An Oregon LLC is a way to legally structure your business so that you have personal asset protection. This means that your personal assets are protected in case your business is sued or has financial issues. LLCs are popular because they provide flexibility while requiring minimal formalities.
This guide on how to form an LLC in Oregon will take you through the pertinent steps in forming your company. A few extra steps that you should cover after your LLC is approved are also included.
Let’s get started!
1. Pick A Name For Your Oregon LLC
The name of your OR LLC should be unique and distinguishable. This means that the name can’t be the same as, or very similar to existing entities on record with the state. Careful planning is in order for picking a name because a lot of LLCs find their applications rejected due to naming issues.
A good place to start due diligence for naming is using the name search function on the Oregon secretary of state website. Searching business entities with your desired name will give you a good idea of the availability of the name.
If you find a good name, it’s also worthwhile to check the USPTO website to check for any possible trademark issues.
Choosing A Proper Designator For Your OR LLC
Every LLC should end its name with a proper designator. The following are available for use in Oregon:
- Limited Liability Company
You can pick any of these for use, though LLC is the most common.
Reserving A Name For The Oregon LLC (optional)
Name reservations allow a 120-day hold on the name, without actually having to form a company. The application can be filed with the Oregon Secretary of State Corporation Division, using the Central Business Registry webpage.
2. Appointing A Registered Agent
A Registered Agent is a person or business entity that agrees to receive service of process on behalf of your Oregon LLC. Service of process pertains to receiving legal documents, including lawsuits, summons, subpoenas, etc. So this is an important role that must be filled cautiously.
It’s mandatory for a Registered Agent to have a physical street address in the state. Additionally, they should maintain regular office hours (9 am to 5 pm), so they can receive service of process if/when necessary.
This is a big reason why many OR LLCs choose to hire commercial registered agents. These are professionals suited for the role and can easily maintain the necessary office hours, which may not be possible for the average person.
Nevertheless, any adult resident of the state can take the role. To be more specific, your OR LLC registered agent can be:
- A person who lives in Oregon.
- A foreign or domestic business entity that is allowed to do business in the state and has an office located in Oregon.
3. Starting An LLC In Oregon – Filing Articles Of Organization
Filing Oregon Articles of Organization with the Secretary of State is the key to starting an LLC in Oregon. It’s possible to create your LLC by filing these documents online or via mail. The Oregon LLC cost (LLC filing fee) is $100 for either method.
The recommended method is filing Articles of Organization online. It’s more convenient and faster than the other methods. The process is fairly intuitive, so there shouldn’t be any trouble in completing and filing the documents.
If filing via mail, you’ll have to download and fill the LLC Articles Form. In this case, the filing fee can be paid via check or money order made payable to “Corporation Division”. Mail the completed form along with the payment to:
255 Capitol Street NE,
Oregon Articles of Organization filed online are usually processed and approved in 1-2 business hours. For filings received via postal mail, the processing time is 5-7 business days.
An Oregon LLC comes into existence when the Articles of Organization are approved. When the LLC is approved, the state will send an Acknowledgment Letter that includes the LLC’s registration number. You can download a stamped and approved copy of the Articles of Organization from the Oregon Registry.
4. Operating Agreement For Your Oregon LLC
It’s not legally necessary to have an operating agreement when you set up your LLC in Oregon. However, it is highly recommended that you have one. The agreement shows that your LLC is being operated properly. In case the business ends up in court, the presence of an agreement may reinforce personal liability protection.
How detailed the agreement should be is up to the LLC members. For example, it could include details like the roles and responsibilities of each member, the percentage of the LLC owned by each member, approach to taxation, dispute resolution mechanisms, and more.
You could think of the agreement as a constitution for the LLC. How detailed you want it is entirely up to you!
While it’s very relevant for multi-member LLCs, single-member LLCs too should consider getting an operating agreement.
It’s worth noting that an Operating Agreement is an internal document of your LLC. There’s no need to file it with any government department.
5. Getting An EIN (Federal Tax ID)
Having an EIN (Employer Identification Number) is important for your OR LLC in its day-to-day operation. This is a federal tax ID, which you can get by filing with the IRS.
You should file for the EIN only after your LLC has been approved. There is no filing fee for getting an EIN.
The simplest and quickest way to get an EIN is by filing the application online. It practically gets an instant approval and your EIN will be available when you complete filing the form.
Form SS-4 comes into play in cases where online filing isn’t possible. Once completed, you can submit this form to the IRS via fax or postal mail. Filing via fax is faster and takes about 4-7 business days to process. Postal mail processing can take 5-8 weeks.
6. Annual Reports For Oregon LLC
Every LLC in Oregon must file an annual report. The report is due every year at the anniversary date of the LLC. Note, the anniversary date is the date on which the LLC was approved by the Oregon Secretary of State.
For example, if your LLC was formed on April 14, 2020, the annual report will be due by April 14 every subsequent year, as long as the LLC stays in operation.
The annual report can be filed online or via mail. It makes better sense to file it online through the Business Registry Web Renewal page on the Secretary of State website. The filing fee is $100.
In case you fail to file the report by its due date, the state will allow a 45 day grace period. After this time, the state may choose to administratively dissolve your LLC.
7. Business Licenses, Permits, And Taxation
There is no general business license or permit for the State of Oregon. These will depend on the location and industry of your business. Some industries may attract specific licensing requirements at the local, state, or even federal level.
Thankfully, Oregon makes it (relatively) easy to figure out what permits/licenses you might need through the Business Xpress License Search Directory. While this is helpful, you should still contact your local county/city to ensure compliance.
State taxes are as important. While Oregon is one of the few states that don’t charge Sales Tax, there are Income Tax requirements. The state has four tax brackets, which depend on the income of the Oregon LLC. You will have to file tax returns with the state. Additional taxes may also apply to specific industries or sectors.
Federal taxation for LLCs is pass-through by default. Profits or losses from your LLC in Oregon will be reported as part of your personal tax returns. However, the forms to be used can vary depending on multi-member or single-member LLCs. Similarly, the tax requirements can change if you choose to structure your LLC to be taxed as C-corp or S-corps.
Staying compliant with tax as well as permits/licensing requirements is important for your Oregon LLC. If you don’t have an in-depth knowledge of these requirements, it’s always a smart idea to hire a professional.