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b. Partnership When two (2) or more individuals have agreed to manage the business together and share the business income a partnership exists. There does not have to be a written agreement, however; the individual must provide each partner’s share amount. An individual’s self-employment income is determined by subtracting the total allowable costs of doing business fromthe gross self-employment income and dividing the amount by each partner’s share. The share of income from a partnership is countable even if it is not distributed. Any salary or disbursements received by the individual from the business is not considered in the calculation of the gross self-employment income.

A partnership is required to file a federal income tax Form 1065 U.S. Return of Partnership Income including Schedule K-1 Partner’s Share of Income, Deductions, Credits, etc., which shows the income and expenses for the business. Unless the partnership is a new business, each partner should have a copy of these forms for reporting their share of the income.

Some partnerships involve a general partner, who is actively involved in operating the business, and a limited partner, who is an investor only, not an active participant. The general partner is considered self-employed and their portion of the income from the partnership counts as self-employment income. Any income received by the limited partner is treated as unearned income.

c. Limited Liability Company(LLC) The name of the LLC is listed as the owner of the business; however, within the business license detail information, there will be an Entity which lists the individual owner(s) as members with the percentage of ownership identified. Members are rarely paid as employees since it is not required; however, if they do receive a paycheck no taxes are withheld.

d. Corporations A business may be a corporation, which is a distinct legal entity with legal status separate from the individuals who form it. If