Thanks so much for the excellent comments and resources.
1) makes perfect sense. ty for confirming
2) ty for information on K-1s. I'll do some research on how to properly report in our bookkeeping software.
3) When you say making partners W2 employees could save on self-employment taxes, could you expound on that a little bit? My understanding is that if roughly a third of our gross income goes to taxes as self-employed partners, employees would pay roughly half that (a sixth deducted from checks) and the employer (us) would pay the other half (+unemployment and other taxes/fees). Is that accurate? Is the total sum of taxes paid from income the same, just divided among employee and business? If so, per questions 1 & 2 above, as self-employed partners, we can reduce that burden by deducting our personal investments and home office etc. As employees, I'm assuming the business would be the only entity making those deductions. Are there other benefits to employment that I'm not thinking of?
4) It seems like each state can make establishing a native business really easy (when I lived in MN it was super easy and cheap, like $100 to register and then free to renew each year) or really hard (NY seemed to cost several thousand a year just to register or renew). Tennessee is somewhere in the middle—registration/renewal is $300/yr, but there's this "excise tax" that I don't totally understand... Since both partners live in different states, one or the other will need to accept income from a foreign entity right? So is there any benefit to just making the business a foreign entity in a state that makes it easy (I hear Delaware is a popular choice)? Or is that misguided?
