If you have a business partner, this video is for you!

A partnership is an arrangement between two or more persons to carry on a trade or business. Each person contributes money, property, labor, or skills, and expects to share in the profits and losses of the business. The partnership passes through any profits or losses to its partners, depending on their percentage share of the business. Each partner includes his or her share of the partnership’s income or loss on his or her federal and Massachusetts tax returns.

Partners are not considered employees and do not receive W-2 forms. If you’re in a partnership together with one or more persons, your year-end Schedule K-1 will state your share of profit or loss from the partnership and the amounts of federal and state tax withheld. This income should be reported on Schedule E which you’ll include with your federal and Massachusetts returns.

For more information, look on the IRS and DOR websites, specifically the IRS’ virtual small business workshop.