When it comes to starting a business in Oregon, there are tax implications and legal steps to take on top of building a brand and marketing a product. One step in this process is determining which type of business works best for your setup.
The Internal Revenue Service provides five different business structures to choose from:
- S Corporations
- Sole Proprietorships
- Limited Liability Companies (LLC)
The benefits of each
Those who are looking for an easy way to structure a business may benefit from a sole proprietorship. Even those who do not register as any other kind of business but do business activities qualify. These businesses allow potential owners to test ideas before landing on something more formal.
For businesses where two people own the company, a partnership is a valuable option. One partner has unlimited liability, while those with limited liability have less control over the business. These protect partners against debts caused by the actions of their business partners and are good for professional groups or those with more than one owner.
An LLC combines the two and protects the owners from personal liability. This means that an owner’s house, savings accounts or vehicle are not at risk if something happens to the company. These are good for medium to high-risk business ventures.
Corporations divide into C corps, S corps, B corps, nonprofit corporations and close corporations. Corporations function separately from their owners, must pay taxes and are legally liable.
Could a combination work?
Business designations are more than structures. They are also related to tax status, and companies often benefit from a combination of the different business structures.