Free Guide to Start an LLC in Oregon
Starting a business in Oregon can be an exciting time. Before selling your product or service though, the nuts and bolts of licenses, registrations, and taxes must be completed.
The guide below will show you the DIY process of forming an LLC in Oregon. However, you can also use an online LLC service to handle the paperwork for you. We reviewed and ranked the 7 best available.
The Top 2 Worth Considering:
- Northwest Registered Agent is a great option if you are looking for premium customer support.
- IncFile is ideal if you are looking for the best pricing with excellent features.
Step 1: Name Your LLC
Selecting a name for your Oregon LLC is a first step, yet a very important one. A name that is unique and easy to remember is helpful in finding potential clients or retaining customers.
The name should indicate the product or service. It should also follow guidelines set forth by the state of Oregon.
The name of an LLC will likely appear on business cards and stationary, marketing materials, a website, legal contracts, business bank accounts, invoices and/or a building directory.
Oregon law requires that the business name includes the words “Limited Liability Company” or the abbreviation “L.L.C.” It must be different than other names already registered. Distinguishable features do not include the following:
- The addition or deletion of punctuation or capitalization
- The use of singular, plural, or possessive form or a word
- The use of words or abbreviations that don’t really change the meaning of the name
- The change in a word or abbreviation that designates entity type
Distinguishable features do include the following:
- The use of one or more different letters or numerals, or a different sequence of letters or numerals
- The addition or deletion of a key word
- A different sequence of key words
- The creative or unusual spelling of a key word
- A different expression of a number: as a numeral, Roman numeral, or word representing a numeral
Let’s imagine that someone is considering opening a flower shop in Bend, Oregon. The name she is considering, Flowers by Fanny, L.L.C. is already in use. Instead, she decides to legally name her business Fanny’s Florals and Design, L.L.C.
Determine the Name is Available
Following the selection of a name but before filing the Articles of Organization, check to ensure that your name is unique on the Business Name Search database of the Oregon Secretary of State website. Searching in other places, such as online, is also a good idea.
After you have determined that your chosen name is “distinguishable,” the name can be reserved in order that you have exclusive rights for 120 days.
Optional: Name Reservation
Sometimes a situation may arise where an individual wants a particular name but needs time to organize his/her company before filing paperwork to create an LLC. In this case, a name can be reserved for 120 days in the state of Oregon.
The reservation fee is $100. An application for Reservation of Name can be filed through the United States Postal Service (USPS), Federal Express (Fed Ex), UPS (United Parcel Service), or in person. Name Reservations cannot be submitted online.
Processing time is five to seven business days. The reservation and payment can be mailed or delivered in person to the following address:
Secretary of State
255 Capitol St. NE, Suite 151
Salem, OR 97310-1327
Reservations will be processed while you wait. They can be delivered to the address above.
Express Mail Courier
If submitting the reservation to the Public Service Counter through an express mail courier (Fed Ex or UPS), the reservation will be processed the same business day. (The document does need to be submitted by 3 p.m.)
Step 2: Choose a Registered Agent
Every LLC in Oregon is required to have a registered agent. This agent can be an individual or a company.
The role of the registered agent is that of a contact person between the LLC and the state. As stated on the Oregon Secretary of State website: “A registered agent is an individual or a business entity located at a physical street address in Oregon, whose sole responsibility is to accept legal documents (service of process, lawsuits, liens, subpoenas, etc.) on behalf of the business.”
Simply put, the process agent receives communications or documents from the state involving such things as taxes or lawsuits and communicates them to the LLC.
Some may wonder why an Oregon registered agent is necessary. The importance of the agent is to ensure that someone is always available to receive important documents even if the business owner leaves the office, goes on vacation, or is otherwise away. Also, having a registered agent is especially important if a physical office does not exist in Oregon.
The owner of the LLC can designate a registered agent on the Articles of Organization application.
Individual as Registered Agent
Most importantly, the individual must be a resident of the state of Oregon. An LLC cannot act as its own registered agent. Using a third party ensures that nothing falls through the cracks. The third party can be an accountant, an attorney, or even a friend. The agent must have a physical and mailing address in Oregon.
Registered Agent Service
If using a service, the registered agent must be a business or professional organization. We recommend either using an LLC formation service (like Incfile or Northwest Registered Agent) which gives you a free registered agent or ordering a registered agent service by yourself if you choose to DIY your Oregon LLC formation.
Step 3: File the Formation Documents with State
Let’s assume that fictional Fanny has selected both the name for her LLC and the registered agent. She is ready to complete the paperwork (called the Articles of Organization) that actually creates Fanny’s Florals and Design, L.L.C. in Oregon.
This step can be completed either online, by USPS, through an express mail courier, or in person. The filing cost is $100. When you are ready, it is important to note a few details about each method to ensure that your application is fully completed in the time frame in which you need it.
