Understanding Partnerships
What Is a Partnership?
A partnership is a business arrangement in which two or more persons carry on a business together and generally share profits, losses, and management responsibilities according to their partnership agreement.
- Owned by two or more partners.
- Partners contribute money, property, services, or skills.
- Profits and losses are allocated according to the partnership agreement.
- The partnership generally files an informational tax return.
Note
Although partnerships generally file tax returns, the income itself is typically taxed at the partner level.
Summary
A partnership combines resources from multiple owners while generally passing tax items through to the partners.