This is one of the most basic questions that entrepreneurs have when they start a partnership venture for the first time. There are a few questions that come with it, like “Does a Partnership need an EIN?” Those are also important to consider, because knowing the answers to them means being prepared to meet all of your tax payments on time and without over or underpaying.
Pass Through Profit
When it comes to calculating the taxes for a partnership, the partnership is not considered separate from its partners. What that means is that each partner will need to calculate the amount of money they have received from the partnership each year, and then they will need to make tax payments to cover the tax liability from the business. This means:
Getting an EIN for a Partnership
You do need an EIN for a partnership even though each partner will be individually liable for the payment of a portion of the taxes. The EIN will only apply to the partnership as it currently stands though. If you wind up having a partner leave, you will need to go through the process of dissolving a business partnership. After that, you are free to form a new one with a new EIN, but you will have to go through the filing process again. Luckily, partnerships are fairly fast to form and to dissolve under the laws of most states.
To start the process of obtaining an EIN for partnership businesses, apply for a tax ID by filling out the form here on GovDocFiling. After that paperwork is processed, you will receive your new tax ID information promptly.