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Starting your business in Oregon by registering a limited liability company (LLC) may help you protect your personal assets and limit your liability to the amount you invested in the business. This characteristic is why an LLC may be attractive to you as a new business owner.
Some reasons that make Oregon attractive for your new LLC’s business are that it is not complicated to file your taxes, and you may find the tax structure of an LLC to be beneficial. Starting an LLC in Oregon is an easy process. The administration of an Oregon LLC is pretty straightforward, and Oregon’s laws do not make it difficult to stay in compliance with LLC regulations.
Under Oregon’s public records laws, all information submitted to the website or the Secretary of State becomes part of the public record. Businesses must disclose their physical address in the state.
Here are the steps you’ll need to take to get your LLC in Oregon.
The Oregon Secretary of State has instructions and the forms you will need. They are available in multiple languages, including English, Japanese, Korean, and Vietnamese.
Everything is available online to register a new business in Oregon because all the physical offices of the Secretary of State were closed due to the pandemic.
The first thing you want to do is conduct a business name availability check to see if the business name you are considering is available for registration as an LLC. The name you choose for your business name in Oregon must be “distinguishable on record” and follow the business registry rules.
The system allows registration of a business name that is available or a name previously used by a business, as long as that business is now inactive.
Filing a business name does not grant any rights to a name. Someone may have a trademark or might be known for a similar name. Using a similar business name may infringe on their rights. It is a poor strategy to choose a name similar to another business, which may confuse the public. It is better if your business name is unique.
Your business name must include the words “limited liability company” or the abbreviations of “LLC” or “L.L.C.” as an entity identifier.
Your Oregon LLC name cannot include these terms: “Cooperative,” “Ltd.,” “limited partnership,” “LP,” “L.P.,” “limited liability partnership,” “LLP,” “L.L.P.,” “Inc.,” “corp.,” “incorporated,” or “corporation.” This rule is because those identifiers describe a different type of legal entity used to operate a business.
Your business name for a regular LLC may not imply that your business is a bank or a related financial activity. The Oregon Division of Financial Regulation controls banks and other financial institutions.
Reserving a name or filing a name registration holds a name for a short time to prepare for the business registration. A name reservation or name registration does not permit operating as a business in Oregon.
You may register your LLC and, as an option, operate under an assumed business name. An assumed business name is also known as “doing business as” (DBA). For example, the company Alphabet, Inc. uses the assumed business name/DBA of Google.
Assumed business names are registered with the county administration where the business operates. If you want to use an assumed business name in Oregon, you must register this name in each county in Oregon where you will have operations.
A trademark is a distinctive name, logo, character, or symbol representing a business. A service mark is a phrase such as “You’re in good hands with All-State.”
If you want to protect the use of the business name as a trademark or service mark, you may register it in Oregon, for use only in the state, through the Oregon Trade and Service Mark Registration.
You may prefer to register your trademark or service mark at the federal level for the entire United States through the U.S. Patent and Trademark Office (USPTO). Trademark registration with the USPTO would also include Oregon.
If you register a trademark or service mark only for the state of Oregon, you must check for conflicts with the federal registration system.
When you are ready to register your business, you must create a new online account in the Oregon Secretary of State’s Secure Access System.
You must have a physical location in the state of Oregon. If you operate a home business, you may prefer to use the physical street address of a registered agent for process service. A mail service, post office box, or private mailbox is not acceptable as a physical address.
All filings in Oregon for an LLC are most conveniently done online at the Secretary of State’s website.
You may also download the forms and file by mail, but the process takes up to 2 weeks after receiving your mailed application for processing and for the information to appear online.
The mailing address, telephone number, and email webform are:
Oregon Secretary of State
Public Service Building
255 Capitol St. NE, Suite 151
Salem OR 97310
We provide registered agent services in Oregon. You may do this yourself as a business owner or hire a registered agent as long as the registered agent meets these requirements:
An operating agreement is not a requirement for filing an LLC in Oregon; however, it is highly advisable to have one, especially if your LLC is a multi-member LLC.
While having an operating agreement is not a required by the state, it’s highly recommended by the Small Business Administration (“SBA”) to have one. The operating agreement sets the terms and conditions of ownership, investment contributions, voting rights, annual meetings, and other important legal matters.
The owners of an LLC are called members.
Members have units in the LLC that represent a percentage interest in ownership.
For example, if the operating agreement allows 100% of the ownership in the LLC to be represented by 100 units, each unit represents one percent of ownership in the LLC.
