All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 2
Registered: ‎09-06-2017

Possible Taxes Business Partnership

I am an employee of a privately owned business, registered in New York State, as a Corporation.

This business has not been profitable any of the past 3 years, but may now be on the path to becoming profitable by year-end 2018.

The owner of this business has extended an offer to me of equity partnership in this business.

Will I incur any tax obligation if I accept this offer, considering this business is not profitable? 

Tax Pro
Posts: 5,725
Registered: ‎02-23-2016

Re: Possible Taxes Business Partnership

Hi BR0808,

 

 

Welcome to the H&R Block community.

 

You will not owe taxes simply from becoming a partner in a company.  When you are a partner in a corporation or any other business you pay taxes on your share of the company's earnings, so with this company not earning any profit you will not owe any tax on company profits any time in the near future based on the information provided.

 

You'll pay taxes on your salary plus your share of the company's profit once it starts earning one.  For a C-Corporation the company's profit is usually distributed to shareholders (which owners usually are) and for other types of companies (partnership, S-Corp, etc.) you get a Schedule K-1 reporting your share of the profit among other things.  For a sole proprietorship and a single owner LLC the company's entire profit is your paycheck and you pay taxes on all of it.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)

Pioneer
Posts: 2
Registered: ‎09-06-2017

Re: Possible Taxes Business Partnership

Louis,

Thank you very much for your post in reply to my question regarding Possible Taxes Business Partnership.
Do you have any suggestions for where I might find a free template for a business partnership agreement?

 

Tax Pro
Posts: 5,725
Registered: ‎02-23-2016

Re: Possible Taxes Business Partnership

You're quite welcome.

 

There are several good options for creating them that you can find just by doing a google search.  The link below will take you to one that is supposed to be 100% free to create and print.

 

PARTNERSHIP AGREEMENT