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Husband and Wife in Texas, LLC, S Corp, Both or Sole Prop?

by BgBizzo, Window Shopper

  • Created: January 22, 2012, 3:40 pm
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2 comments

We are a husband and wife starting a company and we are trying to decide whether to go as an LLC, S Corp, or both, or as a Sole Prop. Now my concerns are of course Liability ( Wanting to Protect my Assets)  and Taxes. Through research it seems like going with LLC as an S Corp I get a little more tax benefits and I am still protected. But I have read in one article the government will recognize my wife and I as "One" and not partners in the LLC. Therefore making us Sole Prop thus leaving all of our personal assets at risk. Should I go as an S Corp because I know you first have to become a coproration then file Form 2553 which provides protection I think but am I facing more taxes this way? Please help! Thanks BG    

Tags: Discuss Popular Topics, Starting & Registering a Business
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BizResearcher | Window Shopper | 1/24/2012 - 12:03 pm

If when you register the LLC, you list both you and your wife as managers, you shouldn't have a problem. Even if only one of you is listed, you would still have liability protection, which you don't have as a sole proprietor. Have you checked the IRS web site for information on tax options for LLCs? Because the IRS does not recognize LLC as a unique taxing entity form, you have the choice to either report your taxes using form 2553 or using a Schedule C with your personal taxes. The form you use depends on how complicated your business will be. If it is fairly straightforward, you might use the Schedule C.

kmurray | Community Moderator | 1/23/2012 - 3:49 pm

Hi,    Check out our blog article, "Should My Company be an LLC, an S-Corp or Both?" You might also try getting in touch with a local Small Business Development Center, which is one of SBA's resource partners. They're located across the country and provide free business counseling and answers. Visit SBA Direct to find your local SBA resource partners by entering your zip code.