You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees — before you sell a single product, there are startup costs associated with launching an LLC in Oregon.
Make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Oregon startup fees here.
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Overall Oregon LLC Formation Costs
LLC Name Reservation Fee
Got a great business name in mind? Worried someone might take it? You might consider filing a name reservation. Reserving a business name isn’t required, but it can be a helpful tool if you aren’t yet ready to start your LLC. In Oregon, you simply need to file the Application for Name Reservation form and pay a $100 filing fee. This will reserve the name for 120 days.
To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.
Whether you reserve your business name or not, you should always perform an Oregon business name search to make sure the name you want is available.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Oregon LLC. Every Oregon LLC must have an Articles of Organization on record with the Secretary of State before commencing business in the state, so you’ll want to file one online or use a paper copy as soon as you are ready. It will cost $100, no matter how you file it, but it’s a payment you’ll only need to make once since the Articles of Organization is a one-time filing.
The information required to file the Articles of Organization includes the official business name of your LLC, the duration of your LLC, your LLC’s principal office address, the name and address of your registered agent, your LLC’s mailing address (if different from your principal office address), an indication that your LLC is managed by its members or a manager, the professional services to be provided by the LLC (if applicable), the names and addresses of your LLC organizers, the names and addresses of your LLC’s members and/or managers, the name and address of “at least one individual who is a member or manager of the LLC or an authorized representative with direct knowledge of the operations and business activities of the LLC,” and your printed name, title, signature, and phone number.
Business and Professional Licenses
Not all Oregon LLCs need professional licenses to conduct business in the state, but some do. Bakeries, for example, need to obtain a Food Handling License from the Oregon Department of Agriculture. On top of that, cities and/or counties have their own licensure requirements, so you’ll need to consult not just the state licenses page, but also your local government to see which licenses your LLC needs.
What are some of the most commonly required business licenses for Oregon LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.
LLC Formation Service
Starting an LLC in Oregon can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation website. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (like LegalZoom or ZenBusiness) offer basic LLC formation services like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, operating agreements, and expedited filing.
Registered Agent Service
Appointing an Oregon registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Oregon business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.
Cost variations depend on the experience and location of the lawyer. Even though there are a whole lot of qualified, experienced business lawyers out there, you only need to choose one. When making this tough decision, consult a website like Avvo, which provides access to a database of Oregon attorneys, so you can search, compare, contrast, and find the best fit for your LLC.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Oregon. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Oregon. Foreign LLCs file an “Application for Authority to Transact Business” rather than the Articles of Organization.
All foreign business entities are required to foreign qualify in Oregon, or they could incur some pretty severe penalties. Refrain from doing business in the state until you’ve filed your Application for Authority online or on paper and paid the $275 fee. It’s pricey, but like the Articles of Organization, it’s only a one-time filing.
LLC Annual Fees
To keep its records current and accurate, the Secretary of State’s office requires every LLC to submit an annual report (or “annual renewal”) before its anniversary date each year. You can file your annual report online and each will cost you $100. Because this is a recurring fee, be sure to include it in your yearly budget.
The information required to file your annual report includes the official business name of your LLC, a brief description of your business purpose, your business email address, your LLC’s mailing address, a name and telephone number in case the state has questions about your report, your LLC’s principal business location, the name and address of your registered agent, and the names and addresses of your LLC’s members and/or managers.
For more info on annual reports for Oregon LLCs, check out our full article on this topic!
Taxes for an Oregon LLC are fairly straightforward. The federal government classifies LLCs as “pass-through” entities, so they don’t need to file corporate tax returns. Instead, the owners and/or members report income and losses on their personal returns. Additionally, Oregon doesn’t impose “franchise” or “privilege” taxes on its LLCs like some states do, and there’s no in-state sales tax either.
The most common reason an LLC would need to pay Oregon taxes is if it hires employees. Any company with employees must pay a Withholding Tax and an Unemployment Insurance Tax. These both require a Business Identification Number, which you can obtain through the Oregon Business Directory or by submitting a Combined Employer’s Registration Form.
Or, if you’ve deliberately set up your LLC to be taxed as a corporation, it will need to file a corporate tax return and pay the 6.6-7.6% corporate income tax, depending on your income. Learn more about Oregon’s business taxes on the Department of Revenue website.
What if I Don’t Pay?
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Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
Skip filing the Articles of Organization or the Application for Authority and you won’t be able to start doing business in the state. Miss an annual report and your LLC will be listed as “inactive,” which means it’s out of good standing with the state. Businesses without good standing cannot foreign qualify in most states, apply for many business loans, and renew most professional licenses. If you still haven’t filed your annual report 45 days after the due date, your LLC can be administratively dissolved.
Late tax payments will incur penalties as well. Late Withholding and Unemployment Insurance taxes, for example, will incur a penalty of 10% of the tax due, plus 1.5% interest per month. Learn more about Oregon’s employer tax laws here. In general, staying on top of your filings and taxes will save you a lot of money and trouble down the road.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Oregon.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees — like annual reports — so your business doesn’t fall out of good standing.
Key Steps for Starting an Oregon LLC
- The first step to forming an Oregon LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
- Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Oregon, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $100 fee. Once the state processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Oregon LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the Oregon Department of Revenue, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.
- Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Oregon!
Key Steps for Maintaining an Oregon LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Oregon.
What are the state business tax rates in Oregon?
If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 5% and 9.9%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay Oregon’s 6.6-7.6% corporate income tax on your business revenue.
How quickly does Oregon process LLC formations?
The Secretary of State lists real-time turnaround times on its website. While these times are subject to change, at the time of this writing, LLC formations filed online were taking about five hours to process, while mailed or faxed forms took four business days.
How many small businesses are there in Oregon today?
The state of Oregon is home to more than 320,000 small businesses. Entrepreneurs of all backgrounds and business types find that Oregon is a great place to own and operate a small business.
What are the top small business resources and websites in Oregon?
The Oregon chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Oregon LLCs. The U.S. Small Business Administration’s Oregon District Office is another valuable resource, and the state’s small business resource page also has plenty of good info.
Should I form my LLC in Oregon, or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.
Cost to Start an LLC in All 50 States
We break down the LLC costs in detail in all 50 states. View all of our State LLC Costs guides below.