Tax Question: How Do I Handle My LLC With Early Retirement?

I am early retiring this year and own an LLC company that only makes about 30K a year but much more than the allotted 17K that I have to stay under for this year. My wife helps me with this work but we don’t pay each other a salary, we just put the money in our business account when it comes in and file 1 Schedule C for the business on our yearly tax forms. She owns 1 share in the LLC and I own 100.

How would I structure this so that my income is limited to 17K and the remainder over that goes into her income. Do I need to update the LLC agreement or put each other on the payroll or maybe just me on the payroll? Do I just transfer ownership (all shares) to her? How would you advise me?

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2 thoughts on “Tax Question: How Do I Handle My LLC With Early Retirement?

  1. Avatar Michael S Cash says:

    Pay your wife a reasonable salary.

  2. Avatar PJ Seifert says:

    File 2 Schedule C’s, one for you, one for wife. IRS does allow this when a spouse contributes to the business. Allocation must be reasonable. This avoids additional payroll taxes (fed & state unemployment, workers comp etc.) if wife paid a wage. And if you don’t have other employees, all the payroll applications. May have to amend LLC agreement.

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