How to Start a Business in Oregon

Your business entity type determines what your default business tax status will be. If you’re a one-person operation selling your own art, you will be a sole proprietorship. If you and your best friend/business partner are selling art together, then you’re a general partnership.

While both a sole proprietorship and a general partnership are easily formed and maintained, there are a few downsides—namely, that neither of these entities have liability protection. So, if someone sues your business, they’re suing you and your best friend. As a result, the business’s debt is also your debt.

The way to protect your personal assets is to have liability protection—this means having a business entity that is legally separated from you and your personal assets. The most common types of independent entities are LLCs and corporations.

Which business entity is right for you?

Oregon Limited Liability Company (LLC)

An LLC is a separate business entity from you and has a ton of flexibility—you can be in charge, you can appoint someone within the business, or hire an outside manager to be in charge.

By default, LLCs are taxed as pass-through entities, meaning that the business doesn’t pay entity-level taxes itself, and instead profits “passes through” to the members. LLCs can also choose to be taxed as C-corp or S-Corp instead.

To start your Oregon LLC, you’ll need to file your Articles of Organization ($100) with the Secretary of State.

Oregon Corporation

Corporations have the same liability protection as LLCs, meaning they are a safer bet for yourself and your personal assets than a partnership or sole proprietorship.

However, corporations have stricter guidelines for record-keeping and reporting. For example, corporations must hold annual meetings and maintain accurate minutes of those meetings. Corporations also have fewer tax options than LLCs. Once you incorporate, you can choose to keep your default tax status or elect to be taxed as an S corporation, but that’s it.

On the other hand, corporations can sell stock, which will help attract top investors—especially ones with deep pockets. So, if growing your business at a rapid pace is important, then a corporation might be your best bet.

To start your Oregon Corporation, you’ll need to file Articles of Incorporation ($100) with the Secretary of State.

Naming your business is an important part of your company’s success. Often, it’s the first thing that potential customers know about your business. Choosing the right name requires a few things—making sure the name connects to your business idea, customer base, and, most importantly, is legal.

According to OR. Rev. Stat. § 63.04.9, your name must:

• Include either “limited liability company,” “L.L.C.,” or “LLC.”
• Not include words or abbreviations that suggest it’s another kind of entity, like “corp” or “limited partnership.”
• Be one-of-a-kind among business names in Oregon.

Search Oregon’s Business Registry Database to see if your desired business name is available.

If you are forming a sole proprietorship or a general partnership, you don’t need to file any paperwork with the Oregon Secretary of State. But if you’re forming an LLC or a corporation, there are mandatory filings that you’ll need to submit adhere to, no matter if your business is big or small.

• To form an Oregon LLC, file your Oregon Articles of Organization.
• To form an Oregon corporation, file your Oregon Articles of Incorporation.

To file either of these, you will need to list the name and physical address of your Oregon registered agent. Though you may act as your own registered agent, hiring a professional registered agent such as Northwest will help you maintain your privacy.

So far in this guide, we’ve dealt with public forms that you’ve had to file with the Oregon Secretary of State. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company.

Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS.

Here are the major internal documents you need to organize for LLCs and corporations:

Oregon LLC Operating Agreement

This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.

Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft an Oregon LLC Operating Agreement template that you can use as a solid foundation.

Oregon Corporate Bylaws

Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. Unlike operating agreements, corporate bylaws are required by law.

As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted an Oregon Corporate Bylaws template you can use to get started.

Starting a nonprofit? We also have Oregon nonprofit bylaws.

No matter what your business is, you’ll likely need a license to conduct it. Exactly which licenses you’ll need depends on your exact business type, as well as your county and city requirements. Make sure to double-check your area’s requirements because licensing might take a bit longer than you expect.

Oregon State Business License

Oregon doesn’t provide a general business license, but nearly every occupation and jurisdiction within the state will require one. You can search for your city, county, and occupation on the Oregon state license directory. For example, the Food Retail Establishment License is required for businesses that prepare, package, store, handle, or display food. You can also look at the Cities and Counties websites individually to find out what sort of specific licenses you might need to bring your products and services to the great state of Oregon.

