Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

I have some business tax questions; my “partner” didn’t

acquire an EIN (Texas). We...
I have some business tax questions; my “partner” didn’t acquire an EIN (Texas). We only hav a DBA. The business provided healthcare services. In 2017 business had a net profit of $5,700 (part time for both of us). We both took disbursements & will report on personal returns but since no EIN/not legally a general partnership didn’t file a 1065. What are (if any) penalties for this? Need EIN ASAP & file ammended 1065? Help? Thanks!
Show More
Show Less
Ask Your Own Tax Question
Answered in 26 minutes by:
3/25/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,112
Experience: Taxes, Immigration, Labor Relations
Verified

We need to know if you run the business as self-employed person and hire your partner as a contractor

OR

if that is a partnership?

If that is a partnership - form 1065 is required if there were any business activities - either income or deductions.

You do need to apply for EIN for the partnership - otherwise you will not be able to file.

.

You may apply for an EIN online - that is the simplest and fastest way.

https://sa.www4.irs.gov/modiein/individual/index.jsp

.

If the first option doesn't work for you - can fax the completed Form SS-4 application to the appropriate fax number (see Where to File Your Taxes (for Form SS-4)), after ensuring that the Form SS-4 contains all of the required information.

If the taxpayer's fax number is ***** a fax will be sent back with the EIN within four (4) business days.

Ask Your Own Tax Question
Customer reply replied 3 months ago
It’s what I get for trusting & not verifying. :/. Hmm. I don’t recall discussing that specifically w/ partner but we considered ourselves equally invested, have equal access to account capitol, & share equally in profits. She did bizness & marketing side; I provided the service. So, didn hire as contractor. Not b surprised if thats gonna the claim. :). On the DBA we r listed as general partnership; which is the only official record of bizness other than opening a joint bank account n DBA name. So r we technically a general partnership (like common law or something?) but not legally? We become legal one we get EIN? Then file 1065. ?? We did have income & deductions they the DBA , all went thru DBA account; then each partner gets k-1basrd off that showing individual profits, etc.?
This HAS TO BE DONE? Or else what? Penalties?
I’m asking so that things are nice & tight & legal. Ain’t got no time for IRS mess. :).
I’m asking, b/c my partner suggested only that we list only our income on our personal taxes & deduct as well. Partner hasn’t mentioned filing a 1065. Said we didn make more than $10k so no need k-1; plus no need k-1 b/c not real partnership. How do u spell conundrum? Guess I right. Help. Victory!

On the DBA we r listed as general partnership; which is the only official record of bizness other than opening a joint bank account n DBA name. So r we technically a general partnership (like common law or something?

Yes - that is correct - as soon as you agreed to run business activities together - that is a starting day of your general partnership.

You are not required to have any contracts or signed documents.

So legally - you have a partnership.

DBA doesn't create any separate entity

What DBA does - it allows you to use a fictitious name for your partnership.

But from legal point of view - you do have a partnership.

That is absolutely legal.

We become legal one we get EIN?

That is opposite - you are applying for EIN after the partnership is formed.

When EIN is assigned - the IRS becomes aware of the partnership.

Then file 1065. ?? We did have income & deductions they the DBA , all went thru DBA account; then each partner gets k-1basrd off that showing individual profits, etc.?

That is correct - if the partnership had business income and deductible expenses - filing is required.

If the tax return is not timely filed - there will be late filing penalties.

Partner hasn’t mentioned filing a 1065. Said we didn make more than $10k so no need k-1; plus no need k-1 b/c not real partnership.

That is not correct interpretation - ANY income will be required to file.

Questions?

Ask Your Own Tax Question
Customer reply replied 3 months ago
Wow. Thank you!!! Just a couple more questions just to tie a big ribbon on this.
The same process my partner suggested (no 1065 or k-1, u claim ur $ & I claim mine) was also used during 2016. Should I expect the IRS to b contacting me soon? Or, how long before they typically go looking? I’m gonna get right on it but since 2016 not filed correctly might already be hit with penalties?Partner said they provided me with same type of info last year (I have no record). Two words I’ve learned frm this experience: due diligence. :). Thank u! Victory!
Customer reply replied 3 months ago
For the record; if this becomes part of the record, when we agreed to equal partners under the DBA with two distinct roles: business & marketing- partner 1 and providing healthcare services partner 2- me; so was in full confidence & total trust I never double-checked the filing data, tax records, or even the un-even distribution of business income. Which brings me to
one last issue & question
(I promise, unless your reply warrants another. :)).... My partner withdrew $ as their disbursement/income greater than the 50% of net profit as agreed upon. Like, 90% in 2016 & 2017 of Net income. They have agreed to pay back & will discuss options to do so (including a time period in which to do so).
Question: What recourse do I have if they don’t repay in full by allotted time? Also :), (sorry) would this be considered theft or embezzlement or whatever the proper/legal term? Thank you soooo very much! You have shined a light into a very dark place! Victory!

