How to form an LLC in Oregon in 6 easy steps
It’s one thing to have a business idea; it’s another to have a business idea and take action. If you’re motivated to start a new business in Oregon, one of the most significant decisions you face is determining which business structure best meets the needs of your venture.
A popular business entity in Oregon is the Limited Liability Company, or LLC, a hybrid business structure providing business owners with a blend of legal and tax protections similar to those found in both a corporation and a sole proprietorship. If you’ve decided to start your own business in the state of Oregon and have determined an LLC is the best business structure for your company, the following 6 steps will help you successfully cross the finish line.
1) Check if your business name is available
Naming the business is usually the first step Oregon business owners will take when forming an LLC. While you may already have a business name in mind, you cannot start an LLC’s naming process until you know the name is available.
To check the availability of your desired LLC name, you’ll need to visit the Corporation Division section on the Oregon Secretary of State website and conduct a Business Name Search. It’s also helpful to search for keywords about your industry so you can see what the competition looks like in your field.
Once it’s been proven your Oregon Limited Liability Company name is available, there are a few naming requirements you must follow to ensure your name is compliant with all Oregon and federal law. You’ll need to include the phrase “Limited Liability Company” at the end of your business name, or choose an abbreviation designation such as “L.L.C.” or “LLC.” You'll also need to avoid using words like “State Department,” “FBI,” or “Treasury” to prevent your company from being confused with a government entity. If you wish to use restricted words like “Bank,” “University,” or “Attorney,” you’ll most likely need to fill out extra paperwork.
With your business name solidified, you may also want to check if the domain name for your business is available to create a website. Regardless if you build your website right off the bat or down the road, shoring up the domain name for your business can be an effective strategy in preventing someone else from acquiring the URL.
Suppose you’re still deciding between a few available names and are unsure of which to choose. In that case, another option is to pay for a name reservation with the state of Oregon via the Secretary of State website, which will reserve a name for you for 120 business days.
2) Claim your name
To formalize the filing of your LLC name, you’ll need to register the LLC with the state of Oregon. This process is known as filing your Articles of Organization, which you’ll submit to the Oregon Secretary of State. The registration process involves a decent amount of paperwork, so before trying to tackle all of the forms on your own, it’s best to select a registered agent to help you handle the requirements.
An Oregon registered agent is a business or individual in charge of handling the legal documents and tax documents on behalf of your company. The person or business must be an Oregon resident or a company legally allowed to conduct business in the state of Oregon. Certain companies like registered agent services specifically help business owners handle LLC formation processes, so they’re great options if you decide to use a company as your registered agent. If you opt to appoint an individual as your registered agent, you have the option of appointing yourself if you possess an Oregon street address.
After you’ve chosen your registered agent, you can move forward submitting your Oregon Articles of Organization either by mail or online through the Oregon Secretary of State website, along with a $100 filing fee. You’ll be asked to provide an assortment of information such as: Your LLC’s name, the duration of how long your LLC will exist, the physical and principal office addresses for your LLC, mailing address, the name and address of your registered agent, the LLC organizer and managers, your contact information, and the contact information of an “Individual With Direct Knowledge” of your company.
If you want to avoid providing information on an “Individual With Direct Knowledge”—which many see as a privacy overreach—you may opt to form an LLC in a neighboring state and then create an Oregon LLC under the same company. To do this, you’ll need to file a foreign LLC form, which can be completed with the Secretary of State Corporate Division, along with a $275 filing fee.
During the Articles of Organization filing process, you also have the option to select an alternative name under which you’ll conduct business other than the name on file for your LLC. This is called a “Doing Business As,” or DBA, and can be obtained by filling out the Assumed Name Registration form on the Secretary of State website and submitting a $50 filing fee.
3) Write your operating agreement
Oregon does not require LLCs to possess operating agreements, but it’s still a good idea for you to draft one. Writing an LLC operating agreement can be a great way to ensure your founding members are all on the same page regarding their individual rights and responsibilities within the LLC and how the LLC should run. In the event of a lawsuit, the operating agreement can also act as a document that can provide liability protection and keep your assets from being accessible by clearly demonstrating that your LLC is its own separate entity.
Even if you’re a single-member LLC, operating agreements are a fantastic way to preserve your company’s vision. If you’re injured or incapacitated, the operating agreement serves as a “business will,” ensuring that the original company roadmap is executed. Without an operating agreement, the daily operations of your LLC will be subject to Oregon state law, which may not jive with the specific inner workings of your business.
