How do I pay myself as a partner in a partnership?

A partnership is a company that two or more people own together. Each partner contributes to all elements of the company, and in return, they’re also personally responsible for all profits and losses.

Paying myself as a partner

If you’re a partner, you can pay yourself by taking a portion of the profits your business earns as a draw. This amount is reported as part of the Schedule K-1. You’ll need to pay taxes on your share of the profits and losses on your personal income tax returns. Most likely, you wouldn’t pay yourself as if you were an employee.

 

Curious about other business structures? Here’s a quick breakdown:

Business structure

How to pay yourself

Tax return

Sole proprietorship

Owner’s draw

Schedule C (Form 1040)

LLC with one member

Owner’s draw

Schedule C (Form 1040)

LLC with multiple members

Distributive share

Schedule K-1 (Form 1065)

Partnership

Distributive share

Schedule K-1 (Form 1065)

S corporation

Distributive share

Schedule K-1 (Form 1065)

C corporation

Dividends

Dividends income on Form 1040

Corporate Officer

Employee wages (if you perform more than minor services for the business)

Form W-2

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