Partnership tax questions.?

I joined partnership with a friend to sell products online. From what I heard, what we make will be taxed, twice. 1st tax will be what our company make, then when we need to divide the paycheck it will be taxed again. If I knew this would happen I wouldn't join partnership with him.

Is there a better way to save tax? Or we can just set up 2 companies, He own T-shirts company, and I own shoe company. And then when it comes to income, it goes straight to our bank with only tax once. then I will write a check for him, or he will write a check for me. so we don't be taxed.

Please enlighten me.

5 Answers

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  • 1 decade ago
    Favorite Answer

    If this is a real partnership and you have a Federal Identification number that confirms you are a partnership, you will need to file a partnership income tax return, form 1065. There is no tax to pay with the return. The profit or loss from the partnership carries to the individual income tax returns via a K-1. There is o double taxation.

  • 1 decade ago

    There is no tax advantage to having a partnership. Your share of the income from the partnership goes onto your tax return, and his share onto his tax return.

    The partnership arrangement requires a third tax return, that of the partnership. The income and expenses are figured, and then split out to you and your friend. The partnership itself pays no tax.

    Rather than filing as a partnership, you can each file as self-employed, showing your individual income and expenses. Keep good records so you are not paying more than your share.

  • ?
    Lv 4
    4 years ago

    If the van is owned by the partnership and is hence a corporation asset, the sale of the van would be coated interior the partnership income and shown as income on sale. This partnership income is then allotted to each and each individual of the partnership in equivalent shares. The sale of shares (additionally universal as capital valuable properties/losses) would be continuously shown interior the guy tax returns. reliable luck.

  • Jss
    Lv 7
    1 decade ago
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  • Judy
    Lv 7
    1 decade ago

    Is this "company" incorporated? If it isn't, and the t-shirt company is his and the shoe company is yours, how are they one company anyway? Just keep them separate, and each of you report your own company's income and expenses on your own tax return.

    If your company isn't incorporated, the company doesn't pay tax, you and your partner do.

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