Tax Prep for Partnerships

When it comes to taxes, partnerships represent a set of special and often complicated cases.

A partnership is required to file an annual return reporting the income, deductions, gains, and losses from its operation.  Instead of paying income tax, however, the partnership "passes through" the profits and losses to its partners.  It is then the responsibility of each partner to incude his or her share of the partnership's income or loss on their personal tax return.

Whether the individuals in a partnership are laible for income tax, self‐employment tax, or estimated tax may take the judgment of an accountant or CPA experienced in tax preparation for partnerships.

Partnership Taxes

Partnership filing requirements can be complex, and generally include the following:

• Annual Income Return (for the partnership)
• Employment Taxes (for the partnership)
• Excise Taxes (taxes paid by the partnership on specific goods and activitiies)
• Income Tax (for each partner in the partnership)
• Self‐Employment Tax (for each partner in the partnership)
• Estimated Tax (for each partner in the partnership)
• Partnerships must supply copies of Schedule K‐1 (form 1065) annually to all partners
• Partners are not employees and should not be issued W2 forms at the end of the year

Types of Business Partnerships

At Albanese Sinchar Smith and Co., we are experienced in serving the tax reporting needs of all three general types of partnerships.

• General Partnerships (where the profits, liability, and mangement of the company are equally distributed among partners)
• Limited Partnerships (where partners enjoy limited liability and responsbility, often related to their investgment percentage)
• Joint Ventures (where the relationship may be limited to a single project or for a limited period of time)

At Albanese Sinchar Smith & Co., our expertise goes beyond taxes.  We are experienced at Partnership formation and in dealing with the changes and challenges that your partnership may face over the years.  Visit our Partnership Formation page to learn more.

Call us today at 724.863.4261 or fill out our contact form to learn more about our partnership accounting and bookkeeping services.