partnerships, how do you handle taxes

Discussion in 'Business Operations' started by swing blade, Nov 1, 2004.

  1. swing blade

    swing blade LawnSite Member
    Posts: 123

    Ok I am in a partnership and have been researching how the tax situation is handled. From what i have read it appears that the partnership operates as a "pass-through" taxation business; meaning that all income/losses are taxed at the individuals level and not that of the partnership itself. Is this correct? also what percentage of your income are you paying out in taxes?
  2. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    That depends on how the partnership is set up, a Inc., LLC., etc.

    The best advise to to hire a good Accountant/CPA, esp in a partnership, period.
  3. swing blade

    swing blade LawnSite Member
    Posts: 123

    well I was a sole proprietor for a few years, but for this season its a partnership formed as an llc
  4. Gautreaux's LNG

    Gautreaux's LNG LawnSite Senior Member
    Posts: 379

    Let him do your taxes! He'll cost you some but I guarantee you'll get more back!

    Good luck with the pertnership! took one a few years back cost me bunch of money to get rid of him!
  5. boonhogganbeck

    boonhogganbeck LawnSite Member
    Posts: 45

    Hi there, I am a CPA. OK, I'm going to assume a couple of things here. First, that you have a partnership agreement and second that you and your partner are each 50% partners. Whether you are a general partnership or an LLC, you are still just a partnership for tax purposes. For tax purposes an LLC is considered a disregarded entity. LLC is a legal form of business that can be a sole proprietorship, a corporation, or a partnership for tax purposes. If it is a partnership fill a form 1065 for the partnership. Each partner will receive a form K-1 stating his/her share of partnership income which is reported on schedule E of the partner's form 1040. If you don't have one already, find a CPA.

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