How to Form an Oregon LLC

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Oregon LLC Quick Facts

Oregon LLC Costs

Initial LLC Filing Fee – $100

 

Recurring State Fee: Annual Report – $100

 

LLC Processing Time

By Mail: Normally 5-7 business days

 

Online: 1-2 hours

Don’t want to form an LLC by yourself?

Let IncFile or IncAuthority guide you through the LLC formation process, so you know everything was done right. Only pay state fees!

Quick Reference

The Limited Liability Company (LLC) is a popular entity structure for businesses starting in Oregon.  The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in Oregon without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Costs to Form an LLC in Oregon

To form a Limited Liability Company in Oregon, file the Articles of Organization with the Oregon Secretary of State.  The LLC filing fee is $100.

Approval for the LLC typically takes less than two hours when filing online and around one week when filing by mail.

Guide to Forming an LLC in Oregon

The steps for filing online or by mail are largely the same.  The screenshots show how to file online.

Businesses that require state licensing and offer professional services such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc. instead of forming an LLC will need to form a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to the LLC outlined below.

Forming an LLC can be both affordable and is something most people can do themselves. Entity formation companies like IncFile or IncAuthority help guide you through the process and make sure there are no mistakes.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

Step 1: Create an account on the Secretary of State’s website

Begin by creating an account on the Oregon Secretary of State’s website by clicking on “New User.”

How to Form an Oregon LLC

  • Click on “Start” under “Register business name, get a BIN, and other registrations/licenses.”

Start Oregon LLC

Step 2: Register the Business Name

  • Begin by clicking on “Register Name.”

Register Oregon LLC Name

  • Then in the drop-down menu for “Business/Organization Type,” select “Domestic Liability Company.”

Oregon Domestic Limited Liability Company

  • Enter the name you want for the LLC.  The name of the LLC has to differ from other entity names registered with the Secretary of State.  Check on available Oregon LLC names before filing to be sure the one you want is available.

There are some naming guidelines to follow. The primary one is the name of the LLC must also include words or abbreviations at the end of the business name.  A designator is used to describe the type of business entity. Designators that are available to use include:

  • Limited Liability Company
  • L.L.C.
  • LLC

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

Before settling on a name, you may want to see if a domain name is also available to match your business name and website address.

Enter the name along with the designator you would like to use and click on “Check Name Availability”  A new page will open, indicating whether the name is available or not.  Even if the search comes back with the name is available, the Secretary of State’s office will also review it to ensure it isn’t being used by someone else or that it is too similar to another name.

If there is a name you want, but are not ready to register the LLC, you can file the Application for Name Reservation with the Oregon Secretary of State, Corporations Division. The name reservation will hold a name for up to 120 days, at a cost of $100.

Oregon LLC Name Registration

Step 3: Activity Description

Provide some basic information about what the business does in fewer than 250 characters.   Entering something now does not force the LLC to only do that business activity forever.  One way to keep the activity description more open-ended, you can enter “Any legal business activity for which a Limited Liability Company may be organized in Oregon.”

Related: How to Answer the Activity Description.

Step 4: Duration

In this section, indicate how long the LLC intends to remain in existence.  Most LLCs will choose a Perpetual duration; however, some businesses (usually investment-related) will have a specific closure date.

Step 5: Business Email

Enter the preferred email address where the Secretary of State will send notifications.  This doesn’t have to be an address in the business name and can be a personal one.

Step 6: Mailing Address for Notices

Enter a mailing address where the Secretary of State will send notices.  This address can be located anywhere or be a PO Box.

Step 7: Daytime Contact

Enter a contact name and phone number should the Secretary of State need to contact someone regarding the LLC filing.

Step 8: Principal Place of Business

In this section, enter the street address, city, state, and zip code of the initial principal office.  This address can be the LLC’s physical address, or it can be the address where the business records are stored.  You may not use a PO Box for the designated office.

