What is a Partnership?

16 Apr 2020

What does the Internal Revenue Service define as a partnership? When you think about a partnership, you usually think about two or more people working together. That is exactly how the Internal Revenue Service sees it as well. A partnership, per the definition of the IRS, is a relationship that you enter into with two or more people. The goal for this relationship is to try and execute on a particular trade or a type of business.

The partnership is a joint effort between everyone involved. All of the folks that are part of the partnership will contribute resources, skill, labor, property, and anything else that is necessary. The expectation and the end result of all of this are that you will all share in any of the profits or losses of the business. That is the basis for a partnership in the eyes of the Internal Revenue Service and what to expect when you enter into one. To identify your business to the IRS though, you will need to obtain what is called a Partnership EIN Number for tax filing purposes.