Partnership Tax Compliance Lawyers in St. Louis

Ensuring Our Clients Remain on the Right Side of State and Federal Tax Laws

Utilizing a partnership as a business structure comes with a variety of benefits. From shared expenses to pass-through taxation, the advantages are wide and varied. However, establishing such an entity with partners also comes with certain responsibilities. Failure to live up to these obligations can prove disastrous. That’s why it’s crucial to work with a partnership tax compliance lawyer in St. Louis.
At The Law Firm of Lance R. Drury, P.C., our team of tax professionals works hard to ensure our clients can focus on success rather than tax requirements. As a successful business ourselves, we know that maintaining legal compliance is critical for many reasons. Fortunately, you don’t have to break the bank to get skilled and knowledgeable experience. Our law firm offers flat-fee services and free consultations.
This means there’s no reason not to reach out. Contact us today to get started.

How Does Taxation Work With Partnerships?

When multiple individuals choose to form a partnership, a new legal entity is created that is “pass-through” for tax purposes. This means that no income taxes are actually paid at the entity level. Instead, all income, deductions, losses, and credits “pass through” to the partners. These individuals report everything on their individual tax returns.
However, this doesn’t mean there aren’t requirements for the partnership itself. An informational return is typically required — usually Form 1065 — to show certain items (e.g., income, deductions, etc.) and other relevant information to the Internal Revenue Service. By filing this return, you’re providing the IRS full transparency around the financial activities of your business.
Unfortunately, this means partners typically need to file multiple returns. This can make things even more complicated than traditional tax returns. That’s why it’s ideal to speak with a partnership tax compliance lawyer in St. Louis before doing anything. An experienced legal professional can ensure you’re on the right path.

What Tax Compliance Issues Do Partnerships Face?

While it’s recommended that you work with a tax attorney to ensure partnership tax compliance, it’s also important to have a basic understanding of what’s expected of these entities. If you decide to handle everything on your own, this basic knowledge will give you a solid foundation. However, most budding entrepreneurs see the extent of the compliance issues they face and instead choose to work with an attorney.

Important Forms

For instance, did you know that partnerships need to file Form 1065 and Schedule K-1 in addition to their individual tax returns? Form 1065 is what’s used to report the financial information of the partnership to the IRS. In addition to items such as income, deductions, and partner allocations, the form also includes information about each partner (e.g., names, tax ID numbers, etc.).
Form 1065 also includes certain schedules. Among them is Schedule K-1, which each partner in the partnership must receive. This reports each individual’s share of the entity’s income, credits, deductions, and other items. The schedule is used by each partner to report their share of the entity on their individual tax forms.

Additional Compliance

However, this isn’t where compliance issues end — and that’s why many people opt to work with a St. Louis partnership tax compliance lawyer. For instance, partnerships must ensure that everyone receives a Schedule K-1 to remain compliant with tax law. There are also other requirements — including informational reporting for certain transactions, withholding requirements, and estimated tax payments — that can make things far more complicated.

What Are Potential Penalties for Partnership Tax Compliance Failures?

In all cases, partnerships must maintain accurate records and adhere to filing deadlines in order to avoid adverse consequences. Such consequences can include penalties for a variety of issues, and if certain tax laws and regulations are violated, criminal charges could be possible. Even if law enforcement doesn’t get involved, though, an audit can prove disastrous.
To understand the strict requirements that these entities face, it’s only necessary to look at the potential penalties they could face:

• • Failure to file penalty
  • Failure to furnish information penalty
  • Accuracy-related penalty
  • Failure to pay tax or estimated tax penalty
  • Substantial underpayment penalty
  • Late payment penalty

Encountering even one of these can make things incredibly difficult for business partners. This is why it’s so important to work with a partnership tax compliance lawyer in St. Louis. It’s an unfortunate fact, but tax law wasn’t created with simplicity in mind. It’s not uncommon for someone to look at a tax form and have no clue what they’re seeing. Fortunately, you don’t have to understand all this complicated legalese.
That’s because a skilled attorney can handle everything on your behalf. Contact our law firm today.

Contact a Partnership Tax Compliance Lawyer in St. Louis Today

Regardless of how you enter the business world, the focus is always to achieve success. When you establish a partnership, you have others who have the same focus — and this can prove invaluable to your underlying goals. However, no level of commitment and hard work can overcome the consequences of failing to comply with relevant tax laws. Therefore, it only makes sense to work with a legal professional who can assist.
At The Law Firm of Lance R. Drury, P.C., our team of dedicated legal professionals is here to help. We’ve seen what can happen when a lack of knowledge regarding tax laws — or even simple oversights — results in compliance failures. The penalties can be severe and potentially disabling for budding entrepreneurs. However, you don’t have to figure out these complex issues on your own. Our partnership tax compliance lawyers in St. Louis can help.
Contact us at (573) 508-0399 to schedule your free consultation.