LLC membership offers liability protection and flexibility. The structure provides legal protections to help businesses thrive. Members simply own membership interests, typically percentages listed in operating agreements. Interests can divide into shares or units.
Finances separate from members, so creditors file charging orders to get payment from interests, allowing the collection of judgment amounts. Members don’t own LLC property and may or may not manage the business.
Single-member LLCs are easier for taxes since no federal return is required. Income is reported on the member’s return. Multi-member LLCs are treated as partnerships. The LLC files an informational return, and members report income and expenses. However, an LLC can elect to change tax classification to a corporation by filing Form 8832, which can be done when formed or later.
What if an LLC becomes inactive? Inactive means no transactions or business activity. Until dissolved, the company legally exists. When inactive, there may still be a need to meet reporting rules.
If a contract exists with a dissolved LLC, it remains legally binding. Dissolving an LLC won’t terminate leases or obligations to other creditors. To dissolve, liabilities must be settled and property divided before submitting a dissolution statement.
In Oregon, a certificate verifies a business legally exists. Potential creditors or investors might request it when applying for financing. Banks or creditors might request it when applying for a loan to confirm no outstanding issues. The Oregon Secretary of State issues certificates. To qualify, a business must comply with regulations. The filing cost is $10. Anyone can apply for a certificate showing registration and fee payment.