As a sole proprietor, you can hire your spouse to be an employee. But, your spouse must be a legitimate employee. If your spouse is your employee, their wages are not subject to federal unemployment tax (FUTA tax). However, their wages are still subject to federal income and FICA taxes.

Can my company pay my wife?

“Yes, you can pay your spouse a salary and should be doing so,” explains James Abbott, owner and head of tax at contractor accountant Abbott Moore LLP. But the spouse or partner in question must actually be doing something for the business, and being paid according to their role and hours.

What happens if you hire your spouse as an employee?

But hiring your spouse as an employee means that he or she will receive Social Security credits toward receiving a Social Security income at retirement. Of course, this also means that FICA tax (Social Security/Medicare) will be withheld from your spouse’s pay and that the business will also have to contribute to this account. 2 

Can a spouse work for a business and not be paid?

In this case, if your spouse works on a day-to-day basis in the business you may decide not to pay a salary to this person in addition to the money received as an owner. Employee or Owner? How the IRS Sees It

Can you work on a side business while at work?

You risk being fired – or even sued – if you breach a contract you have signed and market a product or idea you came up with during your full-time job, so don’t work on your side business while at work.

Why do salaried employees have different attendance rules?

Salaried employees don’t punch a clock, so there is more fluidity in their days. They may come in late or leave early, or take extended lunches or run errands. Many times, they’ll do this without notifying their supervisors. You are certainly entitled to have different attendance rules for different positions.