A Partnership is a legal relationship formed by the agreement between two or more individuals to carry on a business as co-owners. There is no requirement to register a partnership with a state, but most partnerships use a partnership agreement to clarify the relationship. The partners are taxed from the income (or loss) of the partnership on their personal income tax return, and the partnership files an information return (Form 1065) with the IRS.
Multiple-member limited liability companies (LLCs) file income taxes as a partnership.
In most U.S. states, registering the partnership with the state secretary of state is optional.
Types of Partnerships
Types of partnerships include:
A partnership should have a partnership agreement signed by all partners at the time the partnership is formed.