Married & filed an LLC for my AZ small biz. We have it set up where I own 51% & he owns 49%. When filing is it best to say we are a single member or multi-member LLC?

[Carl]

When filing is it best to say we are a single member or multi-member LLC?

This is not a choice you or anyone else gets to make. If there is more than one owner, it's a multi-member LLC. Percentage of ownership is irrelevant. So even if only one of the two owners owned .000001% it's still a multi-member LLC.

Multi-Member LLC – This is a business with more than one owner.  It’s also the exact same as a Partnership (for tax purposes) This type of business also has to register at the state level, and may also be required to obtain an Occupational License from more localized jurisdictions within the state, in which that business will operate.  This type of business will file its own physically separate tax return with the IRS (and state if applicable) referred to as a Partnership Return, on IRS Form 1065. When completing the 1065 (using TurboTax) the business will issue each individual owner a K-1 reporting the income (or loss) of each owner. Each owner will use this K-1 to complete their personal return. So an owner can’t even start their personal return, until after the 1065 Partnership Return has been complete, filed, and all K-1’s issued to all owners.

In the community property states of Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin if you have a multi-member LLC where there are only two owners, those two owners are legally married to each other, and those two owners will be filing a joint 1040 tax return, they have the option of splitting all business income and expenses down the middle and each partner reporting their share of the business income/expenses on a separate SCH C for each tax filer on the joint return. That means your joint 1040 return will have two SCH C’s included with it – one for each owner. But this can present its own problems in the event of divorce, separation. The issues can become even more compounded upon the death of one of the owners. If that deceased owner’s will does not pass all assets to the surviving partner, then that surviving partner can find themselves in a tax hell, not to mention the problems that can arise with the “new” owner or owners.

[DoninGA]

Since you live in Arizona, which is a community property state, you can report your business as either a qualified joint venture or as a partnership.

See this IRS website for a qualified joint venture and how to report - https://www.irs.gov/faqs/small-business-self-employed-other-business/entities/entities

A Qualified Joint Venture requires you each to report your income and expenses on separate Schedule C's which are included as part of your personal tax return, Form 1040.

A Partnership tax return using Form 1065 is separate from your personal tax return and the complexities for completing and filing can be onerous.

See this IRS website for a Form 1065 - https://www.irs.gov/forms-pubs/about-form-1065

[Rick19744]

A couple of quick follow-up points:

• Make sure you read the link provided by @DoninGA regarding being able to file as a qualified joint venture.  You need to understand how your LLC was set up.  In particular, you need to focus on the second bullet in the IRS link provided.  
• There are some differences in how you will pay yourself between the two options; one is a guaranteed payment, the other is just take out cash.
• Since you want to get started down the correct path, I recommend you make an appointment with a tax professional to explain the workings and differences between these two "entity" options