Professional Business Licenses

If you are opening a professional business, such as a law office or medical center, you will need specific licenses for that. These licenses often require educational training and specialized testing so make sure to check the requirements of any of your license applications. There might also be insurance requirements—for example, attorneys are required to have professional liability insurance. To search for your particular requirements, you can go to the Oregon state license directory.

Local Business Licenses

Now that you have your state licenses all ready to go, it’s time to look at your particular local business license requirements.

This depends entirely on where in the state the business will operate. Let’s take Portland, for example. If you want to open a restaurant in Portland, first you’ll file the Restaurant Plan Review. Once that’s approved, you’ll file the Restaurant and Bed & Breakfast License Application.

Licensing requirements and prices differ from city to city, so take a look at your city’s business department to make sure you’re all squared away.

Learn more about How to Get a Business License.

The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.

Open a Business Bank Account

To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.

Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.

Set up Payroll

Employees are an important aspect of starting your business. To set up payroll in Oregon, you will have to:

• get an EIN
• get a BIN
• prepare the forms your employees will need to fill out
• choose a payroll service or software
• decide on a payroll schedule
• register with the Oregon Department of Revenue

Though there’s a good amount of initial setup to organize your payroll, this legwork upfront can help you in the long run. The more organized you are now, the easier things like taxes will be down the road.

Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is on the hook to pay. Business insurance can help cover the costs.

What insurance you need to have will change based on your business and the the boards that issue your licenses. Making sure to check with each individual board—whether that’s for an occupational license, a local city license, or a county license—can help you be prepared.

Here are a few of the statewide common insurances:

Workers’ Compensation Insurance

In order to legally have employees in the state of Oregon, your business probably requires workers’ compensation insurance.

Oregon Workers’ Compensation Insurance protects workers who are injured on the job for lost wages, medical bills, funeral costs, and more. Though most businesses in Oregon do require you to have workers’ compensation, there are a few instances that would allow a business to forgo it, such as domestic servants, like home health workers, gardeners, home maintenance repair, etc.

Liability Insurance

This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.

A perk to starting your business in Oregon is that there is no sales tax. However, the state does asses higher property and income taxes in comparison to other states, so make sure to keep that in mind when settling your business. You’ll also need to consider federal, state, and local taxes. Let’s go over what that means for your business.

Federal Taxes

• LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. An LLC can file paperwork with the IRS to be taxed as an S-Corp or C-corp instead.
• Corporations. Corporations are taxed as C-corps by default. This means that corporations pay the 21% federal corporate tax rate and the applicable Oregon corporate tax rate.

To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.

Oregon State Business Tax

Once you’ve got your federal taxes taken care of, it’s time to turn your attention to the state of Oregon itself. Luckily, since there’s no state sales tax, the process is a bit easier as you won’t have to file for your sales tax as a business. You will, however, have other state specific taxes to keep in mind. For example, Oregon assesses a Corporation Excise Tax to all businesses at 6.6% for the first million of income.

To read more about your Oregon tax requirements, go to Oregon’s Department of Revenue’s website.

Local Oregon Business Tax

Oregon’s local taxes might differ depending on your city and county. You’ll need to search your local area for tax requirements to make sure that you’re all up to date. In addition to each city having their own licenses, the processes for each license is approved by individual committees. For example, to sell alcohol in Portland you’ll need to apply for a liquor license with the city of Portland—this process can take up to thirty days to be approved, and is governed by the Oregon Liquor & Cannabis Commission (OLCC).

If you want the people of Oregon to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or an influencer to establish a robust online presence. You’ll just need the following:

• Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
• Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“[email protected]”).
• SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
• Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.

All businesses in the state of Oregon are required to file an annual report each year on their anniversary date. Oregon annual reports must be filed online through the Oregon Business Registry page. Domestic LLCs and corporations are charged $100 each year for their annual report, while nonprofits are charged $50.

A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.

You can apply to register your trademark with the State of Oregon or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in Oregon is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in Oregon.

You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.

Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.