When a person decides to start a small business in Oregon, that is only the first of many decisions he or she will have to make. Entrepreneurs are faced with many choices in the business formation stage, and of these involves deciding on the right type of business entity. This is a critical decision as it will affect how a business is taxed and other financial aspects for the future of company operations.
The most popular choice among small business owners is a limited liability company. An LLC is practical for many small business operations, particularly because it limits a business owner's personal liability for business debts. In an LLC, the owner's assets and the business' assets are separate, adding a measure of protection for the owner. There is a lot of flexibility allowed with an LLC, and as many as 75 percent of small business startups make this choice.
A corporation is vastly different from an LLC, but it offers some benefits for some types of companies. Corporations are owned by stockholders, yet daily operations usually fall under the authority of a director. The stockholders can have a significant amount of say in what happens in the company, eliminating the possibility that just one person can make decisions on behalf of the company.
The choice of entity will determine how a business operates, how it is taxed and much more. It is a significant decision, and a business owner would be wise to seek an understanding of all of the business formation options available before deciding. A complete assessment of the individual business plan, goals and other details can help an Oregon entrepreneur move forward in the right direction.