Choose a Business Structure

While there are many different business organization structures you may choose for your business, this guide will focus primarily on the five most common types used in Oregon - Sole Proprietor, General Partnership, Limited Liability Company, Business Corporation, and Nonprofit Corporation.

Ownership, liability, management control, and taxation are just a few of the primary considerations when selecting a business organization structure. Each type has its own advantages and disadvantages. If you have questions on which form is best for your particular situation, please consider consulting:

  • An attorney;
  • A certified public accountant;
  • One of Oregon’s Small Business Development Centers;
  • If business is in a regulated industry, contact the appropriate State licensing or regulatory agency.
  Sole Proprietor General Partnership Limited Liability Company Business Corporation Nonprofit Corporation
Registration No, except for Assumed Business Name No, except for Assumed Business Name Yes, File Articles of Organization & Annual Reports Yes, File Articles of Incorporation & Annual Reports Yes, File Articles of Incorporation & Annual Reports
Governing Document Business Plan Recommended Partnership Agreement Operating Agreement Bylaws Bylaws
Ownership 1 Owner 2+ Partners (Owners) 1+ Members (Owners) 1+ Shareholders (Owners) No Owners, Assets must be given to another nonprofit upon dissolution
Liability Unlimited personal liability for debts of the business and yourself Unlimited personal liability for debts of the business including your partners' actions Members (owners) have limited liability for debts of the LLC Shareholder liability limited to loss of their paid-in investment Operators are not personally liable for debts of the business
Management Control Owner makes decisions Partner control and decision making responsibility defined in partnership agreement Member managed or owners may appoint a manager per the Articles of Organization Shareholders elect directors to oversee policies and appoint officers May have members who may elect directors

Must have directors to oversee policies and appoint offic ers
Taxation Owner reports and pays taxes on personal tax return Each partner reports and pays share of taxes on personal tax return Choose to be taxed as a partnership or a corporation for income Corporation pays taxes on income

Shareholders pay taxes on dividends
Nonprofit pays taxes on income unless tax exempt

One of the primary considerations in selecting an organizational structure for a business is protection of a business owner from liability. Other considerations are the transferability of ownership rights, the ability to continue as a business in the event of the death or withdrawal of one or more of the owners, the capital needs of the business, and tax liabilities.