06/18/2026
KNOWLEDGE CHECK: If you and a partner own an LLC together, how does the IRS tax you by default?
Scroll through the slides to check your answer!
If you guessed B) As a Partnership, you hit the nail on the head. 🤝
The moment you add a second owner to your LLC, the IRS's automatic defaults shift gears. Because there is more than one person involved, the IRS stops treating the entity as a disregarded single-member setup and automatically reclassifies your LLC as a Partnership for tax purposes.
This means your business can no longer ride along on your personal tax return. It is now required to file a completely separate tax return: Form 1065.
Operating blind can cost you. Partnership tax returns have completely different rules, complex tracking for partner distributions, and—most importantly—different deadlines than personal returns. If you assume you're "just an LLC" and wait until April to think about your taxes, you could face steep, automatic late-filing penalties for missing the partnership deadline.
Do you share ownership of your LLC with a business partner?
Save this post as a quick reminder that your business has its own unique tax obligations. If you need help navigating your Form 1065 or setting up your partner capital accounts, send us a message today!
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