Posted by Shoshana Roller on 4/6/09 11:15am
Msg #283763

Talking about Social Security...

I have always filed taxes as a sole proprietor. My huband just got his commission (was previously commissioned in CA). Do I need to change to a partnership or an LLC? I would like for him to earn his SS credits.
TIA

Reply by MonicaFL on 4/6/09 11:18am
Msg #283764

Well, when I owned a staffing agency, everyone, including myself, was listed as an employee. I received a w-2 just like everyone else, paid the same ss taxes and federal taxes as everyone else. Even though I was incorporated, I think it is important taxwise and liability wise, to always list yourself as an employee and get a W2 at the end of the year. JMHO.

Reply by davidK/CA on 4/6/09 11:57am
Msg #283774

Each one of you would have to file a separate Schedule C reporting your individual income and expenses. If you claim Office In Home expenses you would have to apportion those expenses between the two Schedule Cs on some sort of logical basis between yourselves. The net profit from each Schedule C would then be subject to Self Employment Tax after excluding the Notary Fees received by each individual. Assuming that there are net profits subject to SE Tax there would be Social Security Credits generated based on the SE Tax due.

The other option is to run the business as a joint husband & wife venture. Combine all income and expense numbers and the 50% of the net profits (less the exclusion) would be taxed and applied to each of you. Only you can determine if this method is better or worse than the more complicated record keeping system necessitated by two individual Schedule Cs.

Reply by Deborah Lewellen on 4/6/09 12:10pm
Msg #283777

Think Twice about the LLC

My hubby also helps me in this business, I've trained him and he just helps me with 8-10 closings a month or so. Especially when the closings are complete opposite directions.
We file as sole prop. We had another business we just dissolved after being in business for 12+yrs. the last two of which we LLC'd it. What a pain in the butt. There was alot of hoop jumping to set the LLC up, not too hard, but I did it and without legalzoom or any other company that you would pay to set it up. However, after you get your tax ID number, you will have to file with the state. In our state we had to file the income on it and pay so much every quarter. It was not alot but about $600 a yr. or so . But I'm telling you it was a pain. Since we've just dissolved that business and we're involved in other enterprises including this, we'd thought about starting another LLC to protect ourselves. Well, just a tip, if you do an LLC and you get tempted to include any property (such as Land/homes/businesses) think twice. It does complicate things and I'd get advice from your tax person and or attorney. If you are still just mom and pop I wouldn't LLC, I'd advise to up your E&O. Nothings full proof.

Reply by Todd/OH on 4/6/09 5:13pm
Msg #283827

Re: Think Twice about the LLC

LLC's aren't cheap and require competent legal counsel. I would STRONGLY suggest that your business bring in some "bang-up" volume requiring help from W-2 employees before going LLC. You can otherwise have a mess on your hands.