I have an Idaho LLC (formed by KKOS) for an operational business. I brought up the s-election with my CPA for 2023 since the income should be substantial enough this year and he suggested making my LLC a multimember LLC with my wife as a member could achieve the same thing as the s-election with less paperwork and because she is not active with me in the business, therefore no SE tax on her portion. (he suggested 25% 75% split) I’ve just never heard of doing it this way instead of the s-election until now. What am I missing here? What’s your opinion?
I took this approach a few years ago and switched from filing as an S-Corp.
If the business is very high income you’ll still save more by filing as an S-corp, but there’s a sweet spot where it makes sense. I like that I longer have to do payroll, my tax return is a little simpler, and I don’t need a separate “family management company” for things like paying my kids.