MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

The Partnership Mistake Nobody Talks About #businessowner #taxadvice

29 Jul 2026 · 1 min

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Mark Kocher warns business owners that adding a spouse, child, or friend as an owner can accidentally create a partnership for tax purposes, forcing you to file a complex Form 1065 return instead of the simpler Schedule C. Once someone is listed as an owner, removing them is hard, and you're stuck with expensive annual filings.

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Now, this gets personal. Mistake number 3, the wrong people are listed as owners. So many people hand out ownership like a party favor. Well, I'm going to add my spouse, or I'm going to put the kids on as ownership, or maybe my parents. Well, my buddy's going to help manage this, or I'll give them 10% or 5%, and we'll see how it goes. Stop. Putting your spouse and your kids on as an owner may seem really straightforward, but it can mess up an entire amount of tax planning that is going to come down the road and bite you in the butt. Now you're filing a 1065 partnership return that can be quite expensive compared to a Schedule C, a small business, or Schedule E, a rental property. They're going to be easier schedules to fill out for tax reporting. And once you put your kids on as ownership, they're on as an owner. You can't just take that away. Very tricky. One extra owner creates a whole extra tax return every single year.