For military spouses looking to solve the employment challenge – entrepreneurship could be the perfect path forward.
A portable career, the flexibility and freedom to fluctuate your workload – the benefits of being your own boss are many. However, for business-minded spouses, there is one big caveat.
Eventually, you’ll have to move.
Starting and maintaining a business as a military spouse can certainly be done, (if you need inspiration – here’s a giant list of military spouses making it happen) but in addition to becoming an entrepreneur, there are a few military-specific challenges you’ll need to navigate.
The good news, is that the basics of business do not change. You’ll need to develop a product idea – or service, and start brainstorming how you’ll want to launch and fund it.
You will need to consider a legal business structure, whether that is a C or S-Corporation, an LLC, or Sole Proprietor. (Many spouse-based businesses elect an LLC structure). There are several free resources available to explain the pros and cons of each structure, along with the taxation requirements that come with each. Click here
It is also important to note, that business regulations do vary by state. At a minimum, if you form a business entity, you will be required to register it with the state. Registration is usually filed through the Secretary of State – or sometimes the Department of Revenue, and there is a business filing fee. Some states require an annual business filing, others are bi-annual. Depending on the business activity – additional licensures and permits may be needed. (The city, or county clerk can guide you through in-depth state requirements.)
You’ll need to separate business finances from personal – by opening a business banking account, and all expenses – or revenue, goes through that account. Depending on your business structure, you may also need to file for an EIN, that’s an Employer Identification Number, with the IRS. This financial separation is critical, particularly for taxation purposes. Depending on the state – your business may be also subject to state corporate or franchise taxes, which are levied as percentages against business income. A separate banking account for your small business is necessary to avoid “co-mingling of funds”, that is mixing personal income, and business income.
Fortunately – military members and spouses have a tremendous advantage when it comes to business start-ups, due to the wealth of business resources and incubators available. There are several organizations dedicated solely to helping develop entrepreneurs in the military community with everything from business fundamentals to entity formations, business concept development and more. Read More
The additional entrepreneurial hoops to navigate as a small business owner – married to the military – come to you courtesy of the military lifestyle.
On or Off-Base? Why it Matters
If part of your business plan is to operate a business from your home – either as a home-based entrepreneur, or direct-sales, the next question to ask is: “Do you reside in base housing?”
Businesses operated from base housing, are classified as a “Home-based Business” (HBB), and require both registration from the Housing Office and approval by the installation commander. Depending on the nature of the business, you may be required to obtain a state or city-issued business license as well. Read more.
Part of the approval process will also determine if your business is seen as competing with AAFES that is “an installation’s officially sanctioned commerce, Exchange and MWR resale operations,” per AAFES service operations manuals.
On a military installation, AAFES is afforded the “first right of refusal” for several business categories. In short, if you operate a home-based business – your business cannot “compete” with the exchange. (Home enterprises on Army installations are governed by AR 210–7, Air Force installations are governed by AFI 32–6001).
Before you begin investing in business supplies – for an on-base HBB, first ensure that you will be able to obtain business approval from the installation.
The entrepreneurial workaround if you find that your business will not be approved as an HBB, either due to the nature of the business – or if seen as a competitor with AAFES, you will need to open and operate your business off-base, either as rented/leased office space, or in an applicable location (i.e. small commercial kitchen, mechanics shop, etc.).
Comply with Base Privileges
Whether operating on-base as an HBB, or off, be careful not to co-mingle base privileges with your business. This includes, not using a military vehicle for business-related driving, not using Space-A (flight travel, or lodging) for a business trip, or using a military-issued PO Box for business. Access to military installations does not equal door to door advertising within base housing, and you are largely prohibited from pushing promotional flyers on base. Additionally, you cannot “use or buy, exchange merchandise or services to produce income”, as this violates the “Notice of Intent to Resell” clause of the installation’s AAFES government contract. Read More
In short, yes – you can operate an HBB, but do not use base privileges as leverage to build the business. Buy any needed business supplies on the local economy – and be smart in your advertising.
Can I Have a Business OCONUS?
It is certainly possible to have a business overseas, as a military spouse, but the two primary considerations will be complying with taxation by a foreign government, and ensuring you do not violate your SOFA privileges to live in a host country. Each country with a military presence has negotiated their own ‘statute of forces agreement’ (SOFA), and it is this agreement that will have a large bearing on your business operations. Your best bet is to start with your installation’s legal office, to explore the intricacies of each location. Read more.
So … What Happens When we PCS?
Depending on how – and where – your business was set up, you will have a few options.
- If your business was an HBB, you will have to de-register at your old base, then re-register and gain new HBB approval – if you reside in on-base housing at your new base, and want to maintain the HBB
- If your business was incorporated in a state, such as creating an LLC, you can either: 1.) dissolve it through the Secretary of State – or Department of Revenue, or 2.) keep it, and …
- Register the existing business, in your new state, as a ‘foreign entity’. It sounds stranger than it is, this process simply means you’ll need to register your existing business in your new state (while maintaining registration in your old state). For example, you incorporated a LLC in Alabama, and are PCSing to Texas – you either need to dissolve the Alabama LLC, or register the Alabama LLC to ‘do business’ aka as a foreign entity, in Texas. If you do select this option – ensure you hire a Registered Agent to stay legal and receive official business license, and state-issued correspondence (if needed). https://www.score.org/resource/should-you-hire-registered-agent-or-be-your-own
Being a small business owner, and creating your own career that PCS’s with you can be absolutely liberating. Military spouses are blazing trails down the entrepreneurial path every day – across the country and around the world. Come join us!