How to start a business in Oregon in 8 steps
Starting a small business in Oregon is a fantastic way to make a living doing what you love through entrepreneurship. Small business owners can also greatly contribute to the economic development of their communities. If you’re an Oregon resident looking to start your own business, here is an 8 step guide to follow to find success.
1) Think about the type of business you want to start
If you’ve reflected on your goals and desires and know for sure that pursuing your business idea is right for you, it’s time to decide exactly what type of business you want to have. Do you want a brick-and-mortar or an eCommerce business? Do you want to sell products, services, or a mixture of both? Who is the target market for your business?
In addition to your own business, you should also think about your competitors. Who else has a business similar to yours in your area? What do they do well, and what mistakes have they made? Learn from both their strengths and their weaknesses as you continue to develop your business idea.
2) Set up your legal structure
You’ll need to select one of the following types of business structures to form your business entity and start your business in Oregon.
- Sole proprietorship: This is perhaps the most straightforward way to structure your business. Sole proprietorships do not require you to incorporate and they are the easiest in terms of paperwork. However, a sole proprietorship does not offer liability protection. Your personal and professional assets are not separate under this structure. This means that if your company were to get sued or if you were to go into debt, your personal assets would potentially be on the line. The major benefit to this structure is that you reap all the profits yourself. They are not shared with anyone, as you are the only owner and employee in your business.
- General Partnership: This structure is similar to a sole proprietorship, but it allows you to go into business with another person. Your personal assets are still liable under this structure, but you and your partner will now share any debt burden equally.
- Limited Liability Company (LLC): An LLC is a popular way to structure a business in Oregon. While you still have much of the ease that comes with a partnership or sole proprietorship, your personal assets are now kept separate from your business. Only your business assets will be liable should you get sued or acquire a significant debt burden. You may have a board of directors under this model, but it is not necessary.
- Nonprofit: If your business intends to focus specifically on social causes, with money earned primarily through donations rather than purchases, a nonprofit structure may be right for you. Nonprofit organizations receive an exemption from income tax in Oregon under most circumstances as well.
- Limited Partnership: A limited partnership differs from a general partnership in that it separates personal and professional assets. A limited partnership also allows each partner to take on a different level of liability and managerial responsibility within the company. Suppose you know you want to go into business with someone, but only one of you is prepared to take on significant financial responsibility in the business. In that case, a limited partnership may be the best option for you.
- Limited Liability Partnership (LLP): A combination of a limited partnership and a partnership, an LLP removes your personal assets from the equation but allows each partner to take equal ownership in the business.
- Corporation: Corporations are considered wholly separate from their owners and stockholders and are subject to intense regulations. In Oregon, there are multiple types of corporations under which you can register your business. The most prominent of these are perhaps the S corp and the C corp. They are similar, but the S corp comes with special tax regulations specific to small businesses that may benefit you over and above the standard C corp.
Some of these business structures may also require that you develop specific documents such as an operating agreement, articles of organization, bylaws, annual reports, or articles of incorporation. If you choose an S corporation, for example, you must file additional paperwork such as IRS Form 2553. You may also need to pay certain filing fees to register your business officially.
Ultimately, each of these business structures has benefits and drawbacks, so research each one in-depth and choose the best fit for your goals.
After you determine the best structure for your business, write out a business plan. This can be as brief as a single page, or it could be several pages. The important thing is to clearly outline your business finances, marketing strategy, growth strategy, organizational structure, and mission as a business. This plan will act as a business guide to help you focus your business. It will also serve as necessary documentation when and if you decide to pursue financing options like private lenders, investors, or banks.
3) Name and register your business
You will use your business name on all your marketing materials, on your signage, throughout your store, and on your website. Choose a business name that is simple, easy to remember, and relevant to what type of business you are. It’s also important to ensure the matching website domain and social media handles are available.
Avoid selecting a name already in use by another business. Not only will it confuse your potential customers, but the Oregon Secretary of State (SoS) also requires that your business name be original to register with the state. You can check with the Oregon SoS to see if your chosen business name is available.
After selecting your business name, complete a Name Reservation Request and register your business with the state. The business registry process is different depending on the type of name you select. For example, if you choose to register as a sole proprietorship or a partnership and use a name other than your own, you will need to complete a Fictitious Business Name Statement. This informs the government that you are using a DBA or “doing business as” name. This is also referred to as an assumed business name. You will not need to do this if you plan to file using your own name.