Here is a checklist of some items to consider including in the operating agreement:
This list is not exhaustive. It only gives a summary overview as a general guide. You may review a sample operating agreement, but do not rely on it or use it without legal advice from an attorney. Work with a qualified attorney for legal help with the preparation of the operating agreement, which will have the specific terms and conditions needed for your LLC.
You do not need to file the operating agreement. Keep a signed copy on file with the other LLC documents you have for safekeeping.
To conduct business in Oregon, a foreign LLC must register with the Oregon Secretary of State and pay a $275 fee. The foreign LLC must have a registered agent in Oregon to maintain a physical address in the state.
The registered agent may be an individual who lives in Oregon or a registered business that is in good standing to conduct business in Oregon.
A foreign LLC must submit a certificate of good standing that is not older than 60 days from the place where the foreign LLC is registered and the application to register the foreign LLC in Oregon.
If you must have a license to provide certain professional services to Oregon residents, you must register a professional limited liability company (PLLC). Examples of businesses that must meet this requirement are doctors, lawyers, architects, dentists, CPAs, etc.
If your business operations must have an Oregon professional license, it is a professional service. If it operates as an LLC, it must be in a special category of professional LLC (PLLC). A PLLC may only provide one type of professional service. A PLLC cannot be medical practice and a dentist. Those business operations would require separate PLLCs.
All the owners of a PLLC must be licensed and registered to perform the professional service that the PLLC has as its business purpose.
The fees to register a PLLC are the same as a regular LLC, which are $100 for filing and $100 for annual renewal.
A single-member LLC is allowed in Oregon. The fees to register a single-member LLC are the same as a regular LLC, which are $100 for filing and $100 for annual renewal.
Having an Employer’s Identification Number (EIN) is required by the Internal Revenue Service (IRS).
We will apply for an EIN for you if you use our services.
As an alternative method, you may apply for an EIN for free directly at the IRS website during their normal business hours from Monday to Friday, 7 a.m. to 10 p.m. Eastern Standard Time.
The IRS uses the EIN to track your business for income tax purposes. You will use this EIN on all tax returns you file for the business.
For federal tax purposes, an LLC is a pass-through entity. An Oregon LLC does not pay any state taxes for the LLC itself. Only its owners pay taxes on income from the LLC.
This status means that federal tax liability, if any, goes directly to the owner-members of the LLC according to their percentage of ownership interest in the LLC.
If the owners are residents of Oregon, they will file and pay personal Oregon state income taxes on any distributions they receive from the LLC.
Here is an overview of income tax, sales tax, self-employment tax, payroll tax, and other state taxes for Oregon LLCs. This overview is not complete. It gives examples of how taxes affect an LLC, so you can get a feeling for the challenges of dealing with tax issues.
An Oregon LLC usually does not have to pay any income tax unless the owners request that the IRS treat the LLC as a corporation.
The owner-members report any net income they receive from the LLC on their personal federal income taxes as self-employment income and may have to pay self-employment taxes.
The LLC files an information-only federal tax return and shows the payment of net income distributions, deductions, credits, etc., for the owner-members on an IRS Schedule K-1 form created for each owner.
The owners of an LLC may file IRS form 2553 to have the LLC treated for tax purposes as a corporation. If the owners do this, the LLC is treated by Oregon state as a corporation, and it must file and pay Oregon corporate income taxes.
This is not tax advice, so consult with a certified public accountant (CPA) or tax professional for specific questions you have about tax issues.
Oregon does not have a state sales tax. Counties and cities may impose a local sales tax; however, the Oregon sales tax rate is 0%.
Owner-members of an LLC must pay federal self-employment taxes on their adjusted gross income after business deductions for any profit distributions received from the LLC. Self-employment taxes in 2022 are currently 15.3%.
An individual pays self-employment tax in addition to personal income taxes.
Self-employment tax pays for Social Security benefits, Medicare, and disability insurance under the Federal Insurance Contributions Act (FICA). Regular employees only pay half of this amount, and their employer pays the other half.
For federal tax purposes, a self-employed person receiving distributions from an LLC is both employee and employer.
There are federal and state payroll taxes to pay for employees of your LLC.
The federal payroll tax rate is 7.65% paid by the employer and 7.65% withheld from the employees’ paychecks for a total of 15.3% of the employees’ wages.
Oregon publishes an Employer Handbook for the state’s payroll taxes.
The Oregon 2022 Tax Schedule III tax rates on the taxable wage base of $47,700 is a minimum of 0.9% and a maximum of 5.4%. New employers pay 2.4% until they are rated based on their unemployment claims history.
There are complex calculations involved in applying credits. Examples are the Federal Unemployment Tax Act (FUTA) and the Oregon unemployment insurance (UI) tax. The FUTA tax in 2022 is 6.2% of the first $7,000 of each employee’s wages.
