paying spouse of a single member llc

in a single member llc can the llc pay wages to the member spouse? and if so what taxes are they subject to?

Answer

Your LLC can pay W-2 wages to any non-member that does work for it.

This includes your spouse and children.

As an employer, the LLC will be responsible for the whole gamut of taxes required of any employers. That means the employer share of Social Security and Medicare taxes, withholding of state and federal income taxes, and so on. I strongly recommend you use a payroll service from a company such as Quickbooks Payroll to handle this for you if you go this route.

The other alternative, if the spouse qualifies, is to pay the spouse as an independent contractor. In that case, the spouse would receive a 1099 at the end of the year and would pay the same taxes any 1099 person must--state, federal, and self-employment.