When looking to start a business, most Oregon entrepreneurs need to start small. Most companies are not overnight successes, but there is always room for growth. During business formation, choosing the right business entity is important. However, choosing one now does not mean that it cannot be changed in the future to better suit any growth that has occurred.
A popular type of business entity is the sole proprietorship. This business type is typically the easiest to start, and owners do not have to register their companies with the state. This type of entity also involves less paperwork, including when tax time comes around. Business losses can be deducted on a personal tax return and filing business taxes can be done with a personal return by attaching the proper form.
Of course, a sole proprietorship can also come with negative aspects. For instance, the owner would face personal liability for the company’s debts. Additionally, if a lawsuit is filed against the company, the owner is at risk of losing personal assets. It may also prove more difficult to obtain a business loan or investors because of the little separation between the company and the owner.
Considering a sole proprietorship may be wise when starting a small company, and as mentioned, the entity could change later. Though less paperwork is involved with this structure, it is still wise to ensure that these entities remain in compliance with Oregon business laws. Therefore, interested parties may want to discuss their business formation with experienced attorneys.