| Question:
Business Law: Sole Proprietorship. My
husband started his own construction/handyman business 3 years ago.
It's an LLC and only his name is listed. He originally did not add my
name to the business because he just didn't think to do it. Should he
add my name to the business? Why or why not?Thank you for your
assistance.
Reply:
answer is ABSOLUTELY
CLEAR. You do NOT want to be a member. The idea of the LLC is to
insulate the family assets from business liabilities. Even if a
creditor or the government can successfully attack your husband, your
assets would be protected. As a member of the LLC you would have
potential liability for Sales and Use Tax, State and Federal Employment
Taxes and NJ Disability and Unemployment contribution.
_________________________________________________________
Should
Husband and Wife Be LLC Members to obtain
Charging Order Protection?
Question
- Can the charging order
pitfalls of a single member llc be avoided by having a husband and a
wife be separate members of the llc? Or would the separate memberships
of the husband and wife likely be disregarded in a SMLLC charging order
analysis?
Answer
- I assume you want a
SMLLC in
order to have an LLC taxed as a disregarded entity.
In community property states, the LLC is already considered to be owned
50/50 by both spouses if it was formed while they were married.
However, it's completely up in the air as to whether this would give
the LLC the charger order protection that a multi-member LLC would have.
What I often do is hold some of the membership interest in a
discretionary grantor trust, with spouse A as grantor and spouse B as
trustee. Then spouse A is the other member. Per IRS Rev. Rul. 2004-77,
because there is only 1 underlying taxpayer in this arrangement, this
LLC will be taxed just like a SMLLC, i.e. as a disregarded entity.
The reason for doing this (besides asset protection) is that both
spouses wanted to vote as a member in the LLC, without going through
the hassle of filling out a 1065 return each year.
Call
me
at (856)
665-2121 today!
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