I have posted this before, but here is an excerpt from my book I wrote, "Tales of the Crazy" (on Amazon) about the hell the ex put me through. She had an LLC that failed miserably, and it did not shield me from massive debts and problems.
Forming an LLC does not shield you from financial burden and debt.
You need to protect your families and marital assets just in case there are large debts or bankruptcy has to be filed. This means one spouse should have all company bank accounts in their name, and the other one off of everything business related to protect all personal assets.
A couple of steps should be taken to protect the assets of your family.
1. Do NOT put your spouse's jointly owning the LLC. By keeping their name off this, they are shielded from potential problems if bankruptcy or frivolous lawsuits happens. They may be sued, but can't be held responsible and your joint personal assets are safe.
2. Get the home mortgage in the spouse's name that is not on the LLC. Joint marital assets are normally not collectible from judgments (except tax liens), but they will try if the spouse's name is on the mortgage and you will waste a lot of time and have a lot of attorney fees fighting this. If the spouses' LLC has an IRS or state tax debt and their name is on the joint mortgage, the tax lien on the home must be paid and you are screwed.
3. If there are any company credit cards, NEVER have any cards issued in your spouse's name. Have them all in the LLC holder's name and SSN. Don't get secondary cards issued in their name. If there is a bankruptcy the person may be liable for all charges made on the card in their name. It does not matter if you declare bankruptcy for the LLC; the spouse may be hit with the debt if they have credit cards for the LLC. Also, if there is a screw-up on the credit card company's part that will affect credit ratings, your family needs to be shielded from this.
If there is a debt on the business credit card that is not being paid and there is another card in your spouse's name, the credit card company WILL go after them. They probably won't win, but it will cost you at least $4K in attorney fees to fight it.
4. NEVER mix personal spending with the company credit cards. Doing this opens up personal assets to debt collection and court judgments from frivolous lawsuits.
5. The company needs to be set up in all business dealings to appear to the court that none of it is done by your spouse. Again, this is to protect your family's assets if some lowlife sues you and wins. Just remember, anyone can sue you for whatever they want and many people make a sleazy living from doing this. Their claim may be completely false, but you will still have to pay legal fees to fight it. Cover yourself as much as possible to eliminate potential problems.
6. Do not EVER file tax returns combining your personal taxes with business profit or losses. If something happens with the business falling behind on Federal or State taxes, both people on the combined return are responsible for the tax. The government can get a levy on the spouse's bank accounts and will withdraw everything. Whoever has the LLC in their name should always file separate, not joint with their spouse. CPA's may tell you that as a couple, losses from the business will give you a greater refund since they subtract income from the spouse, but this sets you up for both people being responsible for future tax and business debts. It doesn't matter if tax returns are filed individually later, what matters is if the returns were filed jointly while the business was in operation.