My wife is opening home daycare

[Alex Shaughnessy]

Good morning. Here is my situation.

I am a w2 employee. All of our insurance/retirement is tied up w/in my job. My wife does not like her job and is making the leap to open an in home daycare as soon as our new house is finished being built. She will run it as a sole proprietor. 

1, All of our credit is in my name and she is an authorized user. Should we use one of our cards exclusively for the business to help keep track of expenses? Or go open another account specifically for business?

2. How do we pay her? Is it smarter to employee herself through the business? Or how do we get the business to help pay for our overall household overhead? 

Hopefully the questions made some sense. Any help is greatly appreciated. Thank you

[Ashish Acharya]

Originally posted by @Alex Shaughnessy:

Good morning. Here is my situation.

I am a w2 employee. All of our insurance/retirement is tied up w/in my job. My wife does not like her job and is making the leap to open an in home daycare as soon as our new house is finished being built. She will run it as a sole proprietor. 

1, All of our credit is in my name and she is an authorized user. Should we use one of our cards exclusively for the business to help keep track of expenses? Or go open another account specifically for business?

2. How do we pay her? Is it smarter to employee herself through the business? Or how do we get the business to help pay for our overall household overhead? 

Hopefully the questions made some sense. Any help is greatly appreciated. Thank you

 You probably need to talk to the lawyer but sole proprietor doesn’t seem right for such a high risk business. 

Opening up the separate account will help you with your bookkeeping and also with the legality if you get some type of legal entity. 

You normally can’t pay yourself via sole proprietor. But it has nothing to do with the deductions you can take for the overhead. This requires deeper conversations with you tax advisor.