In order to complete an online application, you will need to first set up an account on the Oregon Business Directory if you haven’t already done so. Standard processing time is one to three hours.
Hard Copy Filing
The application and payment can be mailed or delivered in person to the following address:
Secretary of State
255 Capitol St. NE, Suite 151
Salem, OR 97310-1327
If submitting through USPS, the processing time is five to seven business days. When delivering through Fed Ex or USPS, same-day processing is offered. When delivering in person, processing will be completed while you wait.
Step 4: Create an Operating Agreement
An operating agreement in the state of Oregon is recommended though not required. The agreement is a contract that defines the operations of the LLC, includes terms and conditions, states the responsibilities of its members, and ensures legal protections of its members.
All owners of the LLC must be in agreement of the terms in the agreement and sign before a notary public.
The operating agreement is useful for both multi-member and single-owner LLCs. In both cases, the agreement provides protections.
For example, in the case of the multi-owner LLC, the terms can stipulate what should happen if a death or divorce occurs among one of its members. In the case of the single-owner LLC, the agreement could be used in court as evidence that the LLC is separate from the individual owner.
The operating agreement can be created in two ways. Some individuals may choose to write the agreement on their own, using an online template. In this case, forms are available that are specific to state. Be sure to use the correct multi-member or single-member form.
The alternative is hiring an attorney to create the document. The benefits of using an attorney are ensuring the document doesn’t exclude any important information, adheres to state law, and invalidates default provisions that may not be what you wish.
Step 5: Get an EIN
An EIN is an Employer Identification Number. Anyone who runs their business as a corporation or partnership must file for this 9-digit number in order to identify the tax accounts of a business. The number can be applied for in one of the following three ways:
Applying online is the quickest method. The process can be completed between 7 a.m. and 10 p.m. EST, Monday through Friday. When the form is completed, the information will be immediately validated and a number issued while you are still online. In order to apply online, a valid individual taxpayer number, such as a Social Security number, is required.
Form SS-4 can be downloaded, completed and faxed to 855-641-6935, twenty-four hours, seven days per week. The EIN will be provided within four business days.
If either of the above methods are unavailable, Form SS-4 can be mailed, though processing will take approximately four weeks. The form can be mailed to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Think you’re ready to open up shop now? Guess again!
Step 6: Taxes, Licensing & Income Reporting
Businesses like Fanny’s Florals and Design, L.L.C. may be official after completing the above steps, but it is important not to overlook a few critical details.
On the federal level, most LLCs do not pay taxes directly to the government. Instead, they report income and losses on the owner’s personal 1040 tax returns. Schedule C is often used for reporting. Unless the LLC chooses to be taxed as a corporation, a single-member LLC is taxed as a Sole Proprietorship and a multi-member LLC is taxed as a Partnership.
Similarly, most LLCs will pay state tax on pass-through income via their personal income tax returns. The exception is if an election is made to tax the LLC as a corporation.
Unlike some states, Oregon does not require LLCs to pay a franchise or privilege tax. In addition, Oregon does not have a sales or use tax.
If your LLC has employees, you will need to pay a withholding tax and contribute to unemployment insurance. In order to do both of these things, you will need to first apply for a Business Identification Number. This can be done online with the Oregon Business Directory or by submitting a Combined Employer’s Registration form.
Finally, an LLC may need to file and pay a local tax to a city, municipality, or county.
State licenses and permits, including a professional license, may be required before a business can begin operations.
For a list of required licenses and permits necessary in the state of Oregon, begin by checking the Business Express License Search on the Secretary of State website. Requirements and fees will vary according to the license. You can also visit the Licenses page at Oregon.gov.
Licenses and permits may also be required on the local level. Check the website of the local municipality where your LLC will be located.
After an LLC is formed, an annual report must be filed with the state of Oregon by the anniversary date of the LLC’s formation. A renewal notice will be sent from the Secretary of State’s office about 45 days prior to the filing deadline. The filing fee is $100.
In order to file, access your Oregon Business Registry account. From there, you can either file online or complete the application online, print it, and submit by mail or in person.
If submitting through USPS, the processing time is five to seven business days. When delivering through Fed Ex or USPS, same-day processing is offered. When delivering in person, processing will be completed while you wait. Online processing is completed in one to three hours.
When all of the mechanics of setting up an LLC in Oregon have been completed, someone like Fanny can get down to the business of setting up a website, creating a logo…or purchasing flowers!
Need Help Creating Your LLC?
We recommend LLC formation services because it allows you to knock off an important thing off your checklist so you can focus all your energy on actually starting a business.
Can you do it yourself? Absolutely.
However, a service that forms an LLC for you will help with ongoing maintenance and keep you notified of any requirements you should adhere to.
As we mentioned earlier, IncFile and Northwest Registered Agent are the top LLC services available. If you’re not familiar with them, as a point-of-reference many of our readers like to compare them to the most well known LLC service, LegalZoom.