How does starting an LLC affect....

2 Replies

Good Afternoon everyone,

This question is from my mom, she is 58 and owns several homes in Colorado, Arizona, and New Hampshire. She was considering applying for an LLC so that her and I could manage these properties together and begin adding to her portfolio. Another family member mentioned that if she started an LLC at her age she wouldn't be able to withdraw Social Security.

Is this statement true/are there negative repercussions for starting an LLC during this time?

Thanks for your help!

Huh?  While entertaining, the statement makes no sense. The family member may have it confused with paying in for SSI. Here's the download on that:

"LLC members are not employees so no contributions to the Social Security and Medicare systems are withheld from their paychecks. Instead, most LLC owners are required to pay these taxes -- called "self-employment taxes" when paid by a business owner -- directly to the IRS."

But being "self-employed" or a managing partner of an LLC have no bearing on SSI benefits. The amount of those benefits has to do with how much you've earned over a lifetime and several other factors.

So, rock on - but don't hire that family member to keep the books!

@Patricia Steiner   Spot on!

@Sam Huze Sounds like your mom has a decent business going there.  I recommend you hire competent advisers, particularly a CPA and an attorney.  In the long run, those people will make you much more than their costs.  And, it allows you to stop listening to the advice of crazy relatives that have no idea what they are talking about!