Includes partnerships and joint ventures.
Partnership
A partnership is a company that is owned by 2 or more individuals or groups who join together to carry on a trade or business. Each partner contributes money, property, labor, or skill, and expects to share in the profits and losses of the business. A partnership is usually classified as such for federal tax purposes. If any of its members has a trade, business, financial operation, or venture, then it must distribute its profits and losses to the partnership.
A partnership cannot be created for the sole purpose of sharing expenses. It must offer a service. A partnership is also prohibited from incorporation. All partners have unlimited liability, meaning you as a partner are responsible for what other partners do. There are multiple types of partnerships, including general and limited partnership.
- In a general partnership, all partners actively participate in the business and have financial commitments. They are also active in management of the partnership
- In a limited partnership, at minimum one partner is a silent partner, therefore they contribute financially to the business but do not participate in the management of the business
Joint Venture
A joint venture is a partnership developed between two or more businesses. The companies share risk or knowledge on a specific venture or set of ventures. A joint venture cannot be incorporated or a limited liability company (LLC). A joint venture also cannot be created for the sole purpose of sharing expenses.
You can apply for an EIN at https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
