General Partnership.
Two or more people, no paperwork filed.
A partnership forms automatically when 2+ people do business together without filing anything. Every partner is personally liable for what every other partner does. Rarely the right choice.
How the IRS sees this entity.
Pass-through (K-1s)
Profit lands on the owner's personal return. The entity itself pays no federal income tax — the tax knife only cuts once, at personal rates.
What you owe, and when.
Forming the entity is the easy part. Here's the recurring paperwork that keeps it alive.
What this trades, and for what.
- No filing fees
- Pass-through taxation
- Simple profit-sharing
- Each partner is liable for all partner debts
- Every partner can bind the partnership
- Disagreements end businesses
- No separation between you and the entity
The founders this fits.
- Spouses running a small cash business together.
- Short-lived project collaborations.
Your partner has questionable judgement or deep pockets you'd rather not share.
Where to actually file.
- Your home state
Form where the partners live or where the business actually operates.
When to move on.
-
Triggered when: Partners want a liability shield.
Convert to a multi-member LLC. Same pass-through taxation, real separation.
Related articles.
Still not sure this is the right fit?
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