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| Business Entities for CCB Licenses |
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| Use for Informational Purposes Only |
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Disclaimer: The following is a summary for informational purposes only and should not be considered, used or relied upon as legal advice. You should consult your attorney or the Oregon Revised Statutes for detailed explanations of the various business entities and the laws governing them.
For purposes of the following summaries, “legal person” refers to an entity formed under the law, such as a corporation, rather than to a natural person. “Members of the same family” refers to parents, spouses, sisters, brothers, daughters or sons, daughters-in-law or sons-in-law or grandchildren.
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| Sole Proprietorship |
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Sole Proprietorship
- Single owner owns and operates the business
- No Corporation Division formation is necessary
- Funded by the owner
- Owner’s personal assets are at risk
- Reports income on owner’s income tax return
Workers’ compensation is required if the sole proprietorship has employees
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| Partnership (or General Partnership) |
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Partnership (or General Partnership)
- Two or more persons (may include “legal persons”)
- Formed by agreement, usually written
- No Corporation Division formation is necessary
- Partners contribute assets
- Partners share management and profits and losses
- Partners have personal liability for partnership obligations
- Property belongs to the partnership
- Partnership must file informational tax return
- Partners must report and pay taxes on their share of partnership income
- Workers’ compensation is required unless the partnership has no employees, and, if there are more than two partners, the partners are members of the same family
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| Joint Venture |
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Joint Venture
- Partnership formed solely for the purpose of a single business undertaking, such as a development project
- Same characteristics and requirements as listed under Partnership above
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| Limited Liability Partnership (LLP) |
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Limited Liability Partnership (LLP)
- Two or more professional licensed individuals (may not include “legal persons”)
- Formed by written agreement
- No Corporation Division formation required, but must file an application for registration with the Corporation Division
- Follows concepts of a general partnership, except that the partners in a registered LLP are liable for the negligent or wrongful acts of each other
- The business name must contain the words “Limited Liability Partnership” or the initials “L.L.P.” or “LLP”
- Workers’ compensation coverage is required unless the limited liability partnership has no employees and, if there are more than two partners, the partners are members of the same family
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| Limited Partnership (LP) |
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Limited Partnership (LP)
- Two or more persons (may include “legal persons”) made up of:
- One or more general partners, and
- One or more limited partners.
- Formed by filing a certificate of limited partnership with the Corporation Division
- General partners control the business and are personally liable for partnership debts
- Limited partners contribute capital and share profits, but take no part in running the business and incur no liability
- The business name must contain the words “limited partnership”
- Workers’ compensation coverage is required unless the limited partnership has no employees and, if there are more than two partners, the partners are members of the same family
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| Corporation |
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Corporation
- A legal entity created by articles of incorporation filed with the Corporation Division
- Owned by shareholders who have no personal liability for the corporation’s obligations
- Managed by a board of directors (elected by shareholders) and officers (elected by directors)
- Governed by bylaws
- Observes certain legal formalities such as annual shareholder meetings and the creation of meeting minutes
- Continues to exist even if shareholders change
- The business name must contain “corporation,” “incorporated,” “company,” or “limited,” or an abbreviation of one of those terms.
- For income tax purposes, for-profit corporations file as either a C-Corporation or an S-Corporation. A C-Corporation pays taxes on its income and the corporation’s shareholders also pay taxes on the income passed onto them, as by dividends. An S-Corporation’s income is allotted to the shareholders and taxed at their personal rate, similar to a partnership.
- Workers’ compensation coverage is required unless the corporation has no employees and, if there are more than two corporate officers, the corporate officers are members of the same family.
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| Limited Liability Company (LLC) |
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Limited Liability Company (LLC)
- Unincorporated association formed under articles of organization filed with the Corporation Division
- Owned by members, who have no personal liability for the limited liability company’s obligations
- Managed by managers
- Governed by operating agreements, similar to corporate bylaws
- The business name must contain the words “limited liability company” or the abbreviation “L.L.C.” or “LLC.”
- Pass-through income taxation similar to an S-Corporation
- Workers’ compensation coverage required unless the limited liability company has no employees and, if there are more than two members, the members are members of the same family.
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| Business Trust |
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Business Trust
- Association formed under a written trust agreement or declaration of trust (the “trust instrument”)
- Must submit a copy of the trust instrument to the Corporation Division
- Ownership interests evidenced by beneficial shares
- Trustees and beneficiaries are not personally liable for the obligations of the business trust
- Generally, subject to the laws governing corporations
- Workers’ compensation coverage is required unless the business trust has no employees and, if there are more than two trustees, the trustees are members of the same family
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