Oregon is known for its spectacular natural reserves and coastline, bustling and progressive cities, and favorable business environment. It’s home to corporate giants like Nike and Intel, but Oregon is also great for small businesses. You can tap into a highly educated workforce, incentive programs, a favorable tax system, and government support for small businesses.
With no state sales tax, building a business in Oregon offers abundant opportunities. An LLC offers liability protection and is a simple business entity that’s easy to start in Oregon. Read on to learn how to start an LLC in Oregon.
What Is an Oregon LLC?
A limited liability company or LLC is a legal business entity. An Oregon LLC combines the limited liability typically associated with corporations with the pass-through taxation of a sole proprietorship or partnership. You gain liability protection and simplified administration when establishing an LLC in Oregon. An Oregon LLC is any LLC formed or doing business in Oregon. All Oregon LLCs must file their Articles of Organization with the Secretary of State.
What to Consider Before Forming an LLC in Oregon?
Before forming an LLC in Oregon, you’ll want to consider the industry and decide on the type of business you want to pursue. This will help guide decisions about business formation and whether you want to form an LLC or a corporation.
For many business owners, an LLC is the most flexible legal entity. It offers the owners, called members, liability protection but also has simplified administration. For example, with pass-through taxation, you can file LLC profits as part of your individual income tax return, so you don’t have to file separately.
After deciding on a business entity, you’ll want to research your target market and market opportunities, create a business plan, and conduct market and customer research. You can carry out most of these steps in the time it takes to file the formation documents with the Secretary of State.
How to Start an LLC in Oregon in 8 Steps
Starting an LLC in Oregon requires only four simple steps. Then, you’ll have four follow-up steps until the business is up and running. Here’s what you’ll need to do:
Step 1: Decide on a Business Name
A business name is important to interface with the public and build both recognition and trust for the business. You’ll want to choose a unique name that encapsulates your company’s offerings, is easy to remember, and is different from existing business entities in the state. The name must include “limited liability company” or some variation like LLC or L.L.C.
You can check possible business names with available web domains as part of the name selection process. A Google search of the intended name will show websites with that name or similar names. Consider also whether you want to use a DBA fictitious name if the desired web name isn’t available.
Next, you can check with the Oregon Secretary of State’s database to ensure your chosen business name isn’t already taken. Finally, you can search in the US patent and trademark office to confirm the name you want to use isn’t trademarked.
Step 2: Choose a Registered Agent
A registered agent is an individual or business entity designated to receive and accept legal documents on behalf of the business. The registered agent must have a physical address in Oregon and be available during normal business hours to accept the service of process if the business is sued.
All businesses in Oregon need a registered agent. A registered agent is an individual or business entity designated to receive and accept legal documents on behalf of the business.
An Oregon registered agent can be a person residing in the state, a domestic corporation, an LLC, or a foreign corporation or foreign LLC authorized to do business in the state. If you live in Oregon and can be available during regular business hours, you can be the LLC’s registered agent.
Step 3: Prepare and File LLC Articles of Organization
The Articles of Organization is a legal document that provides the necessary information about the LLC, such as its name, address, purpose, and the names of its members or managers. By filing the Articles of Organization with the Secretary of State, the LLC becomes a legally recognized entity separate from its owners.
This protects the owners, as their personal assets are generally separate from the company’s debts and liabilities. You can find the Articles of Organization for an Oregon LLC here. Oregon requires a $100 filing fee for the Articles of Organization.
Step 4: Draft an LLC Operating Agreement
After filing the Articles of Organization, an LLC must establish an operating agreement. This legal document must be signed by all LLC members. The operating agreement outlines the rights, responsibilities, and operating procedures of the members of an LLC. It serves as a contract between the members and is used to govern the internal affairs of the company.
Points covered in the operating agreement include the distribution of profits and losses, management structure, decision-making process, and dispute resolution. Common elements of an LLC operating agreement include:
- The LLC’s vision and mission
- Percentage of ownership for each member
- Voting rights
- Responsibilities of each member
- Powers and duties of managers
- Distribution of profits and losses
- Meeting schedule and requirements
- Buyout and buy-sell rules
- Policies on dissolution
What’s Next After Filing an LLC in Oregon?
Once you’ve established an LLC, keeping it active and compliant is essential. This includes filing annual reports, maintaining proper accounting records, and passing through all profits or losses to the LLC members. To get the company up and running, there are just a few simple steps.
Step 5: Apply for EIN
To maintain the LLC as a separate entity, you will need to obtain the employer identification number (EIN). The EIN will allow you to hire employees and open a business bank account. Each LLC or business entity needs its own EIN; you cannot use the EIN of another business for your LLC.
You can apply for an EIN online or through the mail using IRS form SS-4. If you have already applied for an EIN but have lost it, there are several options to recover it, including by contacting the IRS.
Step 6: Open a Business Bank Account
Opening a business bank account for your LLC is an important step in managing your company’s finances and separating personal and business expenses. A separate business bank account ensures you can have a separate personal bank account.
