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.​​​​​