Yesterday, we took a look at the sole proprietorship as a type of home business. Today, guided by Taxgirl on Problogger, we will have a look at the general partnership.
General Partnership
This type of home business arrangement is known as a "pass through." This means that income and tax deductions go through the partnership and then to the partners. Each partner "owns" a certain percentage, and the income and deductions go to each partner in proper proportion. While federal taxes are not paid on partnership income, state taxes or local taxes may be.
Like the sole proprietorship, this is a very easy arrangement. And, like the sole proprietorship, there are some tax limitations according to your personal income taxes. You can have individual assets on the line for the business as well, making your personal assets liable to pay off business losses.
Consult a tax attorney or accountant to make sure that this is the right arrangement for you.
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