It is a 2 member owner business 50/50, how do we file?

[TaxGuyBill]

I hope you are asking about 2016, because if you are just now asking about 2015 and you need to file a Partnership return, you already owe about $1000 in late penalties.

[priddylacey]

Yes  2016. We haven't done any legal stuff yet we are trying to figure what steps to take right now. Any help and tips or advise will be much appreciated

[TaxGuyBill]

Great, you are doing it right, by asking about things BEFORE the business gets too far.  Most people wait way too long, and things can be difficult or impossible to correct 'after-the-fact'.

I suggest going to a tax professional for a "consultation" to learn how to set things up and to analyze what may be best for your SPECIFIC situation for BOTH Partners.  Perhaps a Partnership is best, but perhaps some other form (such as an S-corporation) could be better.  Make sure the tax professional is experiences with Partnership AND Corporation returns.  If it is decided to be a Partnership, you should write up a "Partnership Agreement" to clarify as much as possible between the two partners, as well as other things.  If the business is simple, the tax professional may be able to give you tips for what to do.  If it is more complex, it would be best to go to a business lawyer for help for that.

I also suggest having the tax professional do the business return for AT LEAST the first year.  As Hal_Al mentioned, the Partnership return (or Corporation) is a completely separate tax return, and then the K-1s (and W-2s if it is a Corporation) from that go on your personal tax return.
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[Hal_Al · Accepted solution]

It depends on who the two owners are.

A married couple will split the income and expenses and each file a schedule C as part (attachment to) of their Married filing Jointly (MFJ) return (regular form 1040).

Any other parties will file a Business partnership return (form 1065). The partnership will pay no tax but will issue form K-1 to each partner so they can each file schedule C as part of their regular 1040.

If you have an S corp or LLC, it works the same. The business files a business return and issues K-1 to to the owners or members.

You will need TurboTax (TT) Business software to prepare the partnership  (or LLC or S corp) return and TT Home & Business to prepare your personal return, including schedule C and schedule SE to pay your self employment (social security & medicare) tax.

[SweetieJean]

If a married couple, is it an LLC and do you live in a Community Property State?

[priddylacey]

Not married and I live in Texas