Bought a business

Documentation and return requirements vary based on the structure of the business. Since there are multiple owners, generally it will either be a partnership, S-Corporation, or C-Corporation. The default treatment by the IRS is a partnership when more than one person enters into a business venture together. You will want to confirm your business structure to make sure appropriate tax filings are completed.

All business structures except for sole proprietorships and Single-Member LLCs are considered a separate entity from the owners individually, and have their own tax filing requirements (Form 1065 for partnerships/multi-member LLCs, 1120-S for S-Corps, and 1120 for C-Corps). Each return generally reports the income and business expenses, and resulting profit/loss from the business.

For your personal tax return, the business entity will produce relevant tax forms (K-1s, W-2s, and/or 1099-DIVs) that detail your individual portion of income from the business entity itself. The specific forms vary based on the structure of the business and whether you are an active or passive owner of the business.