In order to form an LLC in Oregon, you must file Articles of Organization with the Oregon Secretary of State for a fee of $100. You have the choice of applying online or by mail. The Oregon Limited Liability Company’s Articles of Incorporation are the legal documents that form the company.
To form an Oregon LLC and get your company up and running, follow the step-by-step instructions below. Please read our What is an LLC guide to learn more about LLCs and their benefits.
Naming your Oregon LLC
The first and most critical step in forming an LLC in Oregon is deciding on a name. Make sure the name you select complies with Oregon’s naming guidelines and is easily searchable by potential customers. You will need to follow some guidelines as below when you want to name your LLC formed in the State of Oregon
To begin, you must establish an LLC and name it with the term “limited liability company.” You may use either LLC or L.L.C. as an abbreviation. Your Iowa LLC’s name also can’t include any terms or phrases that could cause your LLC in Oregon to be confused with a government agency like the FBI, Treasury, or even the State Department.
Finally, some terms are prohibited in the formation of an LLC in Oregon, including “Bank,” “Attorney,” and “University.” If you want to use these terms in your Iowa LLC, you’ll need to produce additional paperwork and include a licenced person in your LLC in Oregon, such as a banker, lawyer, or professor.
Other considerations to keep in mind when naming your LLC in Oregon include ensuring that the name you choose is available in the state. When forming an LLC in Oregon, you must ensure that the name you want to use is not already taken. A name search on the State of Oregon website is a quick way to find out.
Appoint a registered agent in Oregon
For your LLC, you must designate an Oregon registered agent.
What is the role of a Registered Agent? A registered agent is a person or business entity who is in charge of obtaining important legal documents on your behalf. Consider your licenced agent to be your company’s point of contact with the government.
Who is qualified to serve as a Registered Agent? A registered agent must be an Oregon citizen or a company approved to do business in Oregon, such as a registered agent service. You can appoint a registered agent in Oregon from someone within your own company, even yourself.
A registered agent is a person or organisation authorised by an LLC or Corporation to accept service of procedure, government correspondence, and compliance documents on behalf of the company.
A licenced agent’s main function is to help your LLC to maintain successful corporate compliance by reminding you of legal notifications or submitting annual report filing reminders, in addition to collecting official mail on your behalf. A registered agent is effectively a gatekeeper for business organisations, allowing you to take effective action and address possible problems quickly.
If you run a small business or a large organisation, you should expect your LLC’s appointed registered agent to obtain documents such as tax forms, legal documents, official government correspondence/documents from the secretary of state and any summons/notice of a lawsuit.
Registered agents assist companies in staying current with state requirements through sending periodic updates and, on occasion, submitting annual report filings and other official government notices to the secretary of state or other government entities.
Copies of your LLC records will be held by registered agent services. You’ll have a backup of all your essential LLC business and legal records in case of fraud, natural disaster, or other unforeseen losses.
A registered agent will help to provide you with peace of mind, allowing you to devote your time, resources, and attention to running your LLC.
If you want to be your own registered agent, you must be available to receive official government correspondence and service of process notifications at the physical address you give during regular LLC’s business hours.
Instead of keeping track of deadlines and being available during LLC business hours, a designated registered agent allows you to concentrate on your business.
Filing the Oregon llc Articles of Organization
You must file the Articles of Organization with the Secretary of State in order to register your Oregon LLC. This can be done either online or via the mail.
The state filing fee for your Oregon LLC ‘s Article of Organization is $100 that is payable to the “Corporate Division” and is also non refundable. You should mail it to:
Secretary of State, Corporation Division
255 Capitol St. NE
Salem, OR 97310
Attached is a sample of the Articles of Organization that needs to be filed
Now is a good time to figure out whether your LLC would be either member managed or manager managed.
One of the most critical choices you’ll have to make when creating a LLC is how the company will be run.
Member-managed LLCs and manager-managed LLCs have two basic management systems.
Members of a member-managed LLC are actively involved in the company’s activities. Every member has a say in both day-to-day activities and big-picture matters, and all major business decisions need a vote.
Since the administrative power is distributed among the members rather than concentrated in the hands of one or more administrators, this LLC system is often referred to as “decentralised management.”
Members of a manager-managed LLC agree that delegating managerial authority to one or more individual managers is a more effective way to control their company’s day-to-day operations. Manager-managed LLCs don’t need members to vote on any business decision; instead, they give the manager(s) complete control.
Since it concentrates administrative control in the hands of one or more administrators, this LLC system is often referred to as “centralised management.”
Creating an LLC operating agreement for your LLC in Oregon
In Oregon, an LLC operating agreement is not necessary, but it is a good idea to have one.
