An LLC, or limited liability company, is a popular business structure because it provides the benefits of both a corporation and a partnership. They are easy to form in Oregon and offer limited liability protection to their owners. This means that if your company is sued, the owner's personal assets are protected. Additionally, Oregon LLCs are treated as pass-through entities for tax purposes, meaning that profits and losses are passed through to the individual members and not taxed at the corporate level. For these reasons, LLCs are a popular choice for small businesses in Oregon.
If you're looking to form an LLC in Oregon, here are six easy-to-follow steps for getting started.
Choose a Name Your Oregon LLC
You'll need to choose a name for your LLC before registering it.
To make sure your name complies with Oregon law, keep the following requirements in mind:
- The name of your company or business must contain the words "Limited Liability Company," "LLC," or "L.L.C."
- Ensure your business name is original by checking if it's used on the Secretary of State's website. In Oregon, follow this link to see if your desired business name is available.
- It's also illegal to use words that refer to government departments—for example, State Department, CIA, FBI, Treasury, etc., in your company name.
- Words such as "bank," "lawyer," and "attorney" may require extra documentation and licensing.
To view the entire list of restrictions and rules, follow this link.
Keep in Mind:
- Domain name availability: Many people hesitate to create a website for their company, but even if you don't think you need one now, preserving the option for the future is as easy as buying your domain name today. When choosing an LLC name, it's always helpful to check and see whether the domain name is available.
- Reserve your name. If you still need to be ready to form your LLC but are concerned that someone else might snag your name, you may reserve it for a modest fee. By paying the fee and submitting the required paperwork to the state agency in Oregon, names may be reserved for up to 120 days throughout the country.
Choose a Registered Agent for Your LLC
Oregon law necessitates that you select a registered agent for your LLC.
A registered agent is a person the business authorized to receive and manage legal documents on behalf of your LLC.
Your registered agent can be anyone meeting the following requirements:
- Entities (or companies) should willingly provide registered agent services.
- To be an agent, you must have a residency in Oregon.
- The agent must be available to accept documents during the times set by the business.
Prepare and File Articles of Organization
The Articles of Organization document officially establishes your LLC by providing basic information about it. To properly register your Oregon LLC, prepare Articles of Organization and submit them to the Oregon Secretary of State. It might appear to be time-consuming, but that simply means completing a simple online form and submitting it. You may also send it by mail.
The following are some of the most frequently requested materials required to prepare your articles:
- The LLC name and address of the principal office.
- The name and address of the individual or company who will receive official correspondence on your behalf.
- The address to which the Secretary of State should mail LLC notices.
- Will the LLC provide professional services?
- The name and address of each LLC's organizer.
- The LLC's purpose is to explain why you formed it. This might be a broad explanation.
- The name and address of at least one member or manager who knows the LLC's operations intimately.
- The length of time, or period, during which an LLC will exist. Most LLCs are perpetual in nature, implying that their duration is unlimited. A perpetual LLC may be terminated by the members or by the court. You must indicate if your organization's lifespan will terminate on a specific date.
- Does a management structure run your LLC, or do members take charge. This must be mentioned appropriately and laid out.
- The Articles must be signed by the person who establishes the LLC.
After you file your Articles, a state-level secretary will review and approve the filing. Once approved, your LLC becomes an officially recognized business entity.
Receive a Certificate From the State
After you file and are approved for your LLC's formation documents, the state will send you a confirmation letter either via mail or email. This formally confirms that your LLC exists; you can also download a copy of your stamped and approved Articles of Organization. This certificate will enable the LLC to obtain an Employer Identification Number (EIN), business licenses, and a business bank account.
Create an Operating Agreement
Oregon law does not require an operating agreement. However, it is still a vital part of your business. Having a written and easily accessible agreement is beneficial for various reasons - such as resolving disagreements that may come up about financial agreements or other potential litigation. In addition, without an agreement in place, the court's decision will be based on state law instead of what would be best for the LLC and its members.
The operating agreement might cover:
- The name of the LLC must be displayed, and the firm's primary location must be stated.
- How long will the LLC last?
- The name and address of the registered agent.
- Information about the company's Articles of Organization
- The main goal of the firm or business
- Members and their contribution
- The way the profits and losses will be distributed.
- The procedure for admitting and expelling members.
- LLC management
- Clauses that protect against legal liability
Acquire an EIN (Employer Identification Number)
The Employer Identification Number (EIN) is a nine-digit number assigned to your LLC by the IRS to identify it for tax purposes. The IRS offers EINs by mail or online.
