Have you been thinking about making your dream of starting your own business in the beautiful Pacific Northwest a reality but not sure how to begin? This post will help guide you through the process of registering a business in Oregon – one of the most scenic and culturally diverse states in the region.
Registering a Business in Oregon – What You Need to Know
Before we begin, realize the information going forward assumes that you have already decided that operating your business as a sole proprietorship or general partnership (if you will have multiple owners) is not for you. While sole proprietorships and partnerships come with the least complexity and costs as related to startup and ongoing compliance requirements, they’re not all they’re cracked up to be. Unlike LLCs and corporations in Oregon, these default business types are not considered separate legal entities from their owners. That means owners are held personally liable if someone sues the sole proprietorship or partnership. Also, the pass-through taxation of sole proprietorships or partnerships might work against business owners financially. With all business profit and loss flowing through to owners’ personal tax returns, all business income (after allowed deductions) is taxable and subject to self-employment taxes.
That said, let’s get started exploring the steps needed for registering a business in Oregon.
1. Decide on a Business Name
Before you submit the necessary forms to register your business, you will need to choose a name for your business. Then you’ll need to check to see if the name is available and meets Oregon’s rules and regulations.
Do an Oregon corporation search on the name to make sure no other business has claimed it. The state won’t approve a name that’s too similar to another registered business name or if the name might mislead the public.
CorpNet’s free online corporate name search tool makes it a breeze to check the availability of a name, so there’s no reason to skip this critical step in starting a business.
2. Decide Which Business Entity Type You Want to Register As
In Oregon, you can register your business as one of various business entity types. The most common are the Oregon Limited Liability Company (LLC) and the Oregon Business Corporation (C Corporation).
The Oregon Secretary of State Office has online registration forms for filing a business entity. If you don’t register as one of the business types, then you will by default be considered a sole proprietorship or partnership—and we already discussed the downsides of those.
Oregon also recognizes other business structures, too, including Oregon Nonprofit Corporation, Foreign Business Corporation, and Foreign Limited Liability Company—all of which can be registered online. You can also register as a Limited Partnership or Professional Corporation, but these structures require filing by paper rather than electronically.
There’s a lot to consider when deciding which legal entity type will be best for your business, so I strongly advise you to talk with an attorney and a tax professional before making your choice.
What Are the Benefits of Forming an LLC or Incorporating in Oregon?
When you form an LLC or incorporate your business in the state of Oregon, you automatically gain some protection of your business name (within the state, no other LLC or corporation may use your name). You also get limited liability protection. Because your company is considered a separate legal entity from your personal self, your personal assets (such as your home, vehicle, retirement accounts, etc.) will typically be insulated from becoming used as restitution in the cases of lawsuits against and unpaid debt of your business.
You may also discover tax advantages by forming an LLC or incorporating. Definitely, talk with a tax professional to find out how each option will affect you from a tax perspective. The difference may have a significant impact on your bottom line.
Registering an LLC in Oregon
After you’ve confirmed your desired business name is available, you will want to appoint a registered agent that has a physical street address in Oregon. The state requires you have a registered agent before it will approve your request to form your LLC. For in-depth information about what requirements a registered agent must meet and what its responsibilities are, consider reading my recent article “What Is a Registered Agent.”
Next, you can officially register your LLC by filing “Articles of Incorporation” with the Secretary of State Office in Oregon. The state’s form requests the following information and some other details:
- Name of your LLC
- How long you want your LLC to be in operation
- Registered agent information
- Names and addresses of people forming your business
- Management structure of your LLC – LLCs may be member-managed or manager-managed.
- Description of services being rendered – You must provide this if your LLC is providing licensed professional services.
- Members’ names and addresses
- Managers’ names and addresses
Although not required by Oregon, I advise also creating an operating agreement for your LLC. This will define the roles and responsibilities of members and managers as well as layout the internal operating procedures of your LLC. In short, it will make sure everyone working in your organization is on the same page.
Other Considerations When Starting an LLC in Oregon
Officially registering your LLC with the state is a big step but not the only one you must to take. You’ll also need to take other essential tasks to set up your business, including:
- Obtain your EIN (Employer Identification Number).
