My husband and I just started an LLC lawn care/landscape business. I am the owner of the company, and he is an employee. When it comes to tax time, would it be better for our household to make him a W-2 employee or 1099 employee? Also, as the owner, am I able to take out weekly draws to pay myself?
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When you say you both started it, are you both members of the LLC? Is he listed on the LLC filings? If so, then he cannot be an employee, he would be a partner or a member.
If not, then assuming he controls his hours and provides his own tools, you could do it as a 1099. This is a bit of muddy water since you are spouses.
Either way, if the money is coming out of the same account, you will be paying the same amount in taxes. If he is the employee, then you will need to pay the Employers share of the FICA taxes on him and he will pay half. If he is self-employed (1099) then he will pay both portions of the FICA taxes.
As an owner, you can take out draws as often or as seldom as you want. All income you received minus expenses flows through to your personal income even if you do not take a draw.
If you are the only member and he is not a member, then it all will be reported on your Schedule C.
If you are both members of the LLC, then it will still all be split between your K-1s which will be generated after you file your 1065 for the LLC.
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