Kelly Bullis
Now what I’m about to do is what my dad used to say is the danger of hiring a two-handed CPA. (They give you advice in one direction, then say, “On the other hand… .”) I used to run some radio commercials claiming that by hiring our CPA firm to do your business bookkeeping, it would free up your spouse to pursue their fun dreams, free of having to “work” for you. My wife liked to say, “I’m having fun spending your money.”
In this column, I’m going to talk about why you should consider hiring your spouse to “work” for you. Just don’t hire them to do your bookkeeping, we would like to keep doing that for you.
When your spouse is an employee of your business, there are a few benefits that will save you some tax.
First, you can deduct all business-related travel expenses when you and your spouse travel together. My experience has been, when you travel, you and your spouse talk a lot about the business. How to solve current employee problems, customer problems, operation problems, etc. My wife is much smarter than me and has a different perspective. I really enjoy solving business problems with her. So, take your “key employee” on a business trip and deduct ALL the costs of the trip. The IRS doesn’t care where you go, as long as you can show a legitimate business reason.
As we get older, health insurance becomes a bigger issue. You could have the business pay your spouse’s health insurance premiums and get a 100% deduction against business income for doing so. Even if your spouse is on Medicare. Hey! Medicare is health insurance too.
Another issue as we get older… retirement savings. Now, as an employee, your spouse can contribute to your company’s qualified retirement plan while the employer can deduct contributions made to the plan on his or her behalf.
As an employee, your spouse can contribute up to $23,500, and if your spouse is 50 or older, they can contribute an extra $7,500. Then, whatever employer contributions are made, your spouse gets to participate in that as well. (If your company doesn’t currently have a qualified retirement plan, shame on you. Fix that this year. Contact a retirement plan expert – we use Edward Jones – and find out how that will work for you.)
Does your company offer various fringe benefits, such as life insurance, accident insurance, cancer insurance, dental insurance, etc.? Now your spouse can participate in those as well. (If you don’t currently have a fringe benefit plan, I encourage you to investigate getting that started for all your employees. They will love you for it.)
Have you heard? Proverbs 31: 10-11 says, “An excellent wife who can find? She is far more precious than jewels. The heart of her husband trusts in her, and he will have no lack of gain.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com. Also on Facebook.