New LLC - a few questions

[RRB3]

My spouse started a business in 9/14. It is a LLC in the medical durable goods sales business. This is the type of business that we both have been involved with for many years (Me 20+ and her 15+). She is the principal/sole owner and I am not an officer in the company or an employee.

Question 1 - can I work for her in the field, not collect a check or a draw and simply funnel any sales through the LLC?

Question 2 - I can start to draw SS this Fall at 62. At this point we are considering putting me on the books as an employee. I am allowed to earn up to a certain amount (about $15,000) before I need to give back per the SS rule. I would stay in the field and earn money for the company. Is this OK?

Thoughts and or suggestions appreciated.

[smallbiztaxspecialist]

Answer 1 - unfortunately not. If your spouse is the owner of the LLC the LLC is classified as a Single-member LLC and if you work for the LLC you are considered an employee to the business. It's not about whether you actually collect a check or not, it's about documenting what your spouse pays you. The positive side to this arrangement is that whatever you are paid as a salary is a tax deduction to the business. There are many tax advantages with this arrangement but too many to mention here.

Answer 2 - Yes, let your spouse pay you a salary of no more than $15,000 so that you can stay under the maximum limit for SS and as I mentioned in Answer 1, whatever your spouse pays you, your salary will be a tax deduction to the business as well as all the employer taxes that the LLC pays.

Extra tip - keeping good records is important to track what you're paid and what employer taxes are paid.

If you need help, I do provide remote services to small businesses across the U.S.