The geographic demographics and educated workforce of Oregon favor the prosperity of both software and hardware sectors. The traditional natural resource is the platform for industry conglomeration in manufacturing, wood products, food processing, etc. Oregon’s location along the pacific rim gives easy access to foreign markets.
There are a lot of factors to consider before establishing an LLC in the state. One such factor is its moderate tax friendliness. Oregon has no sales tax. Unlike other states, if your LLC sells goods in Oregon, you do not have to pay the sales tax.
Limited Liability Company (LLC) is a legal structure of a company that provides protection to its owners. The default flow-through income taxation keeps things simple. Forming an LLC in Oregon is easy.
Create an LLC in five easy steps in Oregon
Step 1: Name Your Oregon LLC
Select a suitable and catchy name for your LLC to reach out to prospective clients and customers. Make sure the name follows Oregon’s naming guidelines.
- Follow the below points to name your LLC:
- The name must contain the phrase “Limited Liability Company” or one of its abbreviations such as “L.L.C.” or “LLC”.
- The name must be distinguishable upon the record.
- The name must not imply a purpose other than mentioned in its articles of organization.
- The name cannot have state-restricted words such as the attorney, insurance, etc., unless it has a licensed individual as its member such as the doctor or has permission to operate as such.
- The name cannot imply it is a corporation unless it has undergone the required paperwork.
- The name cannot include words like the FBI, federal, etc., that may imply it is a governmental agency.
- Availability of a suitable name -Before settling on a business name, make sure it is available in the state by doing a Business Name Search on the State of Oregon website.
- Accessibility to the desired URL – You can consider looking up the availability of desired web domain for expanding your business.
Note: You can reserve a name for 120 days by filing an Application for Name Reservation with the Oregon Secretary of State Corporation Division. It can be filed online through the Central Business Registry webpage.
- How much does it cost to register an assumed business name (DBA) in Oregon?
You can register an assumed business name in Oregon by filing the Assumed Business Name – New Registration form with the Oregon Secretary of State. The filing fee is $50 and can be done online or via mail. File online.
Step 2: Appoint a Registered Agent
A registered agent is a business entity or an individual designated to accept service of processes, legal documents, and official mails on behalf of your business. A registered agent acts as the point of contact between your business and the State.
To qualify as a registered agent, the entity must have a physical street address in Oregon and be available during conventional business hours. An entity with PO Box as the only address cannot become a registered agent.
- Can I be my own registered agent?
Yes, You or any individual from your LLC can become a registered agent, given they meet all the requirements.
Step 3: File the Oregon LLC Articles of Organization
To officially register your LLC in Oregon, file the articles of organization with the Oregon Secretary of State. This document contains important details that the government must know about your LLC. This could be filed online or via mail by paying $100 to the Oregon Secretary of State Corporation Division.
If you are expanding your LLC to Oregon, a foreign LLC has to be formed.
Following details are required for your Articles of Organization:
- Name of the LLC
- Duration (choose perpetual if your LLC will be active for an indefinite time, or add a date if you want your LLC to end on a specific date).
- Name and contact details of registered agent
- Address where the division may mail notices to the LLC
- (Optional) Professional service being rendered
- Name and address of organizer(s)
- Name of members and managers
- Name and address of at least one individual with direct knowledge about the business activities of the LLC
- Signature of Organizer(s)
File via mail: Download Articles of Organization – Limited Liability Company form
File online: Articles of Organization
Mail to: Secretary of State – Corporation Division
255 Capitol St. NE,
Salem OR 97310
- What is a foreign LLC?
When an existing LLC expands its business to another state, it is known as a foreign LLC in that state. A Certificate of Good Standing is filed along with the articles of organization to register as a foreign LLC. This certificate ensures that the LLC was legally formed and is in accordance with the state.
To register a foreign LLC, read and fill out necessary forms with the Oregon Secretary of State.
- How to order a Certificate of Existence/Good Standing in Oregon?
The Certificate of Good standing, known as Certificate of Existence in Oregon, can be requested by filing the Request for Certificate application with the Corporate Division of Oregon’s Secretary of State by paying $10.
- How long does it take to form an LLC?
It takes 24 hours if filed online or up to 5-7 days if filed via mail.
- What is the difference between member-managed and manager-managed LLC?
- Member-managed: A member-managed LLC structure is decentralized management where the administrative powers are dispersed among the LLC members. Every vote counts during the decision-making process.
