Can you have single member LLC with only one spouse after revoking S Corp in California?

[CA-business]

We are a husband and wife LLC in CA started last year and elected S corp. We have dump truck business and working with a different company  who uses their driver, find work for our truck and maintains the truck. We don’t have much involvement. I’m just entering numbers in quickbooks at the end of the month once they send me the statement which doesn’t take much time, may be couple of hours max.

Since we both are not working materially for our  business, thinking of revoking the S election so we don’t  have to take salary. If I take too little salary based on the work I’m doing, it seems high probability of getting audited.

We both have full time job. My W2 income maxing out social security taxes but not my wife’s as she is working part time.

Can I revoke S corp status and choose single member LLC with just me as a member even though we are in a community property state? This way only I have to report business income and don’t have to pay social security taxes as I’m maxing it out in my full time job. With this arrangement can we still file joint return? BTW, wife is okay with not being on the LLC.

If this is not possible, can we change the llc share to 95/5 so wife is only paying social security taxes on very small amount?

How do I go about making this change? Just update statement of information or do I need to send any new forms to state to remove my wife as member of LLC?

The only asset we have is a dump truck which is financed through the dealer. Would revoking S corp affects anything in terms of assets?

[Note: This is a duplicate posting as it was stuck in the approval process for couple of days. Please refer to the original posting https://ttlc.intuit.com/community/business-taxes/discussion/re-can-we-have-single-member-llc-with-on...]

[ThomasM125]

If you revoke the S corporation status it may allow you to file the business  activity on your personal tax return, even if you had two owners. You can read more about this in this IRS article:

https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorpo...

In any case, it would relieve you from the need to file and report payroll taxes.

You can become the only member of the business, but only if your spouse is not active with it. If he or she performs services for the business, you would need to list that individual as a partner or pay them a salary for their services if they are not a member of the LLC.

To terminate the S corporation election, you need to draft a letter to that affect and send it to the IRS. You need to do it before the 15th day of the third month of the current tax year. It should list the partners and have them sign their consent to the revocation.

You also need to file form 8832, the same form you filed to elect to have the LLC taxed as an S corporation. This will tell the IRS how you are electing to be taxed in the future.