When you marry someone, it’s because you want to be their partner in life. What about when you become partners in business?
How do a husband and wife file taxes on an LLC?
Is a husband and wife LLC treated as a single-member LLC?
Should one or both of the spouses own the LLC?
On this page, I provide you the step-by-step guide on how to start your husband and wife LLC.
As a business lawyer, I’ve helped hundreds of people just like you start their LLC.
If you’re looking to form your husband and wife LLC, email me at email@example.com
Husband and Wife LLC
Whether an LLC owned only by a husband and wife is treated as a partnership is dependent on where the LLC is located.
In general, business entities like LLCs that have more than two members are partnerships, even if the members are husband and wife.
So most of the time a husband and wife LLC will be treated as a partnership unless they choose to have it treated as a corporation.
The only exception is if the LLC is in a community property jurisdiction and it meets these three conditions:
- The LLC is owned by the husband and wife as community property,
- Nobody but the husband and wife could be considered an owner, and
- The LLC is not treated as a corporation under Treasury Regulations.
If the LLC meets these conditions then the IRS will treat the LLC as a disregarded entity and the husband and wife report taxes accordingly.
It is important to reconsider the tax structure of the LLC every year with someone you can trust.
If you have questions about how to file husband and wife LLC taxes, send me an email at firstname.lastname@example.org.
LLC Owned by Husband and Wife
Husband and wife LLC where both people own the LLC have distinct advantages.
One advantage of a two-member husband and wife LLC is that there is slightly superior protection from liability.
While it is true that the LLC will shield the husband and wife from liability, a dual member LLC provides better protection from liability incurred by one of the owners.
The IRS can’t forcibly take assets from a multi-member LLC due to the actions of one of its members because that would be taking assets from one person because of another’s bankruptcy which is illegal.
Single Member LLC Husband and Wife
Deciding to have only one person be the owner of an LLC can be scary.
This fear is certainly understandable, especially to the person who is not a part of the LLC.
If you’re going to have a single member husband and wife LLC, be sure that you have a solid plan in place if the business goes bankrupt or if you get divorced.
Having these precautions in place will ensure that your business with your husband and wife LLC is stress-free. Deciding whether a single-member LLC or multimember LLC is better is important and not to be taken lightly.
Married Couple LLC Single Member
However, sometimes it is better for just one member of the husband and wife team to own the LLC.
For instance, having a single-member LLC can have certain advantages.
If one member of the couple is going to be much more heavily involved in the business, it might be better to list one person as the owner.
A single-member married couple LLC is also good in a divorce, which makes things less complicated when dividing assets.
How to Form a Husband and Wife LLC
In order to form a husband and wife LLC, you must decide who will play what role in the business operations of the LLC.
An LLC needs to have at a minimum an incorporator, a registered agent, and at least one owner.
The incorporator of an LLC is the person who prepares and files the articles of incorporation, and their duties end after the LLC is filed. This person can also serve as the registered agent or as an owner.
A registered agent is responsible for being available at a physical address during business hours to receive legal and business correspondence.
An owner is a person who is responsible for the activity and entire operation of the LLC. The husband, wife, or both could all function as owners.
Deciding in advance who will take on what role in your husband and wife LLC will set you up for business success later on.
If you’re ready to form your husband and wife LLC, email me at any time at email@example.com so I can help you.
Taxes for Husband and Wife LLC
How a husband and wife LLC files taxes depends on how the LLC is set up.
If your LLC has only one member, you can file taxes as a sole proprietorship.
However if your LLC has both the husband and wife as members, it can either file taxes as a partnership or corporation.
If your LLC is a partnership, the LLC itself does not file tax returns but rather the couple will pay taxes on their income.
If the husband and wife LLC files taxes a corporation, then you will either pay taxes on income paid from the LLC as a C corporation or the pass-through income of an S corporation.
The difference between filing taxes as an S corporation and a partnership is that you have to pay self-employment taxes on a partnership, but not on S corporation income.
Forming a husband and wife LLC can seem complicated, but it really doesn’t have to be.
There are a lot of things to consider when deciding how to set up and run a husband and wife LLC including who should play what role and how to file taxes.
With everything else going on in your business, you don’t have the time to deal with all of this and should ask someone who does.
While you’re working on your business ideas, I’m making sure that everything is in order so your husband and wife LLC business can get started the right way.
Want to start your husband and wife LLC? Email me at firstname.lastname@example.org now
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