Oregon LLC Advantages and Disadvantages
An Oregon LLC
offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like a limited partnership
or a Subchapter S Corporation,
are generally prime candidates for a business juststarting. The state of Oregon gives public support to an Oregon LLC.
Should I form a Oregon LLC?
An Oregon LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Oregon to your LLC. Your Oregon LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Oregon LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.
Advantages and Disadvantages of a Oregon LLC
Advantages of Limited Liability Company
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of Limited Liability Company
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By Oregon and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing
your llc purpose, the names of your initial Oregon LLC members, the name and address of your Oregon registered agent,
the details of which will be introduced into the body of your LLC operating agreement and related Oregon LLC formation documents assembled for application to the state of Oregon.
Oregon's 2008 Business Tax Climate Ranks 10th
Oregon ranks 10th in the nation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Washington (11th), Idaho (31st), Nevada (3rd) and California (47th).
Oregon's Individual Income Tax System
Oregon's personal income tax system consists of three separate brackets with a top rate of 9% kicking in at an income level of $7,150. That rate ranks 4th highest among all states levying an individual income tax. Oregon's 2005 individual income tax collections were $1,327 per person, which ranks 5th highest nationally.
Oregon's Corporate Income Tax System
Oregon's corporate tax structure consists of a flat rate of 6.6% on all corporate income. Among states levying corporate income taxes, Oregon's rate ranks 29th highest nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $118.42 per capita, which ranked 34th highest nationally.
| Oregon LLC Advantages and Disadvantages