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posted Jun 3, 2019 11:31:04 AM

1065 or Schedule C for two owners

I started a business with my friend beginning of last year. We did not create a legal partnership. We had income and expenses. Are we required to file 1065 or just split everything in half and report it on schedule C?

We created LLC by the end of 2017. Can we file 1065 for LLC even though we did not created LLC until end and revenues and expenses were paid through our personal account. We did not file any form with IRS to treat our LLC as corporation.

Should we file schedule C and report half on each partner?

Should we file 1065 even though Legal partnership forms were not filed with state. We would need t gen an EIN number to file 1065?

Can we report all income and expenses and just file 1065 even though it was not opened until November of 2017 and we operated business all year?


Thanks !!

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1 Replies
Level 13
Jun 3, 2019 11:31:05 AM

Responses to your questions:

  1. You need to split the income / expenses between the two of you up until the time you formally set up the partnership in the state.  This means you will complete a Sch C and a form 1065.
  2. You need to obtain an EIN for the LLC before you can complete the form 1065.  Check the following link for some guidance https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers
  3. The LLC return, form 1065, was due March 15th so it is technically late.
  4. If you are wanting to prepare the form 1065 your self, you will need to use TT Business and the link to this software is attached https://turbotax.intuit.com/small-business-taxes/
  5. There are some nuances in how partnerships work so I would recommend doing some research on this or invest in some professional advice / assistance for you initial year to get you started on the right track.