I own a company, my company is organized as an LLC (limited liability company), I was reading another post here where the fact that those who are self employed are required to show more documentation when applying for personal loans and such. My question is this: I am considering for other reasons to name my wife president of the LLC, I would become operations manager (we are attempting to secure govt. contracts and she would qualify as a disadvanted woman owned business). Now, if I become an employee of the company instead of owner can't I legally claim that I am not self employed and save the headache of providing taxes and other financial data? Could anyone give me pro's and con's of doing this?
First, a LLC does not have Officers, it has Members. A Member is a person who is an owner of the LLC and will get a Form K-1 at the end of the tax tear. Otherwise the title would something like manager. So... why not have your wife as the Member and you as Operations Manager? Second, the Member is the one who is self-employed. The Employee isn't so no, you wouldn't have to put up the extensive documentation as elf-employed person would. EXCEPTION - If you live n a Community Property State (WA, CA, NV, AZ, ID, NM, TX or WI) then expect the lender to want full doc on your wife also. Pros of doing this: You may qualifiy for MBE/WBE grants or loans. Cons- you better not cheat on your wife, you could be out on your a$$ with nothing. Remember, SHE is the owner, YOU are the employee.
Even when I was the owner I put down that I was an employee. It is so much easier than having to show all the documents the banks want.
Flyingifr, Thanks. That's exactly the main reasons we want to name my wife as the member/president. She meets the criteria for 8a certification and WBE. I figured that since we were changing I would start considering myself an employee and save the headaches. BTW: are you private or commercial?
