Just like in any other state, an LLC in Oregon is a type of commercial entity that is very popular in the country, especially in the mentioned state. This type of business can have a flexible management structure, which allows you to protect the personal assets of the owner(s) in case of any business problems, and also provides more flexibility in terms of taxation.
The main document to obtain when forming an LLC in Oregon is Articles of Organization (AKA a Certificate of Formation), which are part of a formal legal document that is required to establish a company at the state level. The Articles need to be filed with the Secretary of State. After that, your LLC is considered legally established, and you can start running your company officially in Oregon.
Note that Oregon LLC costs and rules for dealing with the Oregon Secretary of State are current for 2022. All fees, rules, and methods of sending documents can change periodically. Thus, make sure you check the official website to stay up to date.
However, if you want to operate your business seamlessly, without risking your company status, you will need more than just the Certificate. If you're wondering how to form an LLC in Oregon, read this guide till the end and study the entire registration process step by step. Or choose best rated online LLC formation service in our rating and get help.
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On the one hand, when trying to find out how to open an LLC in Oregon, you might decide the registration process is quite simple. Especially, if you study this guide carefully. On the other hand, the process requires utmost care, time, legal advice, and, of course, investments.
For example, if your company requires a professional license or specific permits to operate in Oregon, you will need to research this issue separately.
If you wish, you can contact a company that will professionally assist in Oregon LLC formation. This will save your time and allow you to avoid mistakes when filling out your documents. On the other hand, many companies tend to impose additional services (upselling). That's why it makes sense to understand exactly what you are ordering and how much you really need the services offered.
The first thing you need to do before getting to your Oregon LLC registration is to come up with a good business name for your company. The name should be 100% unique and distinguishable. Make sure it's not taken by any other business operating in the state and that it complies with all the necessary Oregon rules and regulations. You can see the full list of requirements in the Oregon state statute (Oregon LLC naming) here and here.
According to the Oregon state statutes, there are some words or abbreviated versions to be included in the LLC name. Thus, your business name has to necessarily show the type of your business entity. That's why you will need to add one of the following options at the end of your chosen LLC name:
You can choose an abbreviation or the full phrase. Keep in mind that your LLC name will be rejected by the Secretary of State unless you add one of the options above.
In addition, there are also restricted words and phrases to consider when choosing a business name for your Oregon LLC:
If your business requires obtaining a professional license/permit, additional paperwork, or some other type of authorization, double-check with the Secretary of State if you can use the chosen name.
To make sure your LLC name not only meets all the required rules but is also available for registration, visit the Oregon Secretary of State's website and check the Business Name Availability Check page.
Things to consider when checking your LLC name:
If the name you want is already taken, you can negotiate with the entity to have them change their name or prove in court that you have a priority right to that very name.
Once you know that your chosen LLC name is available for registration, you can reserve it for up to 120 days (optional). To do this, you must file an Application for Name Reservation with the Oregon Secretary of State and pay a $100 fee. Alternatively, you can also file online at the Oregon Central Business Registry page.
Your official business name may be too long or, otherwise, inconvenient to use for marketing purposes. In Oregon, you have the right to register an additional fictitious business name (DBA), which will be used on signs, advertisements, websites, or your business cards.
A fictitious business name is otherwise called a brand name, trade name, or simply a DBA (short for "doing business as"). The state's requirements for this alternative name are not so strict. For example, you may skip the "LLC" or "L.L.C." the corresponding phrase in it. However, the restrictions on words and business names, which misinform people or are overly similar to other existing business names, remain valid.
One advantage of a DBA is the ability to change it (if necessary) without amending the entire Articles of Organization or registering a new LLC.
For example, if your company sells fruit juices and beverages, then your LLC name might be: "Johnson's Fruit Juice Beverages LLC." To shorten the name a little, you can register a DBA that says "Johnson's Juices."
Say, after a few years, you come to the decision to change your major product line, and switch to coffee, leaving fruit juices as additional goods. To inform your customers about this, you can simply change the DBA to "Johnson's Coffee and Beverages."
You can quietly change your signage, information on the website, and advertising materials. However, you will leave the official LLC name unchanged in legal and financial documents.
To use a DBA in Oregon, your official business name will need to be registered with the Secretary of State. This can be done online at the Secretary of State's website, or you can download the New Registration form on the Assumed Business Name Registration Forms page.
