Accounting Articles > LLCs, LLPs, and Partnerships:

Form 1065 and individual taxes

Form 1065 is the Federal Partnership Return. Regular partnerships, along with Limited Liability Companies and Limited Liability Partnerships are reported on this return.

From a taxation standpoint, a partnership is nothing more than than two or more sole proprietorships put together. As such, the partnership return is nothing more than a conduit of taxable income or loss to your personal return via Schedule K-1.

The biggest problem generally caused by partnerships is the payroll taxes that they create. Social Security and Medicare taxes are currently 15.3% of a partner's income. But here's the problem. You will pay that 15.3% not only on the guaranteed payments coming out of the partnership, but also on your portion of the partnership profits, whether you have received the money, or not.

If you are asking this question in the first place, then its time for a new accountant. Call our offices today. The Special Accounting Packages section of this website may have a special offer which will benefit you. If you have a new business, an audit, need returns prepared, or simply want a second opinion, we can help. As highly recommended CPA's and Enrolled Agents practicing in the Chicagoland Area, we have the experience necessary to help your company. Simply call or e-mail one of our specialists today.