Taxation:

• A pass through entity, does not pay its own income tax
• Partnership must file an informational tax return IRS Form 1065
• Net income or loss is passed through to the partners and is reported on individual tax returns (Schedule E – Form 1040)
• Must apply for a FEIN
• Must withhold income taxes and FICA from employees’ wages
• Must pay FUTA and share of social security for its employees
• Partners themselves may have to pay self-employment taxes and make estimated tax payments

Written Partnership Agreement

• Strongly recommended but not required by law
• Provides for the events of termination of each partnership
• Provides for amount and type of capital contributions and interest in profits, losses of each partner
• Sets forth the management structure and partner withdrawal provisions