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Posted by turrbo [Email] (#8) [Profile/Gallery] (more from turrbo) on Sat, 28 Mar 2009 19:17:49 Share Post by Email
In Reply to: Payroll/Taxation question, Dave, Sat, 28 Mar 2009 18:26:56
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The partnership is a pass-through entity and doesn't pay taxes. The partnership will file a 1065, and you will get a K1 to attach to your tax return. You'll pay the taxes or deduct losses with your personal return. You'll also need to pay self employment taxes, which are essentially double SS and Medicare since you won't have an employer to match.

Keep in mind that in a general partnership you will share personal liability. So creditors can go after your personal assets if something were to go wrong with the partnership. I would recommend setting up an LLC for that season. You still will have the pass-through tax features, but without the personal liability.

You can technically do whatever you want for payments, but I would set up a simple payroll just for record keeping purposes. And yes, you will pay taxes on whatever income the partnership or LLC makes.

Disclaimer: Yes I am an accountant but this is just some friendly advice. Not liable for anything that may or may not occur :)

Good luck! 
_______________________________________
¯_(ツ)_/¯

-turrbo

My babies:

1995 9000 Super CS
2001 9-3 SE Convertible (gone but still in the family)
2004 9-3 Aero Convertible (sold but in good hands)
2007 9-3 Aero SS
2008 9-3 Aero Convertible
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