What is a “Single Member LLC”?

A Limited Liability Company (LLC) can have one or many owners (known as “members”). If just one person is the owner the structure is known as a “Single Member LLC”, which allows you to treat the business as a “Sole Proprietorship” for tax purposes, while retaining the other legal protections of an LLC. IRS has recently held that married persons may both own the business and still be classified as a Single Member LLC.

Where do I register a new business in Oregon?

http://www.filinginoregon.com/ will open the Oregon website for registering your business. This is where you can file the initial registration for a new corporation and LLC or for an Assumed Business Name. The “Business Wizard” is particularly useful to help you register properly with all of the regulatory agencies that affect your business type.

How should I structure my business: sole proprietor, partnership or corporation?

Sole Proprietorship

  • It is easy to form.
  • You are in full charge regarding all decision-makings.
  • Offers the most flexibility.
  • Simpler taxes.
  • Less bureaucratic restrictions.

BUT:

  • Has unlimited liability.
  • The business is vulnerable to critical events.
  • Difficult to raise capital and financing.
  • Depends on the singular ability of the owner.
  • Less professional in appearance.

Partnership

  • Association of two or more persons to carry on a business.
  • Co-ownership of assets.
  • The need for a Written Articles of Partnership.
  • Mutual agency: share of management and profits.
  • Easy to form.
  • Direct rewards, combined efforts.
  • Easier to attract capital.
  • Flexible.

BUT:

  • Unlimited liability of at least one of the partners.
  • Instability, dependence on the other partner.
  • Dependent on the judgment of the partners as an agent.
  • Difficult to dissolve.

Corporations

  • A distinct legal entity existing on its own.
  • Better image, suggest more professionalism.
  • Offers limited liability.
  • Lower tax rate.
  • Easier to sell stocks.

BUT:

  • Activities limited by the charter.
  • Extensive government regulations.
  • Double taxation.
  • More complicated to form, could require legal assistance.
  • Strict regulations of modes of operation.

"S" Corporation
The S Corporation is a corporation, for which an election has been made with the Internal Revenue Service for the income to pass through and be taxed directly to the stockholders on a pro-rata basis, avoiding double taxation on profits and dividends. It allows the stockholders to offset business losses against their personal income according to certain IRS regulations.

  • The S Corporation must have seventy-five or fewer shareholders.
  • The corporation can have only one class of stock.
  • All shareholders must consent to the election.
  • Cannot have alien, non-resident shareholders.
  • The corporation cannot own more than 80% of another corporation.
  • At least 75% of the receipts must be generated by business.

Limited Liability Companies (L.L.C.)

  • It is a combination between corporation and partnership.
  • Has the limited liability advantages of a corporation, but operates with the flexibility and tax obligations of a partnership, a corporation or a sole proprietorship.
Q&A - Business Structure