LLC vs. Partnership
The advantages of an LLC over a partnership:
- limited liability – The owners of an LLC are generally not liable for the debts and liabilities of the business, whereas the creditors of a sole proprietor can go after all the assets of an individual.
- continuous existence – an LLC can exist perpetually whereas a sole proprietorship dies with its owner. The heirs of the owner can take over, but the business no longer exists. If the heirs continue the business they are considered a new business. In a partnership, the death of one of the partners can cause dissolution of the business.
- transferability – An LLC can be transferred by a transfer of interest along with all of its assets. A sole proprietorship needs to have all of its assets, licenses, permits, and accounts transferred manually.
- ownership – An LLC owner can share profits without giving up control by structuring the company so that profits are separate from ownership.
- capital – An LLC can raise capital easier by admitting new members and providing a share of the membership interest.
- records – An LLC will maintain its own bank accounts, records which will separate keeping personal expenses separate.
- estate planning – It is easier to transfer or distribute shares of a company than a sole proprietorship. Control and percentage shares can be determined with more flexibility.
- prestige – An LLC appears to be a more stable, permanent business operation, and the owner is listed as an officer of legal entity.
- credit rating – An LLC builds its own credit rating
Contact us at (503) 274-9001 or by email or continue reading about how to form an Oregon LLC, or about the Oregon LLC laws.