Payment of the Oregon UI tax, which has a rate determined by each company’s history of unemployment claims, may reduce FUTA taxes up to 5.4%. This reduction would mean the FUTA tax is 0.8% after the state credit.
There are special geographical areas for certain additional payroll taxes.
Depending on where your LLC employees do their work (home, office, job site, etc.), as their employer, you might have to pay the TriMet Transit Payroll Tax (0.007937 of earnings in 2022) or the Lane Transit Payroll Tax (0.0077 of earnings in 2022).
This may be confusing, since remote workers may live in an area subject to a tax, even if the company is in an area that is not subject to a tax.
Payroll taxes are complex and constantly changing, so consult with a payroll tax specialist to find out your liability for the LLC’s payroll taxes.
Oregon has many other taxes for businesses. Examples are the bicycle excise tax, heavy equipment rental tax (HERT), marijuana tax, statewide transit tax, timber taxes, transient lodging tax, vehicle privilege and use tax, petroleum load tax, amusement device tax, hazardous substance tax, and many more.
Oregon makes up for not having any state sales tax by taxing so many other things and business-related activities. The scope of the business taxes in Oregon is much too large to cover them all here. Consult with a tax professional in Oregon for the most current state tax information.
Oregon publishes a helpful Start Business Guide. This guide covers all the important topics needed for starting a new business in Oregon. Here are some other items to manage after your LLC is registered.
One of the first things you should do when your LLC is official is open a business bank account. This account is important to help establish the business and track business income and expenses separately from personal ones. You should do this even if you register a single-owner LLC.
Managing an LLC properly is necessary to have the benefits of the limited liability structure.
The annual renewal fee for a domestic LLC is $100. For a foreign LLC, it is $275 per year. You pay this fee each year with the filing of an annual report by the anniversary date of when you first filed the registration of your LLC.
If you registered your LLC on June 15, your annual report is due by June 15 every year following. You may file this annual report and pay the renewal fee up to 45 days before your anniversary date.
The annual LLC report needs to have updated information about your LLC’s primary physical location, registered agent if you have one, and LLC members’ and managers’ names and addresses. You may use the physical address of the LLC for all the LLC members and managers.
If you fail to file your annual LLC report, you will have 45 days from your LLC registration anniversary date before your LLC becomes inactive.
Once an LLC is inactive, to reinstate your LLC, you will have to pay a $100 reinstatement fee, plus file all the missing annual reports, appoint or maintain a registered agent, and pay any past due fees and taxes.
Warning: If you allow your LLC to become inactive, another person may register your business name, creating a conflict. Your business name will not be in the registration system as active, so another person may register the business name without knowing you were recently using it.
The Oregon registration system only checks new business name registrations against the database of active LLCs. Avoid this problem by filing your annual LLC report and paying the $100 renewal fee on time.
If you fail to file the annual report for an LLC, the LLC may become “administratively dissolved.”
You may only reinstate an LLC if it has failed to file an annual report for only a period as long as up to the last 5 years.
You may reinstate the LLC by filing a form and paying the reinstatement fee. If it has been more than 5 years since you filed an annual LLC report, the LLC is not eligible for reinstatement.
For an eligible LLC, you may file for reinstatement online.
One attractive feature is the flexible tax structures possible with an LLC. You ought to consult with a tax advisor, lawyer, and accountant to get advice about the potential tax benefits of using and operating an LLC.
Oregon state authorities don’t issue a general business license. Nevertheless, many business activities and occupations require specific business and professional licenses. Depending on your business, you may also need to get permits and certifications from some state boards or various agencies.
One useful resource is the searchable Business Xpress License Directory. This directory will help you get started with registrations, permits, and licenses you may need. It will help give you information about state, county, and municipal agencies that have requirements for the type of business you want to operate in Oregon.
The database includes information on more than 1,500 certifications, registrations, permits, and licenses.
Counties and cities in Oregon may have requirements for certain types of businesses that operate within their area of jurisdiction.
For a business located outside a city but within a county, the county’s planning department, county administrative offices, or county commissioner’s office are the places to contact for information about any licenses, permits, or registration requirements under the county’s regulations.
For businesses located within city limits, requirements may depend on zoning for the area where the business will be and municipal regulations. You should check if you need a business license to operate in a city.
Check with municipal offices at city hall for the city where you want to operate to see if a local business license is a necessity.
There may also be licensing requirements for special districts. Business Xpress is a comprehensive resource. You may also contact the Office of Small Business Assistance if you are unsure about license requirements or need other help with your small business.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.