Legal Question in Business Law in New Jersey

Is a Partner in an LLC a ''W-2'' Employee?
My partner and I had a partnership that was later changed to a LLC. As part of a workman's comp case (my partner was injured at his other job), a forensic accountant for opposing council has defined my partner as a W-2 Employee of our company. If that is so, he claims most of the travel, office, vehicle and utility expenses should not have been paid by the business, but rather by my partner personally. According to him they are ''personal expenditures that a W-2 employee would have to pay out of his or her wages.'' If he is able to convince the judge of that, then the company's income will look higher. That income will be attributed to my partner, and he will then be deemed guilty of failing to report income, thus reducing or terminating his benefits. While I find his statement that those expenses are personal in nature, that is not my question. My question is this: Since my partner has received no wages from the LLC to date, and since the LLC has filed 1065's and the associated K-1's is there any way that he can be considered a W-2 employee. Can he be a W-2 employee and a prtner at the same time? If not, is there a legal definition somewhere that makes that clear?

Asked on 9/20/07, 10:07 am

Glenn Brown Real World Law, P.C.

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Re: Is a Partner in an LLC a ''W-2'' Employee?

Sit down with your attorney.

LLC's generally do not have "partners".

A member or manager of a LLC can receive a W-2.

Personal expenses are not deductible to a LLC.

Good luck to you.

Answered on 9/20/07, 7:08 pm

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