Today TaxMama hears from Simon in California, who tells us. “I have two friends operating a home-based business out of one of their homes. This is a part time operation. They agreed to share expenses and profits. Rather than file a 1065 can they just file individual Schedule C’s? This does not appear to be an official partnership.”
If the business isn’t really generating much in the way of gross income, it may be easier to do a spreadsheet and split it. Treat it as a joint venture until it starts to generate a little income.
But, did the business file a DBA? What did it say on the DBA publication notice – who is running the business? Two individuals, or a partnership?
Did they open a bank account for the business? What does it say on the signature card?
Is this a partnership or two guys sharing a bank account? Personally, I’d follow the paper trail they’ve left.
For the current year, if they are still running the business, suggest that they set it all up properly if they want to take it seriously. This year, perhaps it’s time to make the entity decision.
The fact that they are only running it part-time, around a job, does not mean it’s not making some serious money.
And remember, you can find answers to all kinds of questions about new businesses and other tax issues, free. Where? Where else? At TaxMama.com.
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