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If my business (partnership) pays taxes, do I pay income tax

 
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amother




OP
 

Post  Thu, Apr 11 2019, 8:28 pm
If my business (a partnership with another person) pays taxes, do I pay any additional income taxes on the money I take home?
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amother




Wine
 

Post  Thu, Apr 11 2019, 8:34 pm
amother [ OP ] wrote:
If my business (a partnership with another person) pays taxes, do I pay any additional income taxes on the money I take home?


I would assume so, especially if it's a paycheck. Your income is an expense for the business, so the business's profit doesn't include that money, and hence is not taxable commercially.

Though there are many ways to structure a business, so an accountant would be the best person to ask.
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amother




Amber
 

Post  Thu, Apr 11 2019, 8:36 pm
Partnerships don't pay taxes. You as a partner pay tax on your share of the partnerships taxable income.

Once the cash is distributed to you - its not taxed again. (and you would have received a distribution so that you can pay those taxes).
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amother




Wheat
 

Post  Thu, Apr 11 2019, 9:40 pm
amother [ Wine ] wrote:
I would assume so, especially if it's a paycheck. Your income is an expense for the business, so the business's profit doesn't include that money, and hence is not taxable commercially.

Though there are many ways to structure a business, so an accountant would be the best person to ask.


This is only true if your business is a corporation. Which is why most companies nowadays don't incorporate.

Most businesses are "flow through" entities, and the money is taxed only once.
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amother




Lilac
 

Post  Thu, Apr 11 2019, 9:52 pm
What taxes is the partnership paying? Also, what is the business type?

A regular partnership (and LLC taxed as a partnership) would be a pass through entity. Profits would be passed through to the individual partners and each partner would pay income taxes on their portion of the profits. You should receive a K-1 from the partnership in this scenario. A k-1 shows your portion of net income. You should be making estimated payments to the irs during the year and you would be receiving money from the business during the year. The business would not be paying any federal income taxes. That's on you. I'm not sure, but probably also self-employment taxes, which are a doozy (about 15%).

An s-corp ( and an LLC taxed as an s-corp) is different. The owners usually are paid as employees with taxes withheld from their paychecks. The business pays employment taxes. Profits after that (ie, after taking off officer wages) are passed through to the owners and taxed on their personal 1040- but only as income (no self employment taxes). You would receive a W-2 from the company showing your income and taxes withheld and a K-1 showing your share of profit(or loss). If you took money out (your share of the profit), you are generally not taxed on this (can get complicated).

Separately, state and city may have their own taxes.

Do you have someone doing the taxes for the business? This is really a question to ask them.
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amother




Oak
 

Post  Thu, Apr 11 2019, 10:15 pm
We have llc. We charge sales tax on all sales and service. So if we come for $75 service call with no sale of goods there is still tax on the $75 we give to govt. then we pay income tax on income. Because it’s a single employee/owner llc all profit is taxed as income.
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