What is Partnership?
Definition A partnership is a business owned by two or more people or entities that passes its income, deductions, and credits through to the partners rather than paying tax itself. It files Form 1065 and issues each partner a Schedule K-1 reporting their share. In a general partnership all partners manage the business and share personal liability, while a limited partnership has limited partners who invest but do not manage and enjoy liability protection; a multi-member LLC is taxed as a partnership by default.
Partnership taxation is flexible but complex, with special allocation and basis rules that make accurate K-1 reporting essential for both the entity and every partner's individual return.