Step 9: Registered Agent

To have an LLC in Oregon, a Registered Agent must be identified.  The Registered Agent can either be a resident of Oregon (Select “Individual”) or a Resident Agent service (Select “Entity of Record”) that has a Registry Number from the Secretary of State. The agent must have a physical street address in the state (Post Office Boxes are not allowed), be available during normal business hours, and act as a central point of contact for service of process to receive important legal documents, tax notices, summons, subpoenas, etc. on behalf of the LLC.

You are not required to pay for a registered agent. Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from your personal residence or are still employed and don’t want your employer to find out.  Hiring a registered agent service like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.

Step 10: Assign the Organizers

An LLC Organizer is someone involved with the formation of the Articles of Organization.  The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but any of the initial members can be listed as an organizer.

At least one organizer must be entered.

Step 11: Register Individuals with Direct Knowledge

The Oregon Secretary of State requires that at least one person who is a member or manager of the limited liability company or an authorized representative with direct knowledge of the operations and business activities be on file.

Enter at least one person’s name and address.

Step 12: Statement of Management

This question asks how the LLC will be managed.  The two choices are:

Member-Managed – An LLC with members who have an active involvement in the management of the LLC.  Most LLCs fall into being member-managed.
Manager-Managed – An LLC whose members hired a manager to run the LLC, similar to a CEO of a corporation.

Select either “Member-Managed” or “Manager Managed.”

Step 13: Declare the Initial Members or Managers

This is an optional section to include the names, contact information, and title of the LLC members and managers.  Some banks will request this information before allowing LLC bank account signing authority.

Step 14: Professional Services Rendered

If the LLC offers services that require state licensing, enter “Yes” and choose from the list of professions.  Some common services that require licensing include accountants, acupuncturists, architects, attorneys, chiropractors, dentists, engineers, landscape architects, podiatrists, psychologists, and real estate appraisers.  For more information about licensed professions in Oregon, see What Licenses and Permits are needed in Oregon.

Step 15: Optional Provisions

This is an optional section and not used by most LLCs.  Here you would include additional rules for the operation of the LLC.

 

Indemnification – The company elects to indemnify its members, managers, employees, agents for liability, and related expenses under ORS 63.160 to 63.170.  Many LLCs will elect the indemnification clause.

Benefit Company – Not as common for an LLC to select, but a benefit company is a blend between a not-for-profit and for-profit company.  There are some requirements to be an Oregon benefit company.

Step 16: Review

Review that all the information is correct.  If there are no corrections, click “Continue.”

Step 17: Title and Signature

Enter the LLC organizer’s title, select their name, and have them sign by checking the “Sign” box.  Click “Submit” to continue.

Step 18: Pay and File

Pay and file the Articles of Organization.

If filing by mail, send the paperwork and fee to:
Oregon Secretary of State, Coropration Division
255 Capitol St. NE
Salem, OR 97310

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If you have questions, contact the ​​​Oregon Secretary of State Corporations Division
​​503-986-2200​​​​​​ 8am to 5pm, Monday through Friday​​
https://sos.oregon.gov/Pages/contactus.aspx

Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare an Oregon LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Oregon operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number or FEIN) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file federal and state taxes, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original LLC formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Occasionally, the bank will request an Oregon Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Oregon Business Identification Number – All businesses operating in the state must obtain a Business Identification Number from the Oregon Department of Revenue, which includes registration for Unemployment Insurance Tax, Employee Withholding Tax and Oregon state taxes.
  • Sales Tax Permits – Even though Oregon does not charge a sales tax, each state has different rules regarding the collection of sales tax when selling and shipping taxable items to residents in their state.

Related: What Business Licenses are Needed in Oregon?

Get Business Insurance

Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:

General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.

Related: 7 Types of Insurance Your Business May Need

File the Annual Report

LLCs are required to file an annual report with the Oregon Secretary of State.  The fee for the annual report is $100 and the due date is on the day the LLC was formed.

Related: How to File an Oregon LLC Annual Report