# General partnership

> Two or more owners, no entity formed, every partner liable — Form 1065 and a K-1 for each partner.

Source: https://lopifi.com/learn/business-entity-types-explained/general-partnership
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**What is a general partnership and how is it taxed?** Two or more owners, no entity formed, every partner liable — Form 1065 and a K-1 for each partner.

A [general partnership](https://lopifi.com/md/glossary/general-partnership) is two or more people in business together without forming anything else. Like a sole proprietorship it can exist without paperwork. Each partner is personally liable for the partnership's debts, including the ones another partner ran up.

For tax it is a [pass-through entity](https://lopifi.com/md/glossary/pass-through-entity). The partnership files Form 1065, an [information return](https://lopifi.com/md/glossary/information-return), and gives each partner a [Schedule K-1](https://lopifi.com/md/glossary/schedule-k-1) with their share. It pays no income tax itself. Each partner pays income tax on their share, and a general partner owes [self-employment tax](https://lopifi.com/md/glossary/self-employment-tax) on it.

> “Generally, a partnership doesn’t pay tax on its income but passes through any profits or losses to its partners.”

— [IRS Pub. 541 (12/2025), Partnerships](https://www.irs.gov/publications/p541), Publication 541, Partnerships

> “there shall be excluded the distributive share of any item of income or loss of a limited partner, as such, other than guaranteed payments described in section 707(c) to that partner for services actually rendered to or on behalf of the partnership”

— [26 U.S.C. §1402(a), (a)(13)](https://www.law.cornell.edu/uscode/text/26/1402), Net earnings from self-employment include a partner's distributive share — except a limited partner's

| Who | Form | Due |
| --- | --- | --- |
| The partnership | Form 1065 | 15th day of the 3rd month after year end — March 15 for a calendar year |
| Each partner, from the partnership | Schedule K-1 (Form 1065) | With the return |
| Each partner | Form 1040 with Schedule SE | April 15 for a calendar year |

What a partnership and its partners file.

> “Generally, a domestic partnership must file Form 1065 by the 15th day of the 3rd month following the date its tax year ended as shown at the top of Form 1065. For calendar-year partnerships, the due date is March 15.”

— [Instructions for Form 1065 (2025), When To File](https://www.irs.gov/instructions/i1065), Form 1065 — who files and when

**General partnership**
- Pro: No state filing to exist.
- Pro: One layer of tax, passed through.
- Con: Every partner is personally liable, for every partner's business debts.
- Con: Can exist by accident, with no agreement on who owns what.
- Con: Can't issue stock or options.
- Best for: Very little. Most co-founders who would be one should form an LLC instead.

A general partnership.

**Scenario — The partnership nobody formed.** Two friends sell refurbished drills at weekend markets, split the cash and never form anything. They are a general partnership. If one signs a lease for a stall, both are on the hook for it. If they turn out to be making real money, they owe a Form 1065 for the year whether or not anyone told them.

## Where this page's rules come from

- [IRS Pub. 541 (12/2025), Partnerships](https://www.irs.gov/publications/p541) — Publication 541, Partnerships (irs)
- [IRS, Partnerships](https://www.irs.gov/businesses/partnerships) — Partnerships — Form 1065 and a Schedule K-1 for each partner (irs)
- [Instructions for Form 1065 (2025), When To File](https://www.irs.gov/instructions/i1065) — Form 1065 — who files and when (irs)
- [26 U.S.C. §1402(a), (a)(13)](https://www.law.cornell.edu/uscode/text/26/1402) — Net earnings from self-employment include a partner's distributive share — except a limited partner's (statute)
- [Form 1065 (2025)](https://www.irs.gov/pub/irs-pdf/f1065.pdf) (PDF) — Form 1065, U.S. Return of Partnership Income (PDF) (form)
- [Wikipedia, “Partnership”](https://en.wikipedia.org/wiki/Partnership) — Partnership (reference)

- **Track:** [Entity types](https://lopifi.com/md/learn/entities)
- **Part of:** [The entity menu](https://lopifi.com/md/learn/business-entity-types-explained) — 4 min
- **Terms taught:** [General partnership](https://lopifi.com/md/glossary/general-partnership), [Pass-through entity](https://lopifi.com/md/glossary/pass-through-entity), [Schedule K-1](https://lopifi.com/md/glossary/schedule-k-1)
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