Two or more persons, who share profits and losses in accordance with their partnership agreement, with unlimited joint liability for debts of the partnership. Though less expensive to form than a Corporation, there is no continuous lifespan as the loss of one partner may dissolve the partnership. Profits and losses are reported on IRS Form 1065, with net income flowing to the individual’s tax return (Form1040), subject to the self-employment tax. In D.C., the fees would consist of $165 to file the Statement of Qualification with the Department of Consumer & Regulatory Affairs and $220 for the biennial registration.
Tax Tip – To limit credit exposure to the partnership assets, one should form a Limited Liability Partnership (LLP) to protect personal assets as a judgment against a partnership may not be satisfied from a partner’s assets unless there is also a judgment against the partner.