Are you looking to form an Oregon limited liability company, but you don’t know where to begin? We have collected all the necessary steps and information you need to set up a new LLC for your business.
This article will teach you:
- The steps you need to take to start an LLC in Oregon
- Additional tasks you must accomplish after registering your LLC
- How long it will take you, and what you can expect to pay
If you are thinking about starting an Oregon LLC, read on for all the info you need.
Step 1: Name your Oregon LLC
The first step in starting an LLC is coming up with a name for your business that complies with state law. We’ve outlined some of the rules for naming an Oregon LLC in the sections below.
Words You Have to Use
Oregon Revised Statutes Section 63.094 requires LLC names to include the words “limited liability company” or the abbreviation “L.L.C.” or “LLC.” This rule exists to make sure people know that the owners have limited liability for company debts.
Words You Can’t Use
Section 63.094 also say you can’t include any of the following terms in an LLC name:
- “limited partnership”
- “limited liability partnership”
In general, you can’t use an LLC name that implies it’s a different type of business entity, such as a corporation or a partnership.
You also can’t make it seem like your company will provide illegal services. So, if your company doesn’t have the proper licenses or certifications to do a job, you can’t name it something that makes it seem like you can.
The big rule is this: if you need a license to do your job, double-check with the Secretary of State to make sure your company name complies with the law.
The law also requires you to choose an LLC name that’s different or “distinguishable” from any other name registered with the Oregon Secretary of State. This will help ensure that your company is not confused with another business with the same name.
Research the LLC Name You Want
When you decide on a name for your LLC, you can use the Oregon Secretary of State’s Business Name Search to see if the name you want is available.
If you find out someone else has already claimed the name you want, you can only use it if you get a court order that establishes your right to do so.
If your chosen name is available, Oregon Revised Statutes Section 63.097 lets you reserve it for 120 days. To claim your name, you must submit an Application for Name Reservation to the Secretary of State. According to the Business Registry Fee Schedule, there is a $100 processing fee.
You cannot submit a name reservation online, so you’ll need to mail or ship it to the following address:
Secretary of State
255 Capitol St. NE, Suite 151
Salem, OR 97310-1327
Oregon DBA: Using an Assumed Business Name
Oregon LLCs can use their formal name when doing business. However, they can also use a “Doing Business As” or “DBA” name to market themselves. In fact, many business owners go with a DBA instead of their LLC’s formal name in their everyday business.
Having a DBA means that you won’t have to use your full LLC name on all of your signage, website, and other advertisements. This is especially helpful if you don’t want to use “LLC” in your name. Just keep in mind that you need to use the company’s real name in official legal records.
If your LLC’s real name is “Barney’s Bookshop, LLC,” you can use a DBA of “Barney’s Bookshop.”
But what if you eventually decide to add vinyl records to your inventory? To make sure your name portrays your business well, you could file a new DBA of “Barney’s Books & Records.”
In Oregon, DBAs are called “assumed business names.” If you decide to use a DBA for your LLC, Oregon Revised Statutes Section 648.007 says you must register it with the Secretary of State.
We recommend using online filing whenever it is available to ensure faster processing.
Step 2: Appoint a Registered Agent for your LLC
A registered agent is a person or company that receives legal documents and other official papers for an LLC.
According to Oregon Revised Statutes Section 63.111, all LLCs need to have a registered agent to accept service of process on their behalf.
Accepting service of process is a legal phrase that means receiving the court documents that are sent during a lawsuit. So, if someone sues your LLC, all of the papers will be sent to your Oregon registered agent.
Your registered agent must have an office in the state. They also must be able to receive process during normal business hours.
Since anyone can be a registered agent, many new business owners think it’s wise to serve as their own LLC’s registered agent. Admittedly, there are some benefits:
- It’s cheap: You’re not paying someone else to do it for you.
- It’s easy: The only address and contact information you have to keep current is your own.
- It’s reliable: You will receive all important documents personally.
Unfortunately, first-time entrepreneurs often find out the hard way that being their own registered agent can cause problems.
Some examples include:
- No privacy: Your name and address will be published on the Secretary of State’s website. This means that anyone with an internet connection can find your personal information.
- Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
- No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
- Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
- It’s your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.
