Hey everyone, my wife and I are finally taking the plunge and starting an LLC for our side business (she does custom cakes, I handle the marketing). We live in a community property state, and I'm wondering if we should file as a single-member LLC or multi-member. Also, any tips on operating agreements between spouses? We get along great, but business and marriage can get messy. Thanks in advance!
LLC Formation
My spouse and I are starting an LLC together
Just make sure you get a good operating agreement. My ex and I started an LLC and it was a nightmare. Get a lawyer, seriously.
Congrats on the new venture! My husband and I run a small landscaping LLC together. We opted for a multi-member LLC because it felt more transparent for taxes and liability. The operating agreement is crucia, but you don't necessarily need a lawyer if you use a reputable service and tailor it to your state. Also, make sure you have separate bank accounts and credit cards for the business, even though you're married.
Community property state changes things. You might want to talk to a CPA about whether a single-member LLC (disregarded entity) makes sense, since you'd file taxes jointly anyway. But liability protection could be weaker if you dont have a formal operating agreement. Don't just DIY it unless you really know what you're doing.
Thanks for the responses! GrumpyGus88, sorry to hear about your situation. That's exactly what I want to avoid. MamaBear2020, good call on separate bank accounts—we're already planning that. SkepticalSam, I hadn't thought about the CPA angle; we'll look into it. Any recommendations on where to find a good operating agreement template?
Honestly, check with your local small business development center. They often have free resources annd templates, and they can point you to low-cost legal help. Better than some random template online.
lol my spouse and I can't even agree on whaf to watch on Netflix, good luck with an LLC
JustHereForTheComments, ha! We have a rule: no business talk after 8pm. Otherwise it's all spreadsheets and frosting recipes. To the OP, I second the SBDC suggestion. Also, some states have specific requirements for spousal LLCs, so double-check your Secretary of State website.
One more thing: if you're in a community prperty state, some attorneys argue that a single-member LLC owned by one spouse can still be treated as community property, which could complicate liability protection. Definitely get professional advice tailored to your state. Don't rely on forums (including me).
Appreciate all the insights! We'll be talking to a CPA next week and checking out the SBDC. And JustHereForTheComments, we've already had the Netflix debate—it's a miracle we're still married, lol.