3 Pitfalls of Starting a Small Business With Your Spouse

Starting a small business can be a rewarding experience. But it's a good idea to find a partner to embark on that journey with you. That way, you'll have a sounding board when you're not sure about a tough decision. And you'll also have someone to share the load with.

You could go out and try to find yourself a reliable business partner. But what if your spouse is interested in going into business with you?

You may be tempted to partner up with your spouse in the course of starting a business. After all, you clearly already have a level of trust based on the fact that you're married. And your spouse will clearly be invested in seeing your business succeed, since that could lead to an uptick in household income for both of you.

But while going into business with your spouse might seem like a smart idea, there are certain pitfalls you might encounter. Here are three to seriously consider.

1. Your business might collapse in the event of divorce

Once your business gets off the ground, it's going to constitute your livelihood. But your business and livelihood might end up sorely compromised in the event that something goes sour within your personal relationship and you wind up filing for divorce.

First, depending on how your business is structured, you may have no choice but to dissolve the business if you and your spouse can't reach an agreement about who will run it. There goes your income.

Or, you might end up in a situation where you're forced to share control of your business with your spouse after your marriage has ended. If you find yourselves unable to work well together, your business might collapse for that reason.

2. You'll have all of your financial eggs in a single basket

The U.S. Chamber of Commerce says that 18% of small businesses fail within their first year, while 50% fail after five years. The scary thing about starting a business with your spouse is that you're not diversifying your income. (This assumes neither of you will retain a job on the side.) Rather, you're putting all of your eggs in one basket. If your business doesn't succeed, you might take a huge hit.

You'll often hear that it's important to maintain a diversified portfolio of investments. But it's also important to diversify your income streams, or you might end up in a dire situation if your joint source of income doesn't pan out.

3. You might never get a break from the grind

It can be difficult for small business owners to achieve a decent work-life balance. But if both you and your spouse run a business together, that business might be all you end up talking about.

You also won't have any stress load diversification. If one of you is stressed about work matters, chances are, the other will be stressed as well. That could make for a pretty crummy existence.

It's easy to see why you may be inclined to partner up with your spouse in the course of starting a business. But before you commit to that idea, do consider the pitfalls. And make sure you and your spouse discuss them together so you both know what you're potentially getting into.