Experienced business owners know that it’s worth investing in a professional registered agent service. They only cost about $100 each year, and they will quickly let you know when they receive mail or papers for your company.
If you are looking for a professional registered agent service, take a look at our Best Registered Agent ranking for some of our recommendations.
If you’re going to conduct business out of state, we suggest that you use a national registered agent service. When you do business in other states, you have to register your company as a foreign LLC and name a registered agent in that state as well.
A national service provider can act as your registered agent in every state. This will allow you to focus on the more critical aspects of running your LLC instead of juggling multiple agents.
Step 3: File Your Oregon LLC Articles of Organization
Articles of Organization are the legal documents that create LLCs. They include key info about each new business. To start an Oregon LLC, you must file articles of organization with the Secretary of State.
If you would like to avoid the hassle of handling your LLC filing yourself, you can also use a professional LLC formation service. Check out our Best LLC formation services article for some of our suggestions.
What to include in my Oregon Articles of Organization?
Oregon Revised Statutes Section 63.047 says that your articles of organization must list:
- The LLC’s name.
- The name and address of the registered office.
- The name and address of the registered agent.
- A mailing address for notices.
- The date the LLC will dissolve or a statement that it will exist perpetually.
- The name and address of each organizer.
- The address of the LLC’s principal office.
- The name and address of at least one member, manager, or authorized representative.
If your LLC is going to be run by a manager instead of its owners, you also need to include this in your articles of organization.
Oregon LLC Filing Fee
According to the Business Registry Fee Schedule of the Secretary of State, the processing fee for Oregon articles of organization is $100.
Oregon LLC Processing Time
If you file online, your registration will be processed on the same or the next business day. Processing can take up to one week after receipt for mailed articles of organization. Therefore, we recommend that you file your formation documents online.
Step 4: Draft your Oregon LLC Operating Agreement
Operating agreements are formal contracts made by an LLC’s members. They provide a way to outline how the business will be operated. They also explain each member’s rights and duties.
Oregon does not require LLCs to make operating agreements. However, having one can be very helpful. The contract sets the rules in advance so that everyone knows what should happen in certain situations. This can help you anticipate and prevent problems later on down the line.
For example, let’s say a member wants to sell their interest in the LLC. The operating agreement should lay out the steps to get the sale completed. It might also explain how to decide on who will take over the exiting member’s duties.
Some other reasons that an operating agreement can be useful are:
- They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
- They say what the manager has the right to do. Managers also have special duties to the company and the members. The operating agreement should state these.
- They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
- They say how new members can join the company. They also have rules about how exiting members can leave.
- They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
- They say whether members or managers are in charge. They also say how to hire and fire managers.
- They say how and under what circumstances the LLC should end. You might not want to dissolve your business now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
- They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.
Oregon Revised Statutes Section 63.057 says that operating agreements can be written or oral. Still, we suggest putting your agreement in writing. That way, you can easily reference it in the future. A written operating agreement helps ensure that all of the owners are on the same page about how the LLC will be run.
The owners should make the contract themselves, so they know what to expect and can make an educated decision about the terms. Make sure to keep a signed copy of your operating agreement for your records!
Step 5: Get an EIN (Employer Identification Number) for Your Oregon LLC
EINs are nine-digit identifiers for businesses. They are assigned by the Internal Revenue Service. Similar to SSNs, they can be used for filing taxes or making other transactions with the government. The main difference is that EINs are issued to LLCs and other types of business entities rather than individuals.
Here are the most common times when you need an EIN:
- Does your LLC have more than one member?
- Does your LLC have any employees?
- Is your LLC taxed as a C corporation or S corporation?
If you answered yes to one or more of the questions above, you must obtain an EIN for your LLC.
If you have a single-member LLC, you can pay your taxes without an EIN because you can file under your SSN. However, getting an EIN is always recommended to avoid fraud and keep business and personal funds separate. You’ll also most likely need an EIN to open a bank account for your LLC.
First Tasks After Registering your Oregon LLC
After you register an LLC, there are some other essential tasks you’ll need to do before officially opening for business. These tasks allow for everything to be ready to go.