The same process my partner suggested (no 1065 or k-1, u claim ur $ & I claim mine) was also used during 2016.

Yes - same requirements for 2016.

If the partnership have income and deductions - filing is required.

Should I expect the IRS to b contacting me soon?

Depending on situation...

If income was reported to the partnership - then the IRS will have a record and may send a letter.

If there were no reporting and the IRS has no record of partnership income - they would not know about the existence of the partnership.

Question: What recourse do I have if they don’t repay in full by allotted time?

All will be based on the agreement between partners.

As you do not have any written agreement - for either party it will be hard to proof what you actually agreed...

If you are not able to negotiate or agreed - you may use any mediation service or sue the partner.

There is no embezzlement or any wrong doing from legal prospective as you are partners.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,112
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 3 months ago
I started this line of questioning suspicious of partners directions on how to file; and already requested to dissolve partnership so I want to make sure that I file correctly but also that I’m not stuck paying any fines alone d/t parnter’s errors. Partner wanting to remove name frm DBA but seems to me that would remove partner frm any obligation to pay penalty/fine previously discussed. Oh, we DID sign Partnership Agreement; found it.
Question: Should I go ahead & get EIN & file 1065 for 2016 & 2017 w/ partnership still intact and then dissolve partnership? Or is ther a better way/order in which to “do it the right way”?
Thank you! :)

The right way - is to as you outlined - to obtain EIN - file partnership tax returns - issue K1 to each partner - and each partner will use K1 for personal tax return.

Having DBA doesn't creates a business entity - that is a just a name of the entity which doesn't exists.

You may want to have "work around" - and report all income and deductions ofr you personally as self-employed - and issue 1099misc to your partner as subcontractor.

That will result same tax liability - so most likely - the IRS would not have any objections.

However - formally - that would be not correct.

Ask Your Own Tax Question
Customer reply replied 3 months ago
Awesome!! Thank you so very much!! I’m gonna hype you in comments & tip you. :).

Appreciate your warm words and the bonus.

You are welcome back for all your tax related issues.

Ask Your Own Tax Question
Customer reply replied 3 months ago
Thank you! Found P-ship Agree.; roles & duties as (me- CEO & partner- CFO & CMO) and the 50/50= equal split of profit & liabilities. Last question(s), promise. :)
I assume that once I file 1065 for 2016 & 2017 the IRS will now b aware of improper filing & could impose fine/penalty? Which the bizness partners would be equally responsible for paying? If possible, I’d rather not pay for partner’s incompetence/mistakes/illegal(?) management of tax filing; guessing both legally liable? How reconciliation occurs dependent on P.A. but filing taxes not w/in my duties therefore to me, partner solely at fault. ?? But b/c we 50/50, we both at fault? Thanks!

Yes - as soon as you file past tax return - the IRS will assess late filing penalties and interest charges.

Both partners will be responsible - the IRS will NOT divide liability - and both partners are jointly and severally liable.

Joint and several liability means that each taxpayer is legally responsible for the entire liability.

If there are arguments between partners - that should be negotiated or decided in the court when there is no agreement.

Ask Your Own Tax Question
Customer reply replied 3 months ago
Thank u! The IRS mite not divide liability for penalties/charges but I am. :). Found our Partnership Agreement; includes titles & roles, I still need to read thru closely again as I believe all bizness/financial/tax/marketing duties were partners responsibility & all the service providing was done by me.
Could get ugly at meeting but I not gonna let it. :). Amen.
Will keep u posted. Thanks again! Victory!

Yes - each partner may be liable - BUT the IRS will not have any concern about that.

These will be issues between partners ONLY.

