Both a partner and a subcontractor?

[dvdgarofalo]

I have a single member LLC. I plan to have my wife join as a partner. I will then need to file a 1065. Can she be a partner and also be a subcontractor?

Additional info.
Both are real estate agents with commission income.  Both have a split of commission with the LLC. For example a 90/10 split. 90% to the agent 10% to the LLC.
Both will share in the 10% profit the LLC makes.
Can I pay out the 90% to her as a vendor on a 1099 as well? Then she files a schedule C along with getting a K1

[gloriah5200]

Any work she does in the partnership as a partner would earn guaranteed payments on her k-1.  You would not issue a 1099-NEC to a partner in a partnership since they are getting a k-1 anyway

[dvdgarofalo]

Thanks for your reply.

I do get your point about the K1. My wife currently is a sole prop and provides other services. While it may be out of the norm, can I nonetheless for some services pay her as a subcontractor for some of her activity creating an expense for the LLC. Yes, I understand then she would put those funds as income on her schedule C.

[Rick19744]

Your questions are all over the board as you are talking about Sch C, sole proprietorship and then a multi-member LLC.  This response is clarifying what @gloriah5200 noted since it appears your question is geared to when you become a multi-member LLC.

What @gloriah5200 is indicating is that "yes" you can do that, but you do not report those earnings on a 1099.

Once you become a multi-member LLC, you will report those earnings as what is called a "guaranteed payment".  These are earnings of a member that are paid to that member regardless of the profitability of the LLC.

These amounts are a separately stated item on the form 1065 and also specifically allocated to that member (your wife in this case).

Once you become a multi-member LLC and file a form 1065, you will no longer be filing the Schedule C.  The earnings from the K-1 will be reported on Schedule E.

[dvdgarofalo]

Thank you. Sorry for the scattered appearance. The downside of not face to face.

This comment helps:

"These are earnings of a member that are paid to that member regardless of the profitability of the LLC."

My end goal is to keep year end income to me as low as possible because I am subject to income limitations whereas my wife is not.