment tax. If you gift 50% of your business to your spouse who isn’t working in the business, then suddenly that 50% share is no longer subject to the 15% self-employment tax (if your spouse meets certain conditions). In addition, you will enjoy a substantially-diminished risk of audit since partnerships are audited far less often than sole-proprietorships.