Open a Business Bank Account
While you can legally run an LLC without a business bank account, it’s much simpler with one. Having a company bank account is beneficial, as it separates your personal assets from those of the business. So, if there are any legal issues, they don’t impact you as an individual.
Business bank accounts offer many benefits, such as:
- Convenience: Keeping things separate makes your LLC’s bookkeeping much simpler.
- More business opportunities: Your LLC can only receive credit card payments through a business account. You can also do business with people who won’t take personal payments.
- Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC’s debts.
The third benefit, asset protection, is vital.
LLC owners are typically shielded from liability for business debts. This is because LLCs are legally defined as separate legal entities from their owners. For this reason, your personal assets won’t be at risk if the LLC gets sued. Creditors can only collect from property owned by the business. This legal concept is called the “corporate veil.”
However, if you “commingle” your personal funds with business assets, the corporate veil can be “pierced” if your LLC gets sued. And if the corporate veil is successfully pierced, you might have to pay the LLC’s debts with your own money.
This is why we recommend opening a business bank account and using it exclusively for the LLC. It will protect your personal assets from company liabilities and help you separate your funds.
Get Business Insurance For Your Oregon LLC
We strongly recommend that you get at least one business insurance policy for your LLC. Think about what type of insurance would be best for your company before purchasing insurance. You’ll need to consider the risks that are the most relevant for your industry to choose the right coverage.
We suggest researching the following types of business insurance for your LLC:
- General liability insurance: You’ll need this if there’s an injury on your property. It pays for damages and a lawyer if you need one.
- Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
- Workers’ compensation insurance: Oregon law requires most employers to have workers’ compensation insurance, with a few exceptions. You can buy a policy from a private insurance company.
- Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
- Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
- Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.
Keep Your Oregon Company Compliant
If you have an LLC, there are certain regulations you need to follow to stay in compliance with the law. For example, a business license might be required, or you may need to pay taxes.
It is crucial to keep up-to-date on the legal changes in your state. This will help you make sure that your company doesn’t run into any problems with local authorities.
Oregon Business Permits and Licenses
Oregon law doesn’t make LLCs get a general business license, but some counties and cities do. Many occupations and business activities also require specific licenses, permits or certifications from a state agency or board. Check out the Secretary of State’s License Directory for more information.
Oregon Tax Requirements
In general, LLCs do not have to pay income taxes, and Oregon does not have a sales and use tax on goods. However, your business may still have to pay some state taxes. This state tax resource page will give you more details.
Federal LLC Tax Filing Requirements
LLCs are considered “pass-through” business entities. This means that they are not taxed on profits. So, you’ll need to report your LLC’s profits and losses on Schedule C of your personal income tax return.
Your LLC also has to pay Social Security and Medicare taxes, even if you don’t plan to hire employees. If you do have employees, you’ll also need to take out payroll taxes from their paycheck.
Annual Report and other Filing Requirements
Oregon Business Formation Quick Links
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- Oregon Business Registry (SOS)
- Business Name Search (SOS)
- Business Registry Fee Schedule (SOS)
- Start a Business Guide (SOS)
- Business License Directory (SOS)
- Understand Your Tax Obligations (Oregon.gov)
- Official Version of LLC Statutes
- Name Requirements: Oregon Revised Statutes Section 63.094
- Name Reservation: Oregon Revised Statutes Section 63.097
- Assumed Business Name: Oregon Revised Statutes Section 648.007
- Registered Agent: Oregon Revised Statutes Section 63.111
- Articles of Organization: Oregon Revised Statutes Section 63.047
- Operating Agreement: Oregon Revised Statutes Section 63.057
- Annual Report: Oregon Revised Statutes Section 63.787
Oregon LLC FAQs
How much does it cost to start an Oregon LLC?
The processing fee for Oregon articles of organization is $100.
What is the processing time to form my Oregon LLC?
If you file online, your registration will be processed on the same or the next business day. Processing can take up to one week after receipt for mailed articles of organization.
What are the benefits of an Oregon LLC?
Starting an LLC protects your personal property from liability for your business debts. LLCs also provide tax advantages to business owners.
Where do I check if my Oregon LLC name is available?
When you decide on a name for your LLC, you can use the Oregon Secretary of State’s Business Name Search to see if the name you want is available.