What's the Difference Between a Partnership and an LLC for Taxes?

A multi-member LLC and a general partnership are taxed almost identically by default, but the LLC offers legal protections that a partnership does not. By default, a multi-member LLC is taxed as a partnership — the business files Form 1065 and each member receives a K-1 showing their share of income. In a general partnership, all partners are personally liable for the business's debts; in an LLC, members are generally shielded from personal liability for business obligations. An LLC can also elect to be taxed differently — as an S corporation or C corporation — giving it more flexibility than a simple partnership. From a tax standpoint, the main reason to choose an LLC over a partnership is the liability protection, since the default tax treatment is nearly the same.