A partnership is a business owned by two or more people. Limited partners who work fewer than 500 hours per year avoid self-employment taxes on their share of income. The right structure, like an LLC or LLP, can save you significant money.
Damon Van Fleet, owner of PayLessTaxes.com and the PLT Firm. And in this video, in 60 seconds or less, I got to tell you about partnerships and how they can help you pay less taxes. So what is a partnership? A partnership is two or more people who own a business together, and you can have partnership agreements and entities like a limited liability partnership, or you can have an LLC. And in the articles of incorporation, you can have spelled out who the partners are. Here's the most important thing about partnerships to know there are general partners and managing partners, and they are going to get taxed on the income that they pull out of that business based upon what they are in that way. And there are silent partners or limited partners, and those partners, assuming that they do not work in the business for more than 500 hours per year, are actually going to be able to take their income as passive income out of the business, which is huge because they will not have to pay self-employment Medicaid on that income. So that's partnerships in under 60 seconds.
