6. Maintain other regulatory and tax requirements
As a general partnership, you won’t have to file an annual report each year, as LLCs and corporations often must. However, there are still regulatory steps you need to take to ensure business compliance.
If your partnership plans on hiring employees, you will likely be subject to payroll withholding tax at the local, state and federal levels. You also may need to meet annual workers’ compensation insurance obligations, which can include providing proof of insurance annually. Additionally, you may need to renew your business permits and licenses each year.
Check with the IRS, your state employment development department, the division of workers’ compensation and other employment-taxing authorities to determine what your obligations are.
Lastly, recall that you’ll need to pay taxes on any income earned as a partner. Partnerships are not subject to the corporate tax rate. Instead, all partners report proportional income on their personal tax returns. For instance, if partners share a 60/40 stake in the company and the firm must report $100,000 in income, Partner A would report $60,000, and Partner B would report $40,000. They would both do so on IRS Schedule K.