The filing fee for DBA registration is $50. Every two years you will be required to renew your DBA.
So you have chosen your business name, but it's still too early to register an LLC - you still need to hire a professional registered agent to list on the Articles of Organization. Thus, the second step in learning how to start an LLC in Oregon is to understand who a registered agent is and why you need one for your business.
A registered agent is an entity or person who will receive business correspondence and handle service of process on behalf of your company. This way, in case any state government agency sends you any kind of documents for consideration or, otherwise, your LLC becomes the subject of a lawsuit, all business documents will be sent to your official registered agent's address.
Under Oregon law, a registered agent can be:
Your registered agent must have a physical address (a registered office, not just a P.O. box) within the state and must be available at that address during regular business hours, 5 days a week (except weekends).
A registered agent may be commercial or non-commercial. In the first case, it must be an RA that has a Commercial Registered Agent Listing with the Oregon Secretary of State as a legal entity that provides registered agent services. In the second case, it can be any individual who meets certain requirements of the state.
Since setting up an LLC in Oregon requires certain investments, aspiring businessmen often try to save on the services of a registered agent and list themselves or one of their LLC members as the RA in the registration documents.
Being your own registered agent in Oregon, of course, has its advantages:
However, at the same time, such a solution also has quite significant downsides:
Therefore, experienced entrepreneurs prefer to cooperate with professional RAs. The cost of their services is not high (around $100 per year). This way, you will have a reliable expert to take care of all the necessary paperwork and will be able to focus directly on your business growth.
If you are planning to work not only in Oregon but also open a new LLC or register as a foreign LLC in other states, you should pay attention to national registered agents.
Such companies have offices in different states and often provide beneficial discounts for bulk service (multiple companies or multiple states at the same time). Moreover, you will only need to pay to a single entity, which is also convenient.
It's important that your registered agent is reliable and understands all the specifics of state laws. That's why it's best to choose the services of reputable companies with excellent reputations.
Finally, once all the preparations are finished, you can now move on to the main step, which allows you to understand how to get an LLC in Oregon. Namely, you can register your Articles of Organization with the Secretary of State.
In the Articles, you must include the following information:
You can file your Articles of Organization online at the Secretary of State's website. This method is the easiest and the fastest. You can also download the Articles of Organization form in PDF, fill it out, and mail it to the Oregon Secretary of State.
Secretary of State, Corporation Division
255 Capitol St. NE
Salem, OR 97310
The state filing fee is $100.
Processing time for online filings is about 1 hour. Applications by mail may require more than a week to process.
If you decided to apply by mail, be sure to enclose the correct filing fee with your filing.
Basically, the question of how to create an LLC in Oregon was answered in the previous step, because legally, your LLC is officially established once the Articles of Organization are approved by the state. However, in order for your company to be fully operational, there are other things you'll need to consider, e.g. an Operating Agreement.
An OA is an internal document that governs the structure of the company, roles of LLC members, profits, responsibilities, disputes, and other important aspects of your business.
Under Oregon law, you are not required to have an OA or file it with the Secretary of State. This document will be stored in your LLC's business records. An OA can be effective before you file the Articles of Organization, at the time of processing, or later at any time.
Although an OA is not required to create an LLC in Oregon, most LLCs still have one. The only exceptions are single-membered LLCs. Essentially, an OA is a contract between all LLC members, which is created and signed by every member to govern the operation of the company and resolve all kinds of disputes in an expeditious manner, without any legal involvement.
An operating agreement may include the following points:
All members of the LLC should take part in editing the OA. After you reach an agreement on each relevant point, the document is then signed and stored with the rest of your business documents.
In Oregon, there are no state requirements associated with obligatory advertising your new LLC in local newspapers, as is still the case with New York LLCs, for example.
All the necessary business information is provided in the state's database of legal entities (during the process of Articles of Organization). Business owners will then be able to find their LLCs on a list of registered legal entities. No additional steps are required.
An EIN is a nine-digit unique legal entity identifier for tax purposes, just like a Social Security Number (SSN) for an individual.
You must obtain an EIN if at least one of the following statements is true for your LLC:
Otherwise, you are entitled to use your own SSN number instead of an EIN. However, we recommend that you get an EIN anyway (you will never regret it and it will not cost you anything).
First, an EIN will help you open a business bank account since they almost always require an EIN number when you open an account. Secondly, your EIN will help you simplify your business management, protect your personal assets in case of any business problems, and avoid possible fraud against you.