An EIN allows you to:
- At the state and federal levels, file and manage your taxes.
- Create a bank account for your new business.
- Hire employees.
Registering your LLC gives you a legal basis from which to operate. Remember to keep your LLC compliant and in good standing on the state's website by filing an annual report. All Oregon LLCs are required to do this; if the Secretary of State receives it after your company's anniversary date, late filing penalties will apply. You might also have to make quarterly tax payments and maintain a registered agent for business purposes.
An active registration also makes it possible for you to:
- Obtain permits and licenses to run your firm, including health department authorizations, zoning permissions, home-based job permissions, and professional qualifications. Some jurisdictions need a seller's license to sell items.
- Register your business with the state's tax office.
- Start a business bank account.
- Apply for a company credit card or a business line of credit.
- Insure your company.
- Protect your name with a trademark.
Starting an LLC in Oregon FAQs
How Much Is an LLC in Oregon?
The Oregon Secretary of State charges a $100 filing fee for LLCs. In addition, Oregon LLCs must submit an annual report to the Secretary of State every year. The registration charge for domestic LLCs is $100, while foreign LLCs must pay a $275 filing fee.
How to Dissolve an LLC in Oregon?
To dissolve your LLC in Oregon, file a Certificate of Dissolution with the Secretary of State. The form must be signed by a majority of the LLC's members and have the company name, date of dissolution, and the signature of a witness.
There is also a $100 filing fee. Once the form is filed, the LLC will be officially dissolved and no longer exist.
How Many Members Can an LLC Have in Oregon?
No minimum or maximum number of members is required for an LLC in Oregon. You can have one member or 100 members; it doesn't matter. However, if you are the only member, you will be considered a single-member LLC with different tax rules.
How Do I Change the Name of My LLC in Oregon?
To change the name of your LLC, you must file an Amendment to the Articles of Organization with the Secretary of State. The form must include the old name, new name, and signatures of all members. There is also a $100 filing fee.
Where to Pay Taxes for LLCs in Oregon?
The Oregon Department of Revenue is where you will pay your state taxes. You can also file and pay your state taxes online. Your federal taxes will be paid to the IRS.
Does Oregon Require an LLC Operating Agreement?
No, Oregon does not require LLCs to have an operating agreement. However, it is highly recommended that you create one. The operating agreement is a legal document that outlines the ownership and management of your LLC. It also sets forth the rules and regulations for running your business. Creating an operating agreement is not required by law, but having one in place is a good idea to prevent disagreements down the road.
Is an LLC in Oregon Required to Have a Registered Agent?
Yes, all LLCs in Oregon must have a registered agent. A registered agent is a person or business that agrees to receive legal papers on behalf of your LLC. The registered agent must have a physical address in Oregon and be available during regular business hours.
What Is a Single-Member LLC?
A single-member LLC is an LLC with only one owner. Single-member LLCs are taxed differently than multi-member LLCs. Accordingly, a single-member LLC is disregarded for federal tax purposes, and the owner reports income and expenses on their personal tax return.
How Do I Convert My LLC to a Corporation in Oregon?
To convert your LLC to a corporation, you must file an Amendment to the Articles of Organization with the Secretary of State. The form must include the name of the LLC, the new corporate name, and the signatures of all members. There is also a $100 filing fee.
How Do I Pay Myself from My LLC?
As the owner of an LLC, you are not considered an employee and cannot receive a paycheck. Instead, you will take distributions from the LLC. Distribution is when the LLC gives you money from the business's profit. You will report the distributions on your personal tax return.
Can I Hire Employees for My LLC?
Yes, you can hire employees for your LLC. However, as the owner of the LLC, you are not considered an employee.
What Is a Disregarded Entity LLC?
A disregarded entity LLC is an LLC that is not taxed as a separate entity from its owner. For federal tax purposes, the LLC is disregarded, and the owner reports income and expenses on their personal tax return.
An LLC is a great way to start a business in Oregon. It offers limited liability protection and flexibility regarding taxation and management. Plus, you can have as many or as few members as you want. However, there are some requirements you must meet, such as having a registered agent and paying state taxes. Creating an operating agreement is also a good idea, even though it's not required by law.
So, there you have it! Now you know how to start an LLC in Oregon. Be sure to comply with all the requirements, and you'll be on your way to running a successful business. Good luck!