If an individual or married couple who files jointly, forms an LLC then the
LLC is taxed like a sole proprietorship. Because LLCs are by nature
pass-through tax entities, all of the company's profits and losses get
combined with the member's personal income tax returns. If a married couple
files jointly, the LLCs taxes is also filed jointly. If a married couple
files separately and are both the members of the LLC, then the LLC is taxed
as a partnership and each person needs to claim part of the LLC's tax
liability.

It is saying that if the business is already set up as a state entity such as an LLC, then at that point it's ineligible from being classified as a married couple's sole proprietorship. If what you're getting at is "as a married couple does that prevent us from starting an LLC," then no. In most instances an LLC is the wisest choice as a sole proprietorship offers very little liability protection. You can read a lot more about the benefits of an LLC on my company's website. Hope this helps! This post was edited to remove a link. Please review our Community Best Practices for more information about how best to participate in our online discussions. Thank you.

"They can not be operated in the name of a state law entity"

I believe this refers to law firms, not LLCs in general. You may want to
check the IRS web page devoted to LLCs for more information.

Hi there,  Check out these resources about LLCs, including our section devoted to the topic and an informative blog post.