What Is a Partnership (Taxes)?

A partnership is a business with two or more owners that doesn't pay income taxes itself — instead, profits and losses pass through to each partner's personal return. Each partner receives a Schedule K-1 showing their share. Partners pay income tax and self-employment tax on their share of profits. The partnership files an information return (Form 1065) each year. General partners have unlimited personal liability; limited partners have liability only up to their investment.