You used the words minority business partner. That means you file a partnership return, 1065. The partnership return will produce a K1 for each of you. You will enter his 20% ownership and your 80% ownership. You would use the Small business software.
You should look at the IRS business center. This will help you understand what you are doing and how to do it.
If the sales rep is an independent contractor, then the 1099 is correct. He would not be asking for a k1 unless he thought he owned part of the business. Clarify with him, if needed. Check your paperwork and minutes of your meeting to be sure. Keep all meeting minutes, those are required in a partnership. Be sure to follow the rules.
If a partnership, you will need to amend what you filed already as a sole proprietor.
Once your original return is accepted and the finances are settled, you can file an amended return.
- Save a copy of the original return before doing an amended return. See:
- Pay additional tax. Taxpayers who will owe more tax should file Form 1040-X and pay the tax as soon as possible to avoid penalties and interest. They should consider using IRS Direct Pay to pay any tax directly from a checking or savings account for free.
- Track amended return status online. Taxpayers can track the status of their amended tax return in English and Spanish using Where’s My Amended Return? Amended returns take up to 16 weeks to process and up to three weeks from the date of mailing to show up in the system.
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