How to Start an LLC in Oregon
How to start an LLC in Oregon in 7 easy steps
Step 1. Naming Your Oregon LLC
One of the most critical steps in starting your business is to choose a suitable name. Besides just describing your LLC and creating a brand for yourself, the name must follow some of the naming rules below.
Legally Required Designation
To stay in accordance with Oregon LLC law, the name of your business must contain “limited liability company” or one of the following approved abbreviations:
- LLC
- L.C.
Unique Name
To find a unique name that is distinct from other businesses in the state, you can run a search on the Oregon Secretary of State’s website. This tells you if the name you desire is available or not.
If you find an available name, you can file an Application for Name Reservation. This document holds your chosen LLC name for up to 120 days before filing to establish your LLC. It carries a $100 filing fee and must be filed online through the Secretary of State’s business registry system.
Additionally, while deciding on an LLC name, you may also want to perform a search of available domain names. It can be helpful to reserve a website name ahead of time even if you are not starting a business website immediately.
Restricted Words
As you select an LLC name, you should be careful not to include any words that risk confusing your business with a state or federal government entity. This includes, but is not limited to, words like “Treasury,” “IRS,” and “State Department.”
You also need to keep in mind that words such as “bank,” “trust,” “attorney,” or other professional indicators may require the presence of a properly licensed individual in your LLC — along with additional paperwork. Oregon does allow for the formation of professional LLCs depending on the services you offer, so be sure to follow all state licensing guides if this is the type of LLC you want to establish.
Using a Trade Name
It is possible to use a trade or DBA (doing business as) name in Oregon. Using a trade name means that while you can continue using your legally registered LLC name on all official state and federal documents, you use your DBA name when interacting directly with the public. This is beneficial if you want to brand your business differently from the LLC’s official name or are interested in operating more privately.
To use your DBA name in Oregon, you must first register it with the Oregon Secretary of State. You need to file an Assumed Business Name – New Registration online or by mailing the completed document to the address on the form. There is a $50 filing fee, and it must be renewed every two years.
Step 2. Choosing a Registered Agent
Oregon requires every LLC in the state to have a registered agent appointed. Your registered agent is responsible for receiving all legal documents, government communications, and tax documents for your LLC; they essentially act as a contact between your business and state or federal agencies. They are also the party that is contacted in the event of a lawsuit against your LLC.
You can appoint any Oregon resident, including a member of your LLC — or a business that is authorized to conduct operations in the state — as your registered agent. As long as your appointee has a valid Oregon street address and is available during regular business hours, they are eligible to be your registered agent.
For more information on registered agents, check out the Oregon Secretary of State’s website.
Step 3. File Your Articles of Organization
To officially establish your business in Oregon, you need to file your Articles of Organization with the Secretary of State’s office. This document includes essential information about your business, some of which you can preview below.
- Your LLC’s name
- Your LLC’s duration, if not perpetual
- Your LLC’s principal office address
- Your LLC’s registered agent’s name and address
- If your LLC is member-managed or manager-managed
- If your LLC provides professional services
- Your LLC’s organizers’ names and addresses
You can file your Articles of Organization online or through the mail. There is a $100 filing fee associated with this document.
Online
To file your Articles of Organization online, you need to create an account on the Oregon Business Registry system. From there, follow the prompts to file your document and pay the applicable fee. Keep in mind there may be additional fees for online credit or debit card processing.
By Mail
If you would like to file your Articles of Organization by mail, you first need to print off and complete this form in black ink. From there, place the form in a secure envelope along with a check for $100 made out to the Corporations Division. Then, mail the sealed envelope to the address below.
Secretary of State, Corporation Division
255 Capitol St NE, Suite 151
Salem, OR 97310
Step 4. Create an Operating Agreement
LLCs in Oklahoma are not required to create an operating agreement, but you may want to consider drafting one up regardless. Your operating agreement should set guidelines for how your LLC is managed, the rights that members or managers have, and what to do if your LLC dissolves or experiences a lawsuit.
If you choose not to create your own LLC operating agreement, Oklahoma LLC law will dictate how your LLC is to be managed in the event of dissolution, conflict, or lawsuit. This may not be in your best interest, so if you want to protect yourself and your assets, creating a valid operating agreement is the way to go. You can follow this template to start drafting one up.
Step 5. Create an Operating Agreement
The state of Oregon does not require LLCs to create an operating agreement, but you should consider creating one for your business anyway. An operating agreement sets clear guidelines for how your LLC’s business is managed. It also defines the rights of members and managers and gives instructions on how to conduct any dissolution operations. Operating agreements can also give guidance if your LLC experiences a lawsuit.
Keep in mind that if you don’t set these guidelines ahead of time, Oregon LLC law will determine how your business is handled in the case of disputes, and this might not be in your best interests.
Additionally, if you are applying for LLC financing, most business bank accounts, loan applications, and other business services require a copy of your operating agreement along with your application to demonstrate your LLC as a separately operating business entity.
Step 6. Get an EIN/Tax ID Number
After your Articles of Organization have been filed and processed, you may need to apply for a Tax ID number, also known as an EIN (Employer Identification Number). Only LLCs that have more than one member, or any single-member LLC that wants to hire employees or be taxed as a corporation, will need to apply for an EIN.
You will use your EIN to identify your business to the IRS on all tax documents and necessary government filings; the number acts like a social security number for your LLC. If you want to hire employees, file federal taxes, open business bank or credit accounts or apply for business funding, you need an EIN.
Your EIN application is completely free and must be filed through the IRS. You can file online or mail in the application. Keep in mind that if you are a foreign filer or do not have a social security number, you must file for your EIN through the mail.
Online
The quickest and easiest way to apply for your EIN is online. You will receive your number once your application is completed. Visit the IRS website to apply for your free EIN.