- Open a business bank account. – As an LLC, you’re required to keep your personal and business finances separate.
- Apply for any required business licenses and permits.
- File for trademark protection of your business name. – If you wish to protect your business name in all 50 states in the U.S., file for a federal trademark through the United States Patent and Trademark Office.
Depending on the nature of your business, other requirements may apply, too. Make sure you check with the state and your local municipality to make sure you have covered all the bases.
Registering a C Corporation in Oregon
Just as an LLC does, you will need to designate a registered agent before registering a Business or Professional Corporation in Oregon.
Then you’re ready to file “Articles of Incorporation” with the Secretary of State. The information the state asks for via the form includes the following details in addition to a few other items:
- Name of your corporation
- Your registered agent information
- Number of shares your corporation is issuing – Corporations are owned by shareholders, and their percentage of ownership in the company is determined by the percentage of shares they hold.
- Description of services rendered – You must provide this if you’re registering as a Professional Corporation.
- Names and addresses of people forming the corporation
Other critical startup tasks to take care of after you’ve officially registered your corporation include:
- Start a records book to keep all your corporate papers—bylaws, stock certificate ledger, meeting minutes, etc.—in one central place.
- Prepare your bylaws. – This document will establish the ground rules for operating your corporation along with board meeting directions, the protocol for issuing stock, and other procedural information. Bylaws help everyone in an organization know how to run different aspects of the business and how to handle different circumstances. They also indicate to investors and the IRS that you operate a responsible, well-organized company.
- Appoint your directors and officers and hold your first board meeting. – Corporations must have a board of directors to oversee the company and vote on strategic decisions.
- Issue company stock. – Check with the Oregon Secretary of State to make sure you understand all rules and regulations that apply to you before issuing stock to your shareholders.
Other Considerations When Starting a Corporation in Oregon
In addition to the corporation-specific details I mentioned above, corporations in Oregon must also tend to standard business tasks, such as:
- Applying for an EIN
- Opening a separate bank account for the business
- Filing for any applicable business licenses and permits
- Filing for a federal trademark – If you want your business name to receive protection in all 50 states.
Another Option: LLC or C Corporation With S Corporation Election
LLCs and C Corporations in Oregon may elect to have S Corporation tax treatment. With S Corp election, business income is typically taxable on the members’ or shareholders’ individual federal tax returns. That information must then appear on the S Corp’s informational tax return via Schedule K-1. While S Corp owners pay income tax on business profits, the business must pay an excise tax for the privilege of doing business in Oregon (unless the company does not conduct business within the state). According to the Oregon.gov website, S Corporations might also need to pay state corporate income tax if they obtain income from a source within Oregon (from property located in or via business activities carried out in the state).
Costs to Register a Business in Oregon
Presently, you must pay an application-filing fee of $100 to register a domestic LLC, Business Corporation, or Professional Corporation in Oregon. Additional fees may also apply for other formation-related filings, such as assumed names, trademark registration, etc.
3. Stay In Good Standing—Don’t Dismiss Your Oregon Business Compliance Obligations!
Officially registering your business and tackling all the startup tasks is just the beginning. To ensure you don’t lose your limited liability protection and the tax advantages that come with being an LLC or corporation, you need to follow through with Oregon’s business compliance requirements. Contact the Oregon Secretary of State Office to find out what activities you must carry out and the filings you must make—and when they’re due. The shortlist will likely include filing income tax returns, submitting annual reports, holding shareholders meetings, and more.
Get Help When Registering Your Business in Oregon
I’ve mentioned this before, but it’s worth revisiting: Rather than going it alone and making uninformed decisions, consult an attorney and tax advisor for insight and expert guidance as you embark on registering your business.
Making the right choices from the start will save you a lot of time and money down the road.
And rather than handle all the details and document filings on your own, consider asking CorpNet to help you.
With the expertise to file virtually all your business formation documents and track your compliance requirements and deadlines (and file your compliance paperwork) in Oregon (and the other 49 states), we can save you a heap of time and do the job more cost-effectively than if you’d enlist a lawyer to execute your filings.
Contact us today and we’ll make sure registering a business in Oregon is fast, painless, and flawless!