Keeping your financial records organized is important when you run a business, especially if your business is a partnership. It’s easy to assume your partner will hold onto all the important tax documents- but what if he doesn’t? Form 1065 (Schedule K-1) is the IRS’s way of encouraging you to keep your own copies for future reference.
As we detailed in our tutorial in December about reporting business partnership income (click here to read more…), Form 1065 reports (to the IRS) the percentage share of profit and loss allocated to each partner, both at the beginning and the end of the fiscal year. Form 1065 (Schedule K-1) exists so one partner can record his or her own profits, losses, deductions, and credits.
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