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,112
33,112 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
What are the options if a partner withdraws from the
What are the options if a partner withdraws from the partnership and now there is only one partner in the business. They filed Form 1065 in 2016 - and now in 2017 there is only one partner / business … read more
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,463 satisfied customers
Last tax year (2016) Me and my friend setup a Partnership
Last tax year (2016) Me and my friend setup a Partnership 1065. At the end of 2016, I bought my partner out and now I am the only member in the business starting from Jan 2017. So, do I still file a 1… read more
Lev
Lev
Tax Advisor
33,112 satisfied customers
My husband and I have an LLC. Our friend has one also. We
My husband and I have an LLC. Our friend has one also. We joined our LLCs to form our business. Didn't get a tax ID for the partnership because we didn't know we needed to. We thought our LLCs we all … read more
Lev
Lev
Tax Advisor
33,112 satisfied customers
This is a Tax question. I along with my investment partner
This is a Tax question. I along with my investment partner purchased 2 Rental Properties in the year of 2017. One Property has both our names in the Title but the other property only has my name in th… read more
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,463 satisfied customers
Story short; partner didn't get EIN & no file 1065 for 2016
Long story short; partner didn't get EIN & no file 1065 for 2016 or 2017. She is standing (I believe) on this: IRC $$ 6031 requires partnerships file 1065 & if not IRC $$ 6698 requires penalty. But, t… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,416 satisfied customers
I have an LLC in CA. Originally it was a partnership, filing
I have an LLC in CA. Originally it was a partnership, filing a 1065 to the IRS. Now, the other partners have left and I want to file as a single member LLC, flowing back into my schedule c. The change… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,416 satisfied customers
Several Tax Filing questions about a Multi Member LLC with 2
Several Tax Filing questions about a Multi Member LLC with 2 DBAs and Tax FilingPresently our Multi (2) Member LLC has 1 DBA (operates as Partnership), last year I used TurboTax to create a1065 and 2 … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
My husband and I have had a DBA as a partnership since the
My husband and I have had a DBA as a partnership since the end of 2014. However, he has filed the last 2 years as a sole proprietor as I am also an employee. So, we have been filing a 1040 under his n… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
How do I go about changing my entity from a sole to a
How do I go about changing my entity from a sole to a partnership? I have a federal ID already as a sole. Do I have to file for another Federal ID number? Do I have to file a SS-4 to apply from sole t… read more
Lev
Lev
Tax Advisor
33,112 satisfied customers
We obtained FED EIN in 2015 with multimember LLC and
We obtained FED EIN in 2015 with multimember LLC and registered as multimember LLC with AZ State as well. After this in DEC 2015, we amended our AZ articles to just a single member LLC. Our question i… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
I have a home business with my boyfriend. We received a
I have a home business with my boyfriend. We received a 1099-K but unfortunately Amazon only put it in his name and not the business name. I was under the impression that they did this because we do n… read more
Lev
Lev
Tax Advisor
33,112 satisfied customers
In 2010 my wife an I started a DBA for our new consulting service
In 2010 my wife an I started a DBA for our new consulting service we started. I immediately became Ill and never contributed any work effort to it. For 2010 true 2013 I filed the earnings all under my… read more
Megan C
Megan C
Certified Public Accountant (CPA)
Master's Degree
8,655 satisfied customers
My wife and I started an LLC 2 years ago. We registered an
My wife and I started an LLC 2 years ago. We registered an EIN and a dba under it to conduct a food service business. We filed our first tax return last year using the LLC and dba. This past year, we … read more
Megan C
Megan C
Certified Public Accountant (CPA)
Master's Degree
8,655 satisfied customers
Hi, Me an my wife have a DBA (partnership) in Texas and we
Hi, Me an my wife have a DBA (partnership) in Texas and we do a lot of contract work. Most of our checks are written in our names but I was wondering what would be the best way to pay ourselves. Shoul… read more
fastfile
fastfile
Tax Advisor
Master's Degree
550 satisfied customers
Hi Steve, Follow-up on last question (April 5th) - Now
Hi Steve, Follow-up on last question (April 5th) - Now that I know it's possible to have one business or BDA (Example: Spark Techologies) running two very different websites, dealing with 2 very diffe… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
Question: If my wife and I have two DBAs associated with one
Question: If my wife and I have two DBA's associated with one partnership EIN – under the circumstances described below – would this be better than having two separate partnerships, (both with my wife… read more
Lev
Lev
Tax Advisor
33,112 satisfied customers
I opened an LLC in 2009, with multiple investors. I was using
I opened an LLC in 2009, with multiple investors. I was using the cash method in 2009 and 2010, therefore I didn't file at all in 2009 since we didn't make any profit on the cash method, and 2010 was … read more
Lev
Lev
Tax Advisor
33,112 satisfied customers
I and another person have gone together to rent a building
I and another person have gone together to rent a building and open an antique / merchandise business. We have a business name but no partnership agreement. We each have our own space and manage our o… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x