Schedule C - non-working owner - passive? SE?

[Gretel]

Client started property management company (SMLLC) run by a manager (20 employees). His only involvement is meeting with the managers, maybe 10 hours a month. My client/owner is legally the managing member for the LLC and the final decision maker on substantial issues, he also is personally liable for the debts of the company.

I am not sure about if this business activity is passive but with this involvement he probably is subject to SE.

Once the company is more established he will not have much involvement any longer, still be liable for debts. Will this change anything? If so, what is the breaking point?

[spanel]

Client started property management company (SMLLC) run by a manager (20 employees). His only involvement is meeting with the managers, maybe 10 hours a month. My client/owner is legally the managing member for the LLC and the final decision maker on substantial issues, he also is personally liable for the debts of the company.

I am not sure about if this business activity is passive but with this involvement he probably is subject to SE.

Once the company is more established he will not have much involvement any longer, still be liable for debts. Will this change anything? If so, what is the breaking point?

I dont see how either way it wont be taxable with SE taxes....

How about an S Corp election? Payroll with the small amount of work and then the rest will be non SE taxable.

Problem Solved.

Chris