You will have to get an EIN (Employer Identification Number) for the partnership. A partnership has to have an EIN, even if it doesn't have any employees. The EIN is the tax ID number for the partnership. You can get an EIN online on the IRS web site, but you should consult a tax professional first to make sure that you give the correct information when you apply for the EIN.
You should have Etsy change the shop to be in the name of the partnership. Give Etsy the EIN of the partnership as the tax ID for the shop.
The Form 1065 partnership tax return has to be filed after the end of the year, but before you and your partners file your personal Form 1040 tax returns. The Schedule K-1 comes from the 1065 return, and you need the K-1 in order to do your personal tax return. The filing deadline for Form 1065 is March 15, not April 15, and the penalty for late filing is high. If you go to a tax professional, you can bring all the information for the 1065 and your personal 1040, and the tax pro can do them both. But go early enough to meet the March 15 deadline for the 1065.
The form that you get for partnership income is a Schedule K-1, not Schedule K. There is a Schedule K (actually several of them), but Schedule K is for other things. Don't cause confusion by talking about the wrong schedule.