Next, provide your business name and address and the registered agent’s name to the state. The registered agent is the person who will receive legal paperwork on behalf of the organization.
4) Apply for licenses and permits
Every business owner in Oregon must file for a business license to legally operate. Check with the U.S. Small Business Administration (SBA) to determine the specific licensing requirements you must fulfill in Oregon. These requirements differ based on the type of business you plan to open, so pursue the site carefully. You will need to work registration costs for these permits into both your startup and annual costs, as many must be renewed each year you're in business.
5) Choose a location
It’s easy to get excited about a piece of available property and sign a lease before you have completed the previous four steps. However, it is only after you know what type of business you will open, write your business plan, understand the zoning requirements of your business, and secure the necessary legal documentation that you are ready to hunt for the perfect location.
When it does come time to find your business location in Portland, Salem, Bend, or another city in Oregon, consider a space within your budget, accessible to your target market, and positioned strategically in relation to your competition. Work with a Real Estate Agent to help you find the right choice for your business.
6) Open a bank account and prepare for future taxes
Unless you plan to operate as a sole proprietor, you’ll need to open a business bank account. This is because you need to show that there is a line between your personal and professional finances. Even sole proprietors can benefit from clearly separating their personal and business accounting by opening a business bank account. Come tax time, it will be far easier to sort out which expenses belong to the business and which belong to you, personally.
In addition to a business bank account, you may find that opening a business credit card benefits you as well. Not only does it make personal versus professional spending clearer, but it can also free up additional startup capital to help you fund your new venture.
You may want to hire a bookkeeper or an accountant to help you file your taxes correctly and achieve the lowest IRS payment or biggest refund. These trained professionals know the rules and regulations surrounding business taxes and will ensure that you are filing properly each quarter.
Whether you hire an accountant or not, you will want to secure your Federal Employer Identification Number (EIN). This number acts as a social security number for your business and will help you with your federal taxes and state tax returns each year. Contact the Oregon Department of Revenue if you want to know more about how you will need to handle sales tax, federal tax, state tax, or other business taxes.
7) Purchase business insurance
It’s imperative to have the right business insurance policies in place before you start your new small business. No matter what type of business you want to open in Oregon, the following business insurance policies help keep you protected from many potential issues.
- Workers’ Compensation Insurance: Workers’ compensation insurance is required in Oregon if you wish to have employees. This policy helps to protect your business if an employee gets sick or injured on the job.
- General Liability Insurance: General liability protects you against financial losses associated with bodily injury or property damage.
- Business Interruption Insurance: Business interruption insurance helps to defray costs should your business have to close for a covered reason.
- Commercial Property Insurance: Commercial property insurance combines business property insurance, which helps to recover costs should your brick-and-mortar become damaged, and business personal property insurance, which covers you in the case of damage to business property that is not permanently attached to your building, such as furniture and computers.
- Business Owner’s Policy: This policy is a bundle of multiple policies such as business property insurance, general liability insurance, and business interruption insurance. It also allows you to package many other required policies for your Oregon business into one convenient policy.
8) Create a marketing plan, hire employees, and more
Marketing can feel overwhelming as there are so many ways to get the word out about your business. This is why creating a solid strategy is essential. A marketing strategy helps you reach your ideal customers through various channels such as social media, email, Google My Business, and your business website.
A marketing strategy also helps you create and stick to a budget—very necessary for small business owners looking to build a foundation of financial health in their new business.
Even if you want to keep your marketing efforts small to start, you’ll need a few key marketing assets. A business website optimized for both mobile and desktop use, business cards, and a presence on at least one social media platform will get you started in the right direction.
In addition to marketing, you’ll want to think about your hiring strategy. If you choose to operate as a sole proprietorship or partnership, you may forego hiring employees altogether. However, you’re likely to want to hire additional help as your business grows. To do that, you’ll need to find the proper hiring forms from the SBA and know the state’s requirements for hiring employees in Oregon.
As you continue on your journey, remember to take time to rest so you can continue to build your way to a healthy and prosperous future. You can also pursue helpful small business resources like Oregon's Small Business Development Center to keep you on track and moving forward.
Congratulations on taking the first steps toward becoming an Oregon business owner!
Get your small business insurance secured in a snap with Huckleberry
At Huckleberry, we know there’s a lot that goes into starting a business in Oregon. That’s why we make it quick and easy to get your small business insurance policies. Get your fast and free workers’ comp quote today and see how you can secure your business insurance online in minutes.