Husband is owner but Spouse does work. IANAL

[Strongsilence-CPA]

Facts: Husband is legal owner of SMLLC. This SMLLC was converted to a California corporation in 2022 and he remained the owner. But the Spouse does all the work (consulting) and manages all the operations, legal, etc. We intend to elect S Corporation status in 2023. I don't think he can be the legal owner while she does the work. As an S, wouldn't wages be required to be paid to him, not her?

IANAL but this entity and ownership doesn't seem proper and might even jeopardize S election.

[qbteachmt]

"But the Spouse does all the work (consulting) and manages all the operations, legal, etc."

Has she been paid through payroll?

"We intend to elect S Corporation status in 2023. I don't think he can be the legal owner while she does the work."

She would still be paid through payroll. He only gets paid for the services he provides, and otherwise is the sole shareholder.

[Strongsilence-CPA]

Thanks. The S Corp will start 1/1/2023 so she will get paid wages in 2023.

[qbteachmt]

Why isn't she being paid now, for the work being done now? That is how women (typically) get screwed out of Social Security credits, for example. If he's not doing the work, and she is doing the work, why isn't this paid work for her? Why is he reporting it at all? She should be her own Sched C, instead. If he created the SMLLC but isn't even working for it, then who is?