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Entities

Question: Are partners considered employees of a partnership or are they self-employed?

Answer:

Partners in a partnership or members of a limited liability company are considered to be self-employed, not employees, when performing services for the entity.

  • If you are a general partner of a partnership (or treated as a general partner in an LLC) that carries on a trade or business, your distributive share of the income or loss from that trade or business plus any trade or business items that are separately stated is net earnings from self-employment.  General partners must also include guaranteed payments for services rendered to or on behalf of the partnership as net earnings from self-employment,
  • If you are a limited partner of a partnership (or treated as a limited partner in an LLC) that carries on a trade or business, only guaranteed payments you receive for services you rendered to or on behalf of the partnership are net earnings from self-employment.  Limited partners are not required to pay self-employment tax on their distributive share of partnership income.

Additional Information:


Category: Small Business, Self-Employed, Other Business
Subcategory: Entities: Sole Proprietor, Partnership, Limited Liability Company/Partnership (LLC/LLP), Corporation, Subchapter S Corporation

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The OMB number for this study is 1545-1432.
If you have any comments regarding this study, please write to:
IRS, Tax Products Coordinating Committee
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue NW
Washington, DC 20224