If two individuals go into business together they are automatically taxed and classified as a partnership by the IRS unless they incorporate in some way. By default, this would be considered a general partnership and can be risky because each partner is liable for all business debts and lawsuits, similar to a sole-proprietorship.

There are other forms of partnerships, including limited partnerships and family partnerships, which may be more beneficial to your specific situation. Talk to your My Way CPA today - we're here to help!