When a married couple sets up an LLC to hold rental property or operate a business, one of the first decisions is: Should both spouses be listed as owners—or just one? There’s no one-size-fits-all answer, but here’s what you need to know to make a smart, informed choice.
What’s the Difference Between a Single-Member and Multi-Member LLC?
- Single-Member LLC: Only one spouse is officially listed as the LLC’s owner.
- Multi-Member LLC: Both spouses are listed as co-owners (members) of the LLC.
Tax Treatment: Simplicity vs. Structure
|
Option |
IRS Tax Treatment |
Annual Filing Burden |
|
Single-Member LLC |
Treated as a “disregarded entity.” Report income on Schedule E. |
No separate return. Simple and streamlined. |
|
Multi-Member LLC |
Treated as a partnership. Must file Form 1065 and issue K-1s. |
Requires partnership return and added paperwork. |
➡️ Note for North Carolina couples: You can only elect single-member treatment if one spouse is legally listed as the sole owner.
Ongoing Maintenance: How Much Paperwork Do You Want?
|
Option |
What to Expect |
|
Single-Member LLC |
Fewer compliance headaches. Minimal recordkeeping. |
|
Multi-Member LLC |
Greater formality encouraged—operating agreement, documented decisions, etc. |
➡️ Both options require an Annual Report and a $200 filing fee with the NC Secretary of State.
What Happens If You Get Divorced?
Divorce isn’t fun to think about, but it’s worth planning for.
|
Option |
Divorce Impact |
|
Single-Member LLC |
LLC may be considered separate or marital property depending on ownership/funding. |
|
Multi-Member LLC |
Ownership is clear and shared—may require division, buyout, or continued co-ownership. |
➡️ Caution: Even if the LLC is in one spouse’s name, it can still be divided by a court if it was created during the marriage using marital funds.
Which Setup Is Right for You?
|
Goal |
Recommended Setup |
|
Keep taxes simple |
Single-Member LLC (owned by one spouse) |
|
Share control and decision-making |
Multi-Member LLC |
|
Prepare for possible separation |
Multi-Member LLC creates clearer ownership |
|
Focus on privacy or protection |
Either can work—what matters is documentation |
Bottom Line
- Single-Member LLCs are easier to manage and file taxes for, but they may concentrate control in one spouse’s hands.
- Multi-Member LLCs require more paperwork and formality, but they provide built-in clarity and shared ownership.
Still not sure which is best for your marriage or your property? Let’s talk about what fits your goals and gives you peace of mind.
FAQs: LLC Ownership for Married Couples
1. Can we both manage the LLC if only one of us is listed as the owner?
Yes, but legally, only the named owner has official control—unless otherwise documented.
2. Does a Multi-Member LLC mean we each get half?
Not necessarily. Ownership percentages are determined by your operating agreement.
3. Will we save on taxes with a Single-Member LLC?
Possibly. It's simpler to file, but your tax liability depends on total income and deductions, not just structure.
4. What happens if we file incorrectly, as a single-member, when we’re both owners?
It could cause IRS issues or trigger an audit. Always align your filings with your actual ownership.
5. Can we change from Single-Member to Multi-Member later?
Yes, you can amend your operating agreement and update the IRS—just make sure to document it carefully.