To draft an operating agreement, start by downloading one of the numerous free online operating agreement templates to provide a framework for your document. The main information that your operating agreement should contain includes: The initial investments made by all LLC owners and members, the LLC’s financial distribution structure, the voting rights and responsibilities attributed to each LLC member, the system for how new membership is accepted or current membership is evacuated, and the process for dissolution.
4) File your Statement of Information
All Oregon LLCs are required to file an annual report, or Statement of Information. The Oregon annual report is typically filed online and can be submitted via the Oregon Business Registry on the Oregon Secretary of State’s website along with a $100 filing fee. The form must be submitted each year after your first year in business and is due on the date you filed to start your LLC. For example, if you filed your LLC on May 1st, you must submit your annual report each year by May 1st.
5) Pay your taxes
Remember writing your LLC operating agreement? Another benefit to its creation is its blueprint for submitting your tax forms for federal and state filings. You have the option to operate like a sole proprietor, whereby you’re taxed using your Social Security Number, or by acting as an S corporation or C corporation, whereby you’ll need to register for a Federal Employer Identification Number through the Internal Revenue Service.
The Federal Employer Identification Number—or Federal Tax Identification Number—is used by the IRS to track state and federal taxes and can be obtained for free by mail or online at the IRS website. Once you’ve acquired your LLC’s Federal Employer Identification Number, you can use it to open a business bank account or business credit card. You can also use it for preliminary steps in hiring employees. Suppose you’re a single-member LLC that will not be hiring employees and wish to be taxed as a sole proprietorship. In that case, you are not required to file for a Federal Employer Identification Number. However, it’s highly encouraged that you still apply for one to set up a business bank account, which will help you keep your personal and business transactions separate.
When filing your tax return for your LLC, you’ll use either Form 1065 for multi-member managed LLCs or Form 1040 if you’re a single-member managed LLC. If you’re a single-member managed Oregon LLC and elect to be taxed as a pass-through entity, be aware that Oregon income tax on personal income ranges from 5% to 10%, with local taxes coming in around .4%, which will impact the amount you pay in state fees.
6) Wrap up other regulation and sales tax requirements
With the formation of your new Oregon LLC almost complete, there remain only a few items to consider.
First, to help you understand Oregon sales tax and employee taxes, it might be best to hire a business accountant who can ensure your LLC complies with all state and federal laws and all state tax and federal tax mandates. Your business accountant will also be able to help you open a business bank account and business credit card, which will separate your business and personal assets, giving you fewer headaches when filing your tax return. When it comes to any business licenses or permits, ask your business accountant for guidance as to what applies to your specific business, and also consult Oregon’s Business Xpress License Directory as well as the Small Business Administration (SBA) guide for more information.
There’s no sales tax in Oregon, so if your business requires you to purchase a lot of inventory, you’ll save a lot of money buying it within the state. Alternatively, suppose your business requires you to hire employees. In that case, you’ll end up spending more money paying for mandated state and federal unemployment taxes and worker’s compensation insurance than you would if you were the lone individual operating your venture.
Get LLC insurance in minutes by following these steps
You’ve just spent a lot of time, money, and effort setting up your Limited Liability Company, so your final step should be protecting your investment with LLC insurance. While there’s a myriad of insurance options, Huckleberry is the top choice for ease in helping you lock in your coverage needs. Here’s how simple it can be:
- Venture to Huckleberry and choose the “Instant Estimate” option. Minutes later, you’ll receive insurance coverage options specifically tailored to meet the needs of your business.
- Enter in your industry so Huckleberry can limit the selections to those most relevant to your LLC.
- Provide specific information about your LLC so Huckleberry can draft proper quotes.
- In less time than it takes to snag a breath of fresh Oregonian air, you’ll receive quotes for a multitude of small business insurance options.
- In a rush? The quick rate estimator can provide you with a ballpark figure on insurance costs for when you’re pressed for time. Whether you need coverage like professional service liability insurance or general liability insurance, the Huckleberry calculator can help estimate your costs.
When considering the final step to launching your Oregon LLC, think of purchasing small business insurance as the icing on the cake.
For everything insurance-related—from workers’ compensation insurance to hired and non-owned auto insurance—Huckleberry has you covered. Knowing you’re legally protected by small business insurance will help you spend less time stressing over “what ifs” and more time putting energy into growing your LLC now and in the future.