What tax forms do I need for our new web design partnership business?

So we launched our little web design and hosting business about 8 months ago. It's just the three of us partners running it as a side gig because we love doing it and hope it'll generate some decent side income eventually. Last year we each only took about $400 as a payment, and kept the rest to cover our costs and save for future expenses. Most of our clients so far have been family members who got discounted rates since we were still learning the ropes. One client recently asked us for a W9, so I had to go ahead and get a FEIN for the business. Now I'm trying to figure out what other tax forms we need to file for our partnership. I've been searching online but I'm getting confused about which forms apply to our specific situation. Would really appreciate some guidance on what forms we need to be filling out for a small partnership like ours. Thanks in advance for any help!

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18 comments

Jacob Lee

•8M

Since you've established a partnership and already obtained a FEIN, you'll need to file Form 1065 (U.S. Return of Partnership Income) annually. This doesn't mean the partnership itself pays taxes, but it reports the business's income, deductions, gains, and losses. Each partner will also receive Schedule K-1 from the partnership, which shows their share of partnership income, deductions, credits, etc. You'll use this information to complete your personal tax returns (Form 1040) and possibly Schedule E. Since you mentioned taking payments, you should track those as partner distributions. Partners generally aren't employees, so you wouldn't issue W-2s to yourselves but instead take "draws" from the business profits. For your ongoing business, keep good records of all expenses and income. If you're providing services to clients regularly, you might also need to look into quarterly estimated tax payments using Form 1040-ES, depending on your expected tax liability.

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Jacob Lee

•8M

The partnership itself doesn't need to file quarterly tax returns, but you may need to make quarterly estimated tax payments as individuals if you expect to owe at least $1,000 in taxes from all income sources (including your partnership income) when you file your personal returns. Since you all have regular jobs with withholding and the partnership isn't generating much income yet, you might be covered by increasing your W-4 withholdings at your day jobs slightly to account for the additional partnership income. This can be simpler than making separate estimated payments, especially for small amounts.

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Sophie Hernandez

•8M

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Sophie Hernandez

•8M

It absolutely handles quarterly estimated payments. It calculates each partner's estimated tax burden based on projected income and your specific partnership agreement details, so you know exactly what each person should pay each quarter. As for being specific, it's definitely not generic advice. You upload your business documents, partnership agreement, and previous returns if you have them, and it uses AI to analyze your specific situation. It identified that we needed specific forms for equipment depreciation based on our actual purchases, not just general partnership advice. It even flagged potential deductions we were missing for our home offices that were specific to our state's rules.

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Natalie Chen

•8M

In Michigan, services like web design generally aren't subject to sales tax (they focus more on tangible products), but if you're selling actual digital products like templates or hosting, that could potentially be taxable. Check with Michigan Treasury to be sure. As for business licenses, since you're operating as a partnership, you typically only need one license for the business entity itself, not for each partner. However, if all partners work from different municipalities, you might need to check local regulations for each area. Some cities have different requirements for home-based businesses. Usually registering in the location where your business is primarily managed is sufficient.

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