If you are considering starting a business with one or more other people in Oregon, you have likely thought about structuring your fledgling company as a partnership. There are two common types of partnerships in Oregon – general partnerships and limited partnerships. The type you choose for your business could affect things from how your company operates to responsibility for the actions of the partners.
General partnerships allow two or more people to own a business together. Through this structure type, each of the partners shares in the liability for the company’s obligations, including any debts, taxes and legal actions. This means, for example, that should the business be forced to file bankruptcy, the assets held by all the partners could be at risk to satisfy the company’s outstanding debts. By the same token, the profits of partnerships get passed through to the partners’ personal tax returns. Additionally, the partners must pay self-employment taxes.
According to the Oregon Secretary of State, limited partnerships are business associations of two or more people. In this structure type, one or more of the partners has general status, while others have limited status. Limited partners are somewhat like corporation shareholders. Any liability they may have for their business’ debts and obligations is limited to the amount of their contribution to the business. However, it is typically the general partners in this structure type who control the business. As is the case with general partnerships, the general partners in limited partnerships carry full liability for the business’ obligations and debts.
The above post should only be considered general information and should not be viewed as legal advice.