spouse being paid a wage
by Carolyn
(Wisconsin)
If my husband has a single member LLC (disregarded entity) can he pay the wife a wage for bookkeeping. She is not active in any other way, just doing the bookkeeping. He does file on Sch C?
Answer
The wife can be an employee of the SMLLC.
The LLC would have to treat her like an employee, meaning that the LLC would need an EIN and would have to withhold federal, state and FICA/Medicare taxes and pay them quarterly.
I would suggest using a payroll service to avoid making mistakes, as the federal government holds employers personally liable for errors in payroll withholding (oh the joys of being an unpaid tax collector for the government!).
The husband would record the income or loss from the LLC on his Schedule C.
