The safest option to avoid receiving an underpayment penalty is for each partner to pay 100% of the previous year's taxes in Estimated Tax Payments.
Partnerships typically pay either through profit sharing or guaranteed payments and report the earnings on a K-1 at the end of the year.
The partnership agreement should be used to specify each partner's share of profits or losses in the business. Taxes are paid on the partner's 1040 Individual Income Tax Return for the partner's share of profits. All partners must agree on the profit-sharing percentages.
Guaranteed payments are expenses to the business but are not considered W-2 income, so income tax withholdings can not be withheld from the payments. At the end of the year, any remaining profits would be split based on the percentage outlined in the partnership agreement, and the guaranteed and remaining profit payments would be reported on the K-1.
For more information on what to pay in estimated tax payments, see the link below:
Estimated Tax Payments
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