By Mail
You must fill out this form when applying for your LLC by mail. If you are a foreign filer or do not have a social security number, leave section 7b blank. Mail the completed form to the address below. You can follow up on any questions with the IRS at (267) 941-1099.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Step 7. Keeping Your LLC Running
To keep your LLC running as smoothly as possible, there are some ongoing tasks that you should stay on top of.
File Annual Renewals
Each year that your LLC is in business, an annual renewal with the Secretary of State’s office must be filed. This renewal is due by the anniversary of your business’s establishment each year, and the Secretary of State’s office will send out a notice 45 days in advance of your deadline.
You must file your renewal online through the Secretary of State’s Business Registry Web Renewal portal. Once you look up your business via its registry number, follow the instructions to file your report. Renewals are immediate upon online filing and carry a $100 fee.
Separate Your Business Finances
Oregon does not require your LLC to create a separate bank business bank account, but it is a good idea to do so anyway. A business credit or debit account can keep your LLC’s finances separate from personal ones, fully establishing your LLC as an independently operating business. This is especially helpful in the case of lawsuits or other legal issues surrounding your LLC.
When opening a debit or credit account for your LLC, you likely need to show your Articles of Organization, operating agreement, EIN, or other LLC documents. You should also compare all your banking options before choosing where to open an account; different banks have varying minimum required balances or credit spending limits, and you want to be sure that you select what is best for your LLC’s needs.
Keep Up With Federal and State Taxes
While running your LLC, you should keep up with federal and state taxation requirements to avoid major penalties or fines.
Federal Tax Requirements
There are several tax structures you can choose from for your LLC that meet different company needs, as each structure comes with its own unique federal requirements. This article can help you gain an in-depth understanding of the differences between each type of tax structure and help you decide which is best for you.
In general, most LLCs are taxed as sole proprietorships or partnerships. This means you are expected to file a Schedule C along with your individual income tax return to declare any income that you receive through your LLC (your LLC acts as a pass-through entity in this situation).
When using this tax structure, keep in mind that you most likely need to pay self-employment tax (at a rate of 15.3%) in addition to any income tax. You may also need to make quarterly estimated tax payments to avoid any IRS fines; the IRS website gives more details on this.
If you want, you can choose to have your LLC taxed as a corporation, like an S Corporation or a C Corporation. You must fill out IRS Form 8832 and IRS Form 2553 to declare this. After these forms have been processed, your LLC will be treated as a corporation and expected to file a separate corporate tax return with the IRS.
Oregon Business Taxes
There is no general business tax required of LLCs in Oregon, but if your LLC is electing to be taxed as a corporation, you may be liable to pay corporate excise tax.
If your LLC is taxed as a sole-proprietorship or a partnership (i.e., a pass-through entity), then you must pay taxes on your business income as part of your individual state income tax return. The Oregon Department of Revenue can give you more information about filing your individual tax return with the state.
Sales and Use Taxes
Oregon does not have a general sales or use tax for goods or services sold within the state. This means your LLC is not liable for sales and use tax unless you are selling items online to different states; in these cases, you need to pay sales taxes to the state you are selling in. More information on this can be found here.
State Employer Taxes
If your LLC has employees, you likely need to pay state payroll taxes and unemployment insurance taxes. Keep in mind that you might also need to pay these taxes on a federal level for your employees.
State payroll taxes can be paid for through the Oregon Department of Revenue, while unemployment insurance taxes will be paid through the State of Oregon Employment Department. Both websites also give more information about calculating your taxes and payment due dates.
Acquire Necessary Permits and Licenses
While there is no general business license requirement in Oregon, you may need to meet local permit and licensing requirements. To find out if your LLC requires licenses, you can check this list of resources on the Oregon Secretary of State’s office. It is also important to note that if you are offering professional services, you may also be required to meet certain state professional licensing requirements.
Your LLC may need to obtain additional permits or licenses on a federal level, though whether this is needed depends on the type of business you run. To determine if you need to meet additional federal requirements, you can use the licensing directory on the U.S. Small Business Administration’s website.
Oregon LLC Resources
This complete list of resources will guide you through each step of the LLC establishment process in Oregon.
- Available LLC name search
- Reserve an LLC name
- Available domain name search
- Register a DBA name
- Oregon registered agent information
- Articles of Organization form
- Articles of Organization online file
- IRS EIN online application
- Annual Renewal online file
- Oregon Department of Revenue
- State of Oregon Employment Department
- Oregon business licensing information
- S. Small Business Administration
Oregon LLC FAQs
The list of FAQs below can put any lingering concerns about starting up your Oregon LLC to rest.
In Oregon, it will cost $100 to file your Articles of Organization, $100 to reserve an LLC name, and $50 to register a DBA name in the state.
The cheapest way to start an LLC in Oregon is to file your Articles of Organization online or through the mail without first reserving an LLC name or registering a DBA name in the state. Doing it this way will only cost $100 to get your LLC established.
How much your Oregon LLC pays in taxes depends on the type of tax structure you set up. You may also need to pay state taxes such as corporate excise tax and state employer taxes. If you are selling goods or services online, you may also need to pay out-of-state sales taxes.
If you have questions about how much you owe in taxes, don’t hesitate to seek professional advice from an accountant or financial advisor, as they can help you understand your tax burden.
You must file a renewal for your LLC annually. This report is due each year by the anniversary of your LLC’s formation. It must be filed online through the Oregon Business Registry Web Renewal system and costs $100 to file.
If you have finished conducting business under your LLC, you must file Articles of Dissolution with the Secretary of State’s office to notify the state your LLC is shutting down. This document costs $100 to file.
Additionally, you may need to consult any applicable operating agreements and proceed down the agreed-upon steps for concluding your LLC’s business and tying up any loose ends.