Schedule K-1 (Form 1040)
What does it mean
The Schedule K-1 is the form that connects an owner’s share of a business income to their personal taxable income. If the owner is a 50% owner of a business that generates $100,000 in taxable income, the K-1 will cause $50,000 of the income to flow to the individual’s personal taxable income, and then the individual will pay tax on the income.
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Why does it matter
A Schedule K-1 will be very common in the entities a community banker lends money two. Common entity types with a K-1 include: LLC, S-Corp & Partnerships. Not only does the K-1 show an owner’s “share” of the income, but it will also show you information such as:
- Â Ownership percentage of the businessÂ
- Â Any Contributions made into the business
- Â Any Distributions taken out of the business
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Other Relevant Terms
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Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities. Win-win-win.
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