A partnership is the relationship between two or more persons who work to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.

There are generally two types of partnerships: general partnerships and limited partnerships. In a general partnership all partners have personal liability for the obligations of the partnership. In a limited partnership, there is typically (1) a general partner who manages the business and has personal liability for the obligations of the partnership, and (2) one or more limited partners who do not participate in the management of the business, and whose liability for the obligations of the partnership is limited to the partner’s capital contribution.

A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, any profits or losses pass through to its partners. Each partner includes their share of the partnership's income or loss on their tax return.

Partners are not employees and should not be issued a Form W-2. The partnership must furnish copies of Schedule K-1 (Form 1065) to the partners by the date Form 1065 is required to be filed, including extensions.

In New York, a partnership is recognized as a business arrangement between two or more individuals who engage in a trade or business, with each partner contributing resources or skills and expecting to share in profits and losses. New York acknowledges both general partnerships and limited partnerships. In a general partnership, all partners share unlimited personal liability for the business's debts. Conversely, a limited partnership consists of at least one general partner with unlimited liability and management control, and one or more limited partners with liability restricted to their investment and no management role. Partnerships in New York must file an annual information return (Form 1065) to report financial activities but do not pay income tax directly; instead, profits and losses are 'passed through' to partners who then report this on their individual tax returns. Partners receive a Schedule K-1 detailing their share of the income or loss, which they must include in their personal tax filings. It is important to note that partners are not considered employees and should not receive a Form W-2.