By opening a business bank account, you can track your business transactions, maintain accurate financial records, and demonstrate the legitimacy of your business to clients, suppliers, and financial institutions. It also helps to protect your personal assets and ensures that your company complies with legal and tax requirements.
When opening a business bank account, you’ll want to ask questions about total monthly fees, interest rates, and additional fees. Find more tips for choosing a business bank account here.
Step 7: Obtain Licenses or Permits
Depending on the nature of your business, you may need to register with the Secretary of State to apply for a business license from your city or county. Check with the Secretary of State and local Chamber of Commerce to ensure you have all necessary licenses. And, of course, you’ll also need the federal employer identification number (step 5 above).
Step: 8: Get Business Insurance
In Oregon, business owners with one or more employees must carry workers’ compensation insurance. Depending on the type of business, additional business insurance may be necessary to offer protection for various types of risks.
Other types of business insurance to consider include:
- General liability insurance
- Professional liability insurance
- Umbrella insurance
- Directors and officers’ liability insurance
- Property insurance
- Commercial vehicle insurance
- Business owner’s policy
- Cyber insurance
4 Types of LLCs to Consider in Oregon
There are a number of options for LLC owners in Oregon. Here are the LLC structures you can consider for an Oregon business.
A single-member limited liability company is an LLC formed with a single owner or member. If you’re forming an LLC independently, you will create a single-member LLC.
A single-member LLC offers the same legal protection of your personal assets as any other LLC, along with simplified administration and management. As a single owner, you’ll also benefit from pass-through taxation.
Oregon allows multi-member LLCs where multiple people or members own the LLC. MMLCCs can be either member-managed or manager-managed. In the latter case, the LLC members hire a manager to operate the LLC.
A multi-member LLC is any limited liability company with two or more members. According to the IRS, there’s no limit on the maximum number of members an LLC can have. With an MMLLC, you can gain liability protection, a legal business entity, pass-through taxation, and simplified administration, making it a convenient option for partners or several people to open a business together.
An L3C, also called a benefit or low-profit limited liability company, is a specialized form of LLC allowed in Oregon. The primary purpose of the L3C is not to make a profit, but instead to focus on achieving social benefit.
An L3C has the same liability protection and pass-through taxation as a standard LLC. Unlike a 501(c)3 corporation, which must adhere to strict requirements, an L3C is relatively simple to set up and maintain.
A professional limited liability company (PLLC) is a business entity for business owners in licensed occupations like law and medicine. Generally, a PLLC must have only one service or business offering. That means the PLLC can’t be made up of an engineer, lawyer, and doctor. A PLLC offers the same personal liability protection as other LLCs, along with simplified administration and pass-through taxation.
Growing Your Oregon Business
An Oregon business offers abundant opportunities for long-term growth and financial freedom. But to get a business off the ground and build momentum requires significant time. Busy founders like you need a reliable team to help ensure success. You can rely on doola LLC formation services as part of your team.
With doola, you get a streamlined formation process. For a low fee, doola guarantees fast formation in any state, including an Oregon LLC. Not only do you get company formation, but also get help securing an EIN, and opening your business bank account. Get doola to take care of the formation process so you can focus on building your core business.
Why should I file an LLC in Oregon?
Filing an LLC in Oregon offers a legal business entity, pass-through taxation, and simplified administration. Filing an LLC in Oregon allows you to take advantage of Oregon’s favorable business climate. Creating an LLC adds legitimacy to your Oregon business.
How long does it take to get an LLC in Oregon?
The time it takes to form an LLC in Oregon depends on your filing method. If you file online, you can expect approval for your Oregon LLC within two to three business days. For mail filing, Oregon approval for the LLCs takes six to eight weeks, or about four to six weeks of processing time after the filing is received.
How much does an LLC cost in Oregon?
To create an LLC in Oregon, you must pay a $100 state fee to file the Articles of Organization. You’ll also need to pay $100 each year to file the annual report. If you use a registered agent service in Oregon, you can expect to pay $35 to $150 a year.
How is an LLC taxed in Oregon?
LLCs have pass-through taxation by default, so members will report income on their individual income tax returns. Oregon LLCs are taxed by the number of members according to IRS defaults. That means a single-member LLC is taxed like a sole proprietorship, and a multi-member LLC is taxed like a partnership.
Can I change the name of my LLC in Oregon after it’s formed?
Can an LLC in Oregon be taxed as an S-Corporation?
Do I need to have a physical office for my LLC in Oregon?
You need a registered office in the state of Oregon. The registered office must be a physical address with someone available during regular business hours. You cannot use a virtual mailbox or PO box for your Oregon registered office.
Can I dissolve or close my LLC in Oregon if I no longer need it?
Yes, you can dissolve an Oregon LLC by following the procedure of the Secretary of State. You will need to report closure to the Oregon Employment Department and Department of Revenue and local municipalities if you have any local licenses.