- Manager-managed: A manager-managed LLC structure is centralized management where the administrative powers are concentrated to the manager(s) of the LLC. The vote of every member is not necessary for everyday affairs.
Step 4: Drafting an Oregon LLC Operating Agreement
An operating agreement is an internal legal document that has the structure of proper functioning of the LLC. It ensures every member is on the same page and thus avoids friction between them. The operating agreement must outline details about the finance and operations of the LLC. The state of Oregon does not require you to submit an operating agreement. However, it is advisable due to the aforementioned reasons.
Every member should have a copy of the document that could be looked up during conflict of opinion or during amendments.
The operating agreement can have the following details:
- Details about profits and assets distribution
- Voting decision
- Membership interest
- Rights and duties of members and managers
- Dissolution guidelines
- What is membership interest?
Membership interest represents a member’s collective ownership stake in an LLC. This includes profits and voting interests. Membership interest can be amended as per requirement.
Step 5: Get an EIN
EIN (Employer Identification Number) is a Federal Tax ID number issued by the IRS to your company. The IRS identifies and keeps tax records of your LLC using this unique nine-digit number. Getting an EIN is free of cost and paves the way for enormous business benefits. With EIN, you can keep your Social Security Number private and thus, prevent identity theft. You can apply for an EIN online, or via mail, or by fax.
Below are the few benefits of EIN:
- You can open a business bank account
- Get a business credit card
- Apply for a business license
- Get business loan
- File and manage Federal and State taxes
- Enables you to separate personal and business finances
- Hire employees
Apply online: Online EIN
Apply via mail or fax: Download application for EIN
Mail to: Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
- How can I file an EIN without a Social Security Number?
Social Security Number is not necessary to get an EIN unless you are applying online for it. You can file the SS-4 form via fax or mail to get an EIN for your LLC without a Social Security Number.
- Which tax structure should I choose for an LLC in Oregon?
By default, IRS taxes an LLC based on the number of members in it. Inform the EIN about the count of members. Accordingly, you will be told about the different tax options available.
There are several factors to bear in mind before choosing the tax status for your LLC (financial plans, company goal, etc.) You have federal, state-level and local tax obligations, which at times get complicated. We recommend speaking to a tax professional can help before making the final call. For more details, visit the Oregon Department of Revenue website.
- What is an Oregon Business Identification Number?
An Oregon BIN is a number issued by the Oregon Department of Revenue when you register with the Department of Revenue for taxes or to hire employees.
- Which license and permits are necessary for business in Oregon?
Depending on the type and location of your business, different licenses and permits may be required to operate your business in the state. For details, visit Oregon License Directory.
File an annual report
You are required to file an annual report of your LLC with the Oregon Secretary of State Corporation Division. You must file the annual report online through the Oregon Secretary of State Business Registry Web Renewal webpage. The filing cost is $100 for domestic LLCs and $275 for foreign LLCs. Your Oregon Annual Report is due on the anniversary date of when your LLC was initially filed.
Dissolving an LLC in Oregon
You can dissolve your LLC in Oregon in two ways – voluntarily or involuntarily. The latter option is easy but has its own consequences. LLC owners may lose Limited Liability Protection, and the company may be put into a forfeited status.
Voluntarily dissolving your LLC is preferable since it keeps you compliant with the state. To do so, check your operating agreement or articles of organization. One of these documents may have the procedures to be followed for dissolution, such as asset distribution, notifying creditors, etc. If not, follow the below procedures:
- Take consent of all LLC members – Hold a voting process and record the number of votes to approve the resolution in the LLC’s official meeting minutes.
- Winding Up
- Close your business tax accounts and cancel licenses – Your LLC has many tax accounts and permits associated with it under the Oregon State government. Pay off all the debts and taxes. Cancel every license.
- Distribution of assets – After paying the creditors, liquidate and distribute the profits and assets among the members of your LLC based on the agreement.
- File Articles of dissolution – File the articles of dissolution with the Oregon Secretary of State to voluntarily dissolve your LLC. This document asks for the following details:
- Name of the LLC
- Date of dissolution
- Authorized signature(s)
File the Oregon LLC articles of dissolution: Download form
The filing fee is $100, payable to the Oregon Secretary of State Corporation Division. The processing time takes a week.
Mail to: Secretary of State
255 Capitol St. NE,
Suite 151 Salem
Note: You will have to file a dissolution form in every state where your business operates. You will be entitled to pay business taxes and file annual reports if you do not file for articles of dissolution in that state.