Summary of What This Blog Covers:
- Understand How Business Structure Impacts Unmarried Couples – Learn why running a business with your fiancé requires more than just shared responsibilities, including how the IRS treats single-member LLCs, partnerships, and informal co-ownership differently for tax purposes.
- Know What You Can (and Can’t) File Together – Discover why unmarried couples cannot file a joint Schedule C, and explore alternative filing options like partnerships, S-Corps, or C-Corps to stay compliant and potentially reduce your tax burden.
- Explore How Marriage Changes Your Tax Strategy – Find out how tying the knot opens new tax advantages like Qualified Joint Venture status, joint filing, and simplified business structuring plus when to plan for a post-marriage tax strategy overhaul.
- Avoid Common Tax Pitfalls and Stay Compliant – From self-employment taxes and retirement planning to missed filings like 1099 forms or FBAR requirements, learn how to keep your business in good standing and avoid costly tax penalties with expert CPA guidance.
Running a business with your fiancé or unmarried partner? First off, high five. That’s bold, exciting, and seriously impressive. You’re blending love and logistics, spreadsheets and shared dreams. But there’s one thing that doesn’t care how harmonious your relationship is: the IRS.
When you’re operating a business together but aren’t legally married, you’re walking a tightrope of tax rules that can trip you up fast especially if your business structure isn’t clearly defined, or if you’re treating your income like it belongs on a shared return.
Let’s break it all down: the traps to avoid, the right way to structure your business, how your filing options change if you get married and how working with a smart, strategic Austin, Texas CPA can keep your business (and relationship) running smoothly.
1. Your Business Structure Dictates Everything (Even If You Haven’t Chosen One)
The first and most important decision? Choosing how to structure your business entity. You might think you can figure that out later but trust us, it matters now.
So, what happens if:
- Only one of you is listed on the paperwork?
Then your business is treated as a single-member LLC or a sole proprietorship, and that income goes on their Schedule C. The IRS calls this a “disregarded entity.”
Your partner? Doesn’t exist for tax purposes no matter how many hours they’re putting in. - Both of you are actively running the business, but only one is named as the owner?
That’s where it gets tricky. You’re technically running a partnership, and if you don’t file a partnership return (Form 1065) and issue K-1s to both partners, the IRS could accuse you of misreporting income. That means penalties, back taxes, and maybe even a letter you don’t want to open. - You actually set it up as a partnership.
Smart move. Partnerships are recognized legal entities, which come with responsibilities like filing Form 1065 annually but they also give you both credit for the income, expenses, and equity you’re sharing anyway.
What to do:
Work with a certified public accountant near you who knows the ins and outs of structuring multi-owner businesses. If you’re located in Central Texas, a CPA in Austin, Texas will understand the local regulations and can help ensure you’re not only compliant but also strategically set up for future tax planning.
2. You Can’t File a Joint Schedule C (Unless You’re Married)
You’ve poured your time and money into this business together. You’re splitting profits, handling operations, maybe even sharing a QuickBooks login. So why can’t you just file a joint tax return?
Because the IRS says no. If you’re not married, you cannot file a joint Schedule C.
Instead, you must choose one of these:
- Formal Partnership: File a Form 1065, issue K-1s, and report your share of income individually.
- S-Corporation or C-Corporation: Electing corporate status can offer self-employment tax savings, but comes with added responsibilities (like payroll and corporate filings).
Trying to bypass this by lumping your shared income on one return? It’s not only incorrect, it could also flag your return for audit.
What to do:
Speak with a tax advisor near you or a licensed CPA who can walk you through the pros and cons of each option. Need help managing your bookkeeping? We’ll help you implement tools like QuickBooks Self-Employed to track income and expenses separately for each owner.
3. Getting Married? Congrats. Now Let’s Talk Tax Advantages.
Love, commitment, tax optimization… what a combo.
Once you’re legally married, your tax options change significantly:
- You can file jointly, which typically lowers your combined tax rate.
- You can elect Qualified Joint Venture (QJV) status if you co-own the business and live in a community property state like Texas.
- You may be eligible for higher deduction thresholds and a more simplified structure (e.g., avoiding Form 1065).
What to do:
Before you walk down the aisle, schedule a meeting with an Austin small business accountant who can:
- Review your current structure
- Outline the benefits of joint filing
- Help you plan a post-marriage entity update (if needed)
4. Common Tax Traps Couples Fall Into (and How to Dodge Them)
Let’s talk about the tax surprises we see most often when unmarried couples go into business together.
A. Self-Employment Tax Gets You Twice
When both of you are earning income from the business, you each owe self-employment tax—currently 15.3%—on your net earnings.
And no, it doesn’t matter if one person handles all the marketing and the other manages clients. If you’re earning income, the IRS wants its cut.
Use a self-employment tax calculator or get a CPA to help you make quarterly estimated tax payments. Don’t forget: you may also receive 1099 forms or 1099-K forms if your business runs through Stripe, Airbnb, or other platforms.
B. Forgetting Retirement Planning
Since you’re filing taxes individually, you need to plan for retirement individually too. Consider a Solo 401(k), SEP IRA, or Traditional IRA. Contributions reduce your taxable income now and build your future.
C. Failing to Re-Evaluate Your Structure Annually
Maybe your partnership made sense when you started. But what if you’re now earning $200K per year? You may want to switch to an S-Corp to reduce self-employment taxes and increase deductions.
What to do:
Have your Austin tax accountant review your business structure and financials every year. Business and life changes fast. Your tax strategy should evolve with it.
5. Watch Out for Compliance Requirements (They’re Not Optional)
The IRS and state agencies have no sympathy for unfiled forms or late payments no matter how in love you are.
Here’s what to stay on top of:
- W9 forms for contractors
- 1099 NEC forms issued for non-employee compensation
- Form 1065 for partnerships
- FBAR filing if you hold business assets in foreign accounts
Missing a filing deadline can mean penalties of $195 per partner, per month, for partnerships, not to mention late fees for unpaid taxes.
What to do:
Let your Austin accounting firm manage your compliance calendar. From filing deadlines to tax document prep, we’ll make sure everything is filed on time and accurately.
6. How Insogna CPA Helps Couples in Business Win (and Keep Winning)
At Insogna CPA, we work with entrepreneurial couples every day. From small businesses to multi-entity partnerships. Whether you’re running a creative agency, investing in real estate, or launching a startup, we’ll help you:
- Choose the right entity (LLC, partnership, S-Corp)
- File taxes accurately and on time
- Minimize self-employment and income taxes
- Stay compliant with IRS and local tax laws
- Build long-term financial plans separately or together
We’re not just here for April 15th. We’re your year-round tax partner. And yes, we speak “relationship plus revenue.”
Your Next Step: Talk to a CPA Who Gets Your Business and Your Relationship
Running a business with your fiancé is a beautiful thing but don’t let tax missteps turn it into a stress fest.
Whether you’re:
- Just starting a new venture
- Scaling an existing partnership
- Planning a wedding and a tax strategy
…you need more than generic advice. You need a trusted tax advisor in Austin who understands how personal and professional finances intersect.
Schedule a consultation with Insogna CPA today.
Let’s make your tax strategy just as strong as your business and your relationship...