Should I Put My Spouse on My Home Business Payroll?

There are good reasons to put your spouse on your home business payroll, as it can decrease the taxes you pay. Consider these possibilities:

If you do not have health insurance through your spouse's job, putting them on the payroll allows you to call your health insurance an employee health plan, so you can deduct 100% of the cost of your health plan, rather than only a portion.
If you take your spouse along on a business trip as an employee, you can deduct the cost of their travel as well as your own.
You may be able to deduct childcare expenses.
If your spouse is not otherwise employed, it lets them build more money into their future Social Security benefits.
You may be able to contribute more to your pension accounts.

The negative is that you will have to pay payroll taxes, so only place your spouse on your home business payroll if the savings above will offset this. Consult with your tax advisor first. And, of course, your spouse must do some actual work for your business to qualify as an employee.

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Should I Put My Spouse on My Home Business Payroll?

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