Running a business with your spouse can be very rewarding. It may have been an ambition for the two of you for several years. After all, who is more trustworthy than your life partner?
That being said, operating any kind of family business comes with unique challenges. Should you have an operating or shareholder’s agreement?
Defining the roles
Spouses, or business partners in a personal relationship, may have a rough idea about what type of roles they are going to play within the company. For example, one may opt to play more of an accounting role while the other is customer-facing. In any case, it’s best to clearly define these roles in writing to avoid confusion and potential arguments in the future. This is where a shareholders’ or operating agreement comes in. These legal documents can outline which of you oversee key business decisions and what should happen if a deadlock occurs.
It’s also important for spouses to know exactly what stake they have in the company. How much are each of the shares worth? What percentage of the profit will each of you take? These questions can form the basis for solid negotiations if one of you later decides to go in a different direction, professionally or personally.
Sometimes, spouse or family-owned businesses don’t work out. One spouse may need to leave their role within the company to avoid damaging their personal relationship. In such an instance, it’s important that you know the procedure for selling shares and moving on.
Shareholder and operating agreements can protect both the business and spouses. We help family-owned businesses with the legal aspects of running business entities. Contact us for a consultation.