Starting a new business with a partner

[capostatus]

Before forming a LLC etc when starting a first time small business, is it better to have someone as your partner or employee for taxes?

If I’m getting paid from a client, and then giving their portion to my partner/employee, would that money count as my personal income in addition to theirs?

What would be the best way to handle this? Thanks!

[tagteam]

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@capostatus wrote:

Before forming a LLC etc when starting a first time small business, is it better to have someone as your partner or employee for taxes?

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That depends. Have they made a capital contribution and listed as such in the Articles of Organization?

If so, they are a partner, regardless, and partners cannot also be employees of the partnership.