The Pros and Cons of Hiring Your Spouse In Your LLC
Small business owners often face the dilemma of whether or not to hire their spouse in their LLC. While there are pros and cons to this decision, ultimately it comes down to what is best for the business and the family. Here we’ll explore some of the pros and cons of hiring your spouse in your LLC. Thanks for reading!
Con #1 – you’re going to have FICA taxes, once they become an “employee” to your business, you will have to pay them a wage and you will have responsibilities as your Spouse’s Employer, to pay FICA taxes for social security benefits and medicare benefits.
Con #2 – you will have to pay your State employer taxes if it applies in your State.
Pro #1 – the FICA situation also has a plus side, because since you’re paying into social security and medicare as your Spouse’s employer, that creates an opportunity for your spouse to benefit from receiving social security and medicare benefits once they reach the applicable age.
Pro #2 – Health insurance: if you offer health insurance coverage for yourself and your employees, your spouse would receive this employee benefit.
Pro #3 – you can provide additional employee benefits like travel reimbursement or a plan where your business provides coverage for business travel; business travel could be created from vacations if you set things up properly.
Pro #4 – Retirement benefits; your business an open up retirement plans for your employees and this would provide a way for retirement contributions to be setup for your spouse; these contributions are a tax deduction to your business.
Pro #5 – If you have other financial goals such as security a mortgage, it looks good to a lender if both spouses have income.
Pro #6 – Another option to hiring your spouse is to make him or her a partner of the business and this eliminates expensive payroll taxes if you hire them; Settign up this type of arrangement should best be done with an experienced tax professional to make sure everything is done accurately.
So, is it a good idea to hire your spouse in your LLC? It depends. There are definitely some pros and cons to consider before making a decision. If you’re on the fence about whether or not to add your spouse to your business, I want to hear from you! Leave me a comment below and let me know why you’re considering hiring your spouse. I love hearing from my readers!
By the way…if you would like to learn about 10 Tax-Saving Strategies for Entrepreneurs that the IRS is “Hoping” You Don’t Find Out About…click here to download this free report.
I’m Ktasha (“Tasha”), a seasoned expert in small business management and taxes. My expertise lies in supporting small business owners and self-employed individuals like you with tax management and overall business operations. I understand how challenging it can be to keep everything organized and running smoothly when you’re focusing on running your business. That’s why I’m here to help take the weight off your shoulders. I offer tailored service packages, as well as consultation and coaching services, to help simplify your business affairs and reduce stress. Whether you’re an experienced entrepreneur or new to the game, I’m here to help you navigate the complexities of business ownership and operations with ease.