Getting an EIN number is easy. You can go to the IRS website and apply online. It's simple, intuitive, and takes no more than 5 minutes to complete. You can also print and fill out IRS Form SS-4 and send it by mail.
If you apply online, you will receive your employer identification number in just a few minutes. When choosing regular mail, you will have to wait for the mail to be delivered and processed. The IRS doesn't give you an exact timeframe, however, most of the time, it takes a few days to process.
As mentioned earlier, there's no charge for receiving an EIN. So, if the company that helps you start your new business requests a fee for the service, there's no point in paying for it - you can always do this on your own for free.
To understand how much you need to pay to form an LLC in Oregon, let's summarize:
Thus, to open an LLC in Oregon, you may need as little as $100.
However, you'll need more money to hire a registered agent, file a DBA, and so on. In addition, creating an OA is also likely to incur some costs (the document needs to be legally correct so you may need the help of a lawyer).
In addition, obtaining business licenses and permits for certain types of activities in Oregon is also associated with certain costs, since you will need to pay registration fees when obtaining such documents.
If you plan to be engaged in special business activities or if our guide seems overcomplicated, you can hire a professional business formation company that will help you start a business in Oregon.
On the one hand, you will have to pay extra for the services of professional companies. On the other, registering an LLC on your own can often become even costlier. That said, if you choose a professional service, you will not have to pay for any legal consultations. Moreover, many business formation services offer additional services (e.g., OA templates) for free. Lastly, even the cheapest package will often include a free year of registered agent services.
Considering the fact that LLC formation in Oregon can cost you as low as $30-40 (for the minimum package, excluding the state filing fee), you will save your time, effort, and money in the long run.
Once you understand how to start an LLC in Oregon, we recommend considering additional steps. Legally, none of them are required by the state, however, it's best that you still do after you register your LLC.
You can operate an LLC in Oregon without a separate bank account. As a member of your LLC, you have every right to use your personal bank account for any transactions associated with your company.
However, we still recommend creating a separate business bank account for the LLC. This way, you will protect your personal assets and get more opportunities for your business.
Advantages of having a separate business bank account;
The last point of advantages can be called the most important. This is due to the fact that an LLC is often established with the purpose of running a business safely while maintaining reliable protection for personal assets.
The thing is that the personal finances of LLC members are protected by a so-called "corporate veil." This means that all debts of the company will be paid only at the expense of the company's assets. LLC members' personal savings remain untouched.
However, if you are going to receive payments for services into your own bank account or, conversely, pay for utilities or personal purchases from your corporate account, you will break that veil. In this case, in case of a lawsuit, your adversaries can claim reimbursement from your personal account as well.
That's why we strongly recommend you to open a separate business bank account for your LLC, and be careful with your company finances, i.e. never mix them with your personal assets, even if you are the only LLC member.
There's one last preparatory step that needs to be done before you start running your business. Many startups try to skip the insurance issues since it implies additional expenses, which is often simply impossible at the initial stage.
However, think about why you are insuring your life, car, or home. It's the same with business insurance. In case of certain force majeure situations, you will have an "airbag" for your business. To save money, do your research on business insurance types carefully and pay only for those policies that are suitable for your line of business.
Here are some of the most popular types of business insurance:
Once the process of starting an LLC in Oregon is completed, and you can officially run your business, it's important to remember to follow state laws and timely pay your taxes. Remember that state laws may change with time so you want to keep an eye out for possible changes in the part that governs your business.
These can be:
You also need to research your tax requirements and consult your professional accountant so that your LLC is always compliant with the IRS.
At the federal level, LLCs are considered pass-through entities. However, you will need to pay self-employment tax and federal income tax.
You and your LLC employees will also have to pay state income tax to the Oregon Department of Revenue, depending on how much you make (at an average rate between 5% and 9.9%).
If you choose to be treated as a corporation, you will need to pay Oregon Corporate Excise Tax (depending on your net income). Also, if your commercial activity is in excess of $1M, then there's also the Oregon Corporate Activity Tax (CAT) that you will have to consider.
In addition, whether or not your company has employees, you must pay social taxes (Social Security and Medicare). And if you have employees, it's important to deduct taxes from their paychecks on time.
A limited liability company is a welcoming legal structure for many businesses. Start an LLC is easy. Select your state to start.