{"id":4916,"date":"2016-04-04T10:47:49","date_gmt":"2016-04-04T15:47:49","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/incorporation-and-legal-structures\/when-should-you-set-up-an-llc-with-a-spouse.html"},"modified":"2025-10-31T12:06:00","modified_gmt":"2025-10-31T17:06:00","slug":"when-should-you-set-up-an-llc-with-a-spouse","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/when-should-you-set-up-an-llc-with-a-spouse.html","title":{"rendered":"When Should You Set up an LLC With a Spouse?"},"content":{"rendered":"\n
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When Should You Set up an LLC With a Spouse?<\/h1>\n\n
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\n By Jade Yeban, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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You may want to form an LLC with your spouse if they are active in the business with you. LLCs provide liability protection from business debts and obligations. However, forming an LLC with your spouse will impact your federal income tax<\/span> filings and self-employment taxes<\/span>.<\/p>\n\n <\/div>\n\n\n\n

When married couples<\/span> start a business, they often think about forming a\u00a0limited liability company<\/span>, or LLC. An LLC is a business type that is set up to protect members from\u00a0personal liability for business debts<\/a>\u00a0and other legal liabilities. In some circumstances, the benefits of limited liability may diminish when a spouse regularly participates in a business because the spouse may incur personal liability for their actions.<\/p>\n

Deciding to set up a single-member LLC<\/span> or a multi-member LLC<\/span> with your spouse depends on several factors. These include how you want to pay taxes, protect your personal assets, and follow state laws<\/span>. We\u2019ll explore when it\u2019s smart for married entrepreneurs to\u00a0form an LLC<\/a>\u00a0and how it affects things like income tax<\/span>, Social Security<\/span>, and Medicare<\/span>.<\/p>\n

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If a spouse regularly helps in the business, not having an LLC<\/a> can be risky. Without an LLC, the business is likely to be a sole proprietorship<\/span>. This means if the business owes money or gets sued, the couple\u2019s personal assets could be at risk. An LLC can help protect these assets. In community property states<\/span>, it may be automatic for\u00a0both spouses to\u00a0be considered owners. In other states, the non-participating spouse might not be liable. It\u2019s important to know your state\u2019s laws<\/span>.<\/p>\n

If a spouse regularly works in an LLC<\/a>, they\u00a0may incur personal liability for their actions if they fall under the following categories:<\/p>\n