Business formation in Oregon is a stage of the startup process where the business law attorney has a strong role in assisting the business owners in choosing and setting up the right legal structure for the business. Business formation is important because it will usually impact on the method of taxation that the business will follow. The paperwork involved can be a massive amount or it can be much less, depending on the legal structure that is chosen.
A popular structure for small businesses is the Limited Liability Company, called an LLC. This entity probably requires less official paperwork than any of the other formats. The LLC also allows for “pass through” taxation directly to the shareholder’s personal return, thus avoiding double taxation. By not requiring two separate tax filings, an LLC owner can avoid the pitfalls of double taxation.
A similarly preferable tax result can be obtained with a Subchapter S corporation, a smaller-scale business corporation, but this setup has a number of requirements. Whether the Subchapter S is preferable to an LLC is something that should be discussed with one’s business law attorney and the company’s accountant. These issues get complex when there is more than a simple business structure that is needed.
In such events, the attorney and tax consultants will become necessary advisors in getting the business correctly off the box and into operation. In addition, it is important in business formation to properly allocate the correct number of shares or percentage of ownership to each prospective owner. Generally, the investors will know these amounts or percentages and it will be up to the professionals to construct the proper business organization, with the advice and approval of the clients. Many different considerations go into the initial phases of starting up the business in Oregon and other states; the owners must be careful to take each business formation step deliberately and with knowledge of the impact of each decision.
Source: bizjournals.com, ““I have built an app and have a business plan. What now?”“, Reza Rabiee, Dec. 31, 2017