Hey everyone, I started an LLC about two years ago and it's been doing pretty well. My spouse recently quit their job and wants to help out with the business. Can I just add them to the LLC now? What's the process and are there any tax or legal gotchas I should watch for? Appreciate any advice!
LLC
Can I add my spouse to the LLC after the business gets going?
Depends on your state but generally you'd amend your operating agreement and fils an amendment with the secretary of state. Also check with your accountant about tax implications. Might be easier to just hire them as an employee though.
Adding a spouse can be tricky if you're in a community property state. That could affect how the LLC is taxed. Definitely talk to a lawyer.
Thanks for the replies. I'm in Texas, which I think is a community property state. What does that mean for me?
In Texas, if you add your spouse as a member, the LLC might automatically be treated as a partnership for tax purposes unless you elect otherwise. But if you're the sole member now, it's a disregarded entity. Adding a spouse could change that. Seriously, get professional advice.
Why not just hire them as an employee? Less paperwork and you can still pay them a salary.
Yeah, but if they're an employee you have to deal with payroll taxes and workers comp. Adding as a member might be simpler long-term if you want them to have ownership.
Also consider liability. If your spouse becomes a member, they could be personally liable for business debts. Is that something you both want?
Good point. We'll definitely discuss that. I thinm we need to sit down with a lawyer and accountant before making any changes.
That's the right move. Also, check if your current operating agreement has any provisions about adding members. You might need unanimous consent if there are other members.
Just make sure you don't end up in a situation where you're both liable and then divorce. LOL. But seriously, get a post-nup or something.