A recent New Accounts class instructor informed our new accounts personnel that a husband and wife combination can form a sole proprietorship. I know that this has been discussed for years, but I was not aware that this has actually been allowed. Does anyone know where I can find the guidance on this issue?

I beleive it depends on the state. We had banks in CA, and they allowed it.

Oklahoma allows it

Colorado does not.

Alabama does not.

Yes in CA. Perhaps it's because we are a community property state?

WA does, I do not believe OR does.

Community property states are more likely to permit it, but the mere fact you're in a CP state doesn't make it automatic. Oklahoma, which does permit H&W sole proprietorships, is not listed as a CP state.

NJ (not a CP) does. Check your state law.

And just because state law allows it, doesn't mean your FI is required to accept it - your FI still determines it's account opening procedures and requirements.

If memory serves, GA still does...I think FL does not.

I'm of the understanding that PA does not recognize husband/wife sole proprietorships (not a community property state).

While Georgia is a community property state, I don't believe it allows a husband and wife on a sole proprietorship account.

The overriding factor is that the IRS does not allow it, regardless of if the State may or may not allow it or recognize it.

The IRS treats them as a qualified joint venture or a partnership for tax purposes and therefor, your CIP and account documentation practices should mirror your processes for opening those types of entities.