More details to this question:
My husband and I are starting an LLC but I'm realizing that for tax purposes and Workers Compensation purposes it may be better to have him as an employee of the LLC-he will be doing all of the work related to the business. Can I be listed as the owner and he as the employee, but also have him listed as one of the members? Also, if I am the owner who then could I reserve as the agent? Kind of a loaded question, thank you for any input.
7 ANSWERS
For federal income tax purposes, an LLC may have one or more Members. Anyone who is a Member of the LLC cannot be an employee of the LLC. If your Husband is not a Member of the LLC, he could be an employee if he performs services for the LLC under your direction. As an LLC Member you may choose to opt out of Worker's Compensation insurance coverage. If your Husband becomes an employee of the LLC, he should be covered by Workman's Compensation. Your Husband cannot be both a member and an Employee.
Answered on Jan 16th, 2013 at 2:06 PM
Yes, your husband can be a paid employee of your LLC. He can also be an owner, or not. You can be both an owner and the agent.
Answered on Jan 16th, 2013 at 2:06 PM
Elder Law Attorney serving Hollister, CA
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Charles R. Perry
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Nothing in the law prohibits an owner of an interest in an LLC from being a paid employee. You may want to consult with a business lawyer about how best to structure the ownership and management of the LLC, so that it provides you with the best tax situation and it complies with your desires as to how company decisions should be made. In particular, you need to be concerned about whether community property is being used to fund the company, and how that might affect the LLC's ownership if it is not held 50-50 between you and your husband.
Answered on Jan 16th, 2013 at 2:06 PM
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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It is fine for an owner also to be an employee. Be sure that his pay as employee is reasonable compensation for the services he renders.
Answered on Jan 16th, 2013 at 2:06 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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The LLC can employ him even though he is a member. You should see an attorney and/or an accountant to determine the ramifications of such an action.
Answered on Jan 15th, 2013 at 1:34 PM
Taxation Law Attorney serving Sacramento, CA
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Rex Halverson & Associates, LLP
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Yes; I assume that you have a SMLLC (Single Member LLC). As for whether he can be both a member and an employee, I do not know the answer. I would suggest you stay on as the agent for service.
Answered on Jan 15th, 2013 at 1:34 PM
Tax Attorney serving Portland, OR
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Bullivant Houser Bailey PC
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If he is a member (and the LLC is taxed as a partnership rather than as a corporation), the IRS position is that he cannot be treated as an employee. Whether or not he is the registered agent should not affect whether he is an employee.
Answered on Jan 15th, 2013 at 1:34 PM