What is a Partnership?

A partnership consists of two or more people carrying on a business together for profit. Unlike the sole proprietorship, the partnership is considered to be separate and distinct from the partners. Also, unlike the sole proprietorship, when forming a partnership, there are certain formalities that have to be adhered to. Some partnerships have formal written agreements between the partners, and others do not. It is probably wise to have terms between the partners laid out in a proper contractual agreement, however it is not required.

With regards to partnership taxes, the partnership is not required to file a separate return, and whatever portion of income the partners individually receive must be reported on their individual returns. This is called “pass-through taxation”. While the partnership does not have to file a separate return, it is required to file a document that is called “Annual Information Return”. In the state of Texas there are different types of Partnership formations such as, Limited Liability Partnerships (LLP), or Limited Partnerships (LP or Ltd.), that have their own unique features. For more information, call Garg & Associates today for a consultation.

The Spring business attorneys at Garg & Associates will meet and consult with each client individually, discuss their business strategies, and arrive at a solution that best suits their needs. If you need a skilled business attorney, you owe it to yourself and to your business to consult with attorneys who have your best interests as their top priority. The Garg & Associates attorneys proudly serve all of North Houston and are simple a phone call away.

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