Forming LLC or S-Corp during a divorce

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Forming LLC or S-Corp during a divorce

Unread postby whatever_works » Mon Mar 06, 2017 6:00 pm

Apologies if this should be in the "before and during" forum or another. My divorce is not final yet. 2.5 years and still going. State is MA. Two kids. I lost my job last month and I am looking at my options next. My wife lost her job about a year ago and she has been searching since. There are plenty of jobs for both of us but since she is taking her time finding one, I am in no rush to get one.

I'm a computer programmer and I've been considering finding corp-to-corp assignments going forward. So far I've been a W-2 employee at a large company so taxes, assets and child support were all easy to do. But if I form an LLC or an S-Corp for the purpose of having hourly wages going to the corp and start drawing a comparable salary from the corp, would that make my wife go after the S-Corp's earnings during the finalization of the divorce?

Would it be advisable to hold off until the divorce is final and find a W-2 employment instead?

Thanks for any advice. I've looked through the forum archives but didn't find anything relevant. I emailed this question to my attorney last week but have not heard back from him yet.
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Re: Forming LLC or S-Corp during a divorce

Unread postby lionel2013 » Tue Mar 07, 2017 1:40 pm

Would it be advisable to hold off until the divorce is final and find a W-2 employment instead?


Definitely, absolutely, most certainly, yes.

Otherwise you are just going to make your divorce more complicated and lengthy.
Whenever you think divorce is bad, remember there are worse things than divorce.
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Re: Forming LLC or S-Corp during a divorce

Unread postby whatever_works » Tue Mar 07, 2017 7:57 pm

Thanks for your advice. I will stick with W2 employment.
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Re: Forming LLC or S-Corp during a divorce

Unread postby truemort » Mon Mar 20, 2017 10:28 am

whatever_works wrote:Apologies if this should be in the "before and during" forum or another. My divorce is not final yet. 2.5 years and still going. State is MA. Two kids. I lost my job last month and I am looking at my options next. My wife lost her job about a year ago and she has been searching since. There are plenty of jobs for both of us but since she is taking her time finding one, I am in no rush to get one.

I'm a computer programmer and I've been considering finding corp-to-corp assignments going forward. So far I've been a W-2 employee at a large company so taxes, assets and child support were all easy to do. But if I form an LLC or an S-Corp for the purpose of having hourly wages going to the corp and start drawing a comparable salary from the corp, would that make my wife go after the S-Corp's earnings during the finalization of the divorce?

Would it be advisable to hold off until the divorce is final and find a W-2 employment instead?

Thanks for any advice. I've looked through the forum archives but didn't find anything relevant. I emailed this question to my attorney last week but have not heard back from him yet.



Although I didnt form my LLC during the divorce (it as formed yrs ago during the marraige at happier times), it is now making my life a living hell during the divorce process.

I am also a computer programmer and takes assignments corp to corp on hourly rate...that was the only purpose of the LLC.....

stbx is a "co-owner" of this LLC.......

as you could imagine..it has complicated things to no end......please wait!!!!
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Re: Forming LLC or S-Corp during a divorce

Unread postby whatever_works » Mon Mar 20, 2017 12:59 pm

Thanks so much for taking the time to reply. I will stay away from an S-Corp for now.
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Re: Forming LLC or S-Corp during a divorce

Unread postby JimRockford » Tue Mar 21, 2017 2:06 am

I'm sure you can find staffing agencies that will either do corp to corp or put you on W2 with only deductions for federal state tax and social security, they will also pay workmen's comp on your behalf. Obviously, this costs more and impacts the better deductions that would be allowed as corp to corp. However, I think in your case, this is probably your best option.
Deciding to go forward with a divorce is kind of like joining a brotherhood. However, it is a brotherhood that you really don't want to join.
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Re: Forming LLC or S-Corp during a divorce

Unread postby whatever_works » Tue Mar 21, 2017 12:47 pm

JimRockford wrote:I'm sure you can find staffing agencies that will either do corp to corp or put you on W2 with only deductions for federal state tax and social security, they will also pay workmen's comp on your behalf. Obviously, this costs more and impacts the better deductions that would be allowed as corp to corp. However, I think in your case, this is probably your best option.


Thanks Jim. If the choice is between W2 with a staffing agency and not getting the job, I would take the first option. But from experience the difference is rate is quite a bit. But I hear the advice loud and clear.
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Re: Forming LLC or S-Corp during a divorce

Unread postby JimRockford » Tue Mar 21, 2017 12:57 pm

I work for an old line tech company and we hire through agencies that bring people in as either W2 or corp to corp all the time, we don't care which. we just don't do 1099. One thing I have noticed is that many of the first time contractors that we have brought in have been told by the staffing company that they have to go W2 whether or not they have a corp. This is not the case, and I suspect that it is overzealous recruiters trying to increase the staffing firms margin, and their own commission..
Deciding to go forward with a divorce is kind of like joining a brotherhood. However, it is a brotherhood that you really don't want to join.
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Re: Forming LLC or S-Corp during a divorce

Unread postby whatever_works » Tue Mar 21, 2017 2:20 pm

JimRockford wrote:This is not the case, and I suspect that it is overzealous recruiters trying to increase the staffing firms margin, and their own commission..


Yes, I've been fed that line too. But I have a close friend who does corp-to-corp contracting. And he tells me that it is all about the gig. He says everything is negotiable if the recruiter wants you in the job. As long as they are talking hypothetical positions, they stand firm. But if an actual gig is on the line and you are the best candidate, all rules can and will be bent to your whims. :-)
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