Creating a formal partnership is a huge step in the process of owning a business. A partnership works together to make sure their business is the best it can be, contributing time, money, and effort into making their dream work.
There are many things that you can do as a partnership, and file your taxes is one of them. A partnership is required to an file annual information return to report the income, losses, deductions, and gains from its business but is not required to pay an income tax. Any profits or losses are passed through each of the partners. Partners are not employees, and therefore should not fill out Form W-2. They do, however, need to have a Schedule K-1 (Form 1065) filed by the date required on the form.
Here’s what you need to know about partnerships and how we can help you with them.
As a partnership:
You must file for the annual return of income, which Form 1065 does for you.
You are also liable for employment taxes, including Social Security, Medicare, income tax withholding, federal unemployment tax and depositing employment taxes. For these, you will need to file two to three different forms depending on the area that you work in.
If you qualify to pay an excise tax, we will walk you through the process of filing those forms.
As an individual in a partnership:
You may be liable for income tax. If so, you will need to file Form 1040 as well as the supplemental income and loss forms.
Since partners in a partnership can be self-employed, they might be required to pay tax on that. You will need to file Form 1040 as well as supplemental Schedule SE. Partners may also be liable for estimated tax, which can be filed through Form 1040-SE.
Owning or controlling a business is a lot of work, and there are a lot of forms required in order to operate your business as smoothly as possible. At Selby Tax & Accounting Services, we are here to help you sort through the paperwork and help you properly get through it so you can start and manage your business with ease.
We can set up an appointment with you to sit down and talk about the best filing options for your business. Call us at 616-613-3222 to set up a time to meet!