Jake Lawson here. After guiding over 1,200 entrepreneurs through LLC formation, I get this question weekly: “Should I include my spouse as a member of my LLC?” The answer isn’t as simple as “yes” or “no”—it depends on your situation, your relationship dynamics, and what you’re trying to achieve. Let me break it down for you.
The LLC Formation Reality Check
First, let’s clear up a common misconception I hear constantly: you don’t “LLC yourself.” That phrase makes my eye twitch every time.
When you form an LLC, you’re creating a separate legal entity—think of it as building a protective wall around your business assets. This wall shields your personal assets (your home, car, savings) from business lawsuits and creditors.
The paperwork you file with your state asks for one crucial detail: who are the members of this LLC? Members are the owners, and they can be anyone you trust with your business, finances, and reputation.
Why Spouses Consider Joint LLC Ownership
Many married couples dive into entrepreneurship together. Maybe you’re both fed up with the corporate rat race, or you each bring complementary skills to the table. I’ve worked with power couples who’ve built incredible businesses—from digital marketing agencies to real estate investment companies.
The appeal is obvious: you’re already partners in life, so why not be partners in business?
The Upside: When Spouse Co-Ownership Works
Let me paint the rosy picture first. Here’s when including your spouse as an LLC member makes perfect sense:
Shared Vision and Responsibility
When both spouses are genuinely invested in the business’s success, you get true accountability. No one’s coasting while the other does all the heavy lifting.
Built-in Communication
You’re already sharing a bed and a mortgage—discussing quarterly projections over morning coffee isn’t exactly a stretch.
Legacy Building
If your LLC becomes profitable (and I hope it does), you’re building wealth for your family unit, not just yourself.
Complementary Skills
I’ve seen couples where one handles the creative side while the other manages operations. When it works, it’s beautiful.
The Reality Check: Why Spouse Co-Ownership Can Backfire
Now for the less romantic side of the equation—and trust me, I’ve seen these scenarios play out more times than I’d like to count.
Decision-Making Paralysis
Every business decision becomes a marriage discussion. Need to pivot your marketing strategy? Better hope you both agree. Want to hire that contractor? Time for another kitchen table conference.
Work-Life Boundary Explosion
When you’re both LLC members, business stress doesn’t stay at the office—it follows you to dinner, vacation, and yes, even the bedroom. I’ve had clients tell me their marriage counselor suggested restructuring their LLC.
Asset Protection Complications
Here’s something most people don’t consider: if you’re both members and the business gets sued, both of your personal assets are potentially at risk. Having one spouse outside the LLC can provide an additional layer of protection.
The Divorce Factor
I hate bringing this up, but let’s be adults here. If your marriage hits the rocks and you’re both LLC members, your business dissolution becomes part of your divorce proceedings. Messy doesn’t begin to cover it.
Single-Member LLC with Spouse Employment: The Alternative Strategy
Here’s a structure I often recommend: form a single-member LLC with yourself as the sole member, then employ your spouse.
Benefits:
- Clean decision-making authority
- Simplified tax reporting
- Better asset protection
- Easier dissolution if needed
- Your spouse still gets paid for their contributions
The catch: Your spouse doesn’t own equity in the business. If that’s a dealbreaker, then joint ownership might be your only option.
Operating Agreements: Your Marriage Counselor on Paper
Whether you include your spouse or go solo, you need an Operating Agreement. This document is like a prenup for your business—it sets the rules before emotions run high.
Key Elements for Spouse-Owned LLCs:
Management Structure: Who makes day-to-day decisions? Who handles finances? Who’s the tie-breaker when you disagree?
Profit Distribution: How do you split the money? 50/50? Based on time invested? Based on capital contribution?
Exit Strategy: What happens if one spouse wants out? What if you divorce? What’s the buyout process?
Voting Rights: Does each spouse get equal say, or are decisions weighted by ownership percentage?
Pro Tip from Jake:
I’ve seen couples try to skip the Operating Agreement because “we trust each other completely.” Trust is beautiful, but business disputes have a way of testing even the strongest marriages. Get it in writing.
Tax Implications: The IRS Doesn’t Care About Your Feelings
Here’s where things get interesting. The IRS has special rules for married couples who own LLCs together.
Qualified Joint Venture Election
If you’re married, file jointly, and both materially participate in the business, you can elect to be treated as a Qualified Joint Venture instead of a partnership. This simplifies tax filing—you’ll each report your share of income on separate Schedule Cs.
Partnership Tax Status
Without the QJV election, your multi-member LLC gets taxed as a partnership, requiring Form 1065 and separate K-1s for each spouse. More paperwork, more complexity.
State-Specific Considerations
Different states have different rules about spouse-owned LLCs. Some states recognize “spousal LLCs” with special provisions, while others treat them like any other multi-member LLC.
Community Property States: If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, your state’s community property laws can complicate LLC ownership structures.
When I Recommend Joint Ownership
After 15 years in this business, here are the scenarios where I typically recommend including your spouse:
- Both spouses are actively involved in day-to-day operations
- You have clear, complementary roles that don’t overlap
- You’ve successfully managed money together for years
- You’re both risk-tolerant and understand the implications
- You have a solid Operating Agreement with exit strategies
When I Recommend Going Solo
I suggest single-member LLCs when:
- One spouse is the primary driver of the business
- You want maximum flexibility in decision-making
- Asset protection is a top priority
- Your spouse prefers being an employee rather than an owner
- You’re in a high-liability industry
The Amendment Option: You’re Not Locked In
Here’s something that might surprise you: you can change your mind later. LLC structures aren’t set in stone.
Want to add your spouse as a member? File an amendment with your state (usually costs $25-$100) and update your Operating Agreement.
Want to remove your spouse as a member? Same process in reverse.
I’ve helped couples restructure their LLCs multiple times as their businesses and relationships evolved. It’s more common than you might think.
Red Flags: When Spouse Co-ownership Is a Bad Idea
Based on my experience, avoid joint LLC ownership if:
- You frequently disagree about money
- One spouse is significantly more risk averse
- You’re already experiencing marriage troubles
- Your business involves high liability (think: contracting, food service, etc.)
- One spouse has significant personal debts
The Bottom Line: It’s About Your Specific Situation
After reviewing hundreds of spouse-owned LLCs, here’s my take: there’s no universal right answer. The best structure depends on your relationship dynamics, business goals, risk tolerance, and asset protection needs.
My recommendation? Start with an honest conversation about expectations, roles, and worst-case scenarios. If you both feel good about joint ownership after that discussion, go for it but get a solid Operating Agreement in place first.
If either of you has reservations, consider the single-member LLC with spouse employment structure. You can always restructure later as your business grows.
Next Steps: Getting Your LLC Formation Right
Ready to move forward? Here’s your action plan:
- Decide on your ownership structure based on the factors above
- Choose your formation state (Delaware isn’t always the answer, despite what you’ve heard)
- Draft your Operating Agreement before you file anything
- Consider tax elections and their implications
- File your Articles of Organization with the appropriate state
Need help with any of these steps? I’ve reviewed every major LLC formation service out there some are excellent, others are overpriced marketing machines. Check out my detailed service reviews to find the right fit for your budget and needs.
Remember: forming an LLC with your spouse isn’t a marriage test. It’s a business decision that should be made with your head, not just your heart.
Want more straight-talking LLC advice? Subscribe to my newsletter for weekly insights on business formation, tax strategies, and service provider reviews. No fluff, no upsells just the information you need to make smart decisions.