What is the concept of an operating agreement? An LLC operating agreement is a legal document that spells out an LLC’s ownership and operating procedures.
What are the advantages of an LLC operating agreement? A detailed LLC operating agreement guarantees that both company owners are on the same page and decreases the likelihood of potential dispute.
An LLC operating agreement should be in effect for any Oregon LLC owner to protect their company’s operations. While an operating agreement is not legally mandated by the state, it will set specific rules and standards for your LLC while also ensuring your legitimacy as a legal entity.
An LLC’s ownership arrangement and operating procedures are outlined in an operating agreement, which is a legal document.
Your operating agreement should cover all of the topics below, whether you’re starting a single-member or multi-member LLC. Any of these clauses would have no effect on the day-to-day activities of a single-member LLC, but they must be included for the sake of legal etiquette.
When the LLC was formally created, who its members are, and how ownership is divided are all things to consider. Multi-member LLCs may have an equal ownership arrangement or delegate different “units” of ownership to different members.
Management & Voting
If the LLC will be run by its members or by a manager appointed by them, and how members will vote on business matters. Each member usually has one vote, but you may want to give certain members more control than others. Read our guide to managing your LLC for more details.
Initial capital contributions when forming an LLC
Your operating agreement should cover the sum of money that each member has put into the business. This is also the time to plan how you can raise more funds in the future.
Distributions of profit and loss
How will the gains and expenses be distributed among the members? The most popular alternative is to equally divide income. You should decide how you want them divided in your operating agreement if you want them divided differently. Read our Contributions and Distributions guide for more detail on the fundamentals of LLC ownership.
Membership structure changes
In the event that a member leaves the organisation, how can roles and ownership be transferred? In the LLC’s governing text, it’s critical to spell out the procedure for buying out and/or replacing members.
Dissolution of your Oregon LLC
If any of the members of your LLC decide that you no longer want to do business, you can dissolve it officially. The method of hypothetically dissolving your company is an integral part of your operating agreement. Read our Oregon LLC Dissolution article to learn how to dissolve your Oregon LLC.
Getting an EIN
What is an EIN number? EIN is an acronym for Employer Identification Number. The Internal Revenue Service (IRS) assigns EINs to companies to help them be identified for tax purposes. It’s essentially a business’s version of a Social Security number.
An EIN could also be referred to as a Federal Employer Identification Number or a Federal Tax Identification Number. An EIN is required to open a business bank, file and manage Federal and State Taxes as well as to hire employees.
Even if you already have an EIN for your sole proprietorship, the Inland Revenue Service still requires that your sole proprietorship get a new EIN when converting to an llc. You will be able to get an EIN for free from the IRS and it is an easy process that can be done either online or by mail.
Steps that you can take after you form an LLC
Separating business and personal assets
When your personal and business accounts are combined, your personal assets (such as your house, vehicle, and other valuables) are put at risk if your Oregon LLC is sued. This is referred to as piercing the corporate veil in business law.
As a general rule, business organisations such as LLCs exclude their shareholders from personal responsibility for the debts of the company. The corporate veil is a term used to describe this defence in the sense of business organisations.
However, establishing your company as an LLC isn’t enough to guarantee that your company has limited liability company protection. When an LLC’s creditors are not paid, the creditors can sue the LLC’s owners, alleging that they are personally responsible for the company’s debts. The act of piercing the corporate veil is known as piercing the corporate veil.
There are a few steps that you should take to maintain the corporate veil
Having Adequate start up capital
Creditors would claim that the company was never adequately distinct or autonomous from its shareholders to give rise to a corporate veil if it never had enough money to cover its liabilities. To prevent this argument, it is crucial to make a fair initial investment in the company when starting a business.
Money is always tight for new companies at the start, so each company must determine how much money is adequately required to fund its initial costs and liabilities, including payments owed to creditors and possible third-party liabilities. Maintaining solvency (assets in excess of liabilities) in the early stages of your business decreases the chances of veil piercing success.
Prevent the mixture of financial affairs
The company should have its own bank account and credit card, as well as conduct business independently of the founders. Individual owners can not use company funds for personal reasons (for example, paying home cable bills) unless the transaction is properly reported as a loan or a draw.
If the organisation requires additional funds and the investor wants to contribute, the investment should be reported as a capital donation, with proper paperwork created at the time.
The company’s contractual transactions should be conducted in its name, with the company as the named party to any contracts and the individual signer clarifying that they are signing for the company below the signature line—for example, John Smith, as Approved Member of ABC LLC, for and on behalf of ABC LLC.
This includes the signer’s name, authority/title, and the organisation for which the signature is being made.
Documenting all company business
The way you sign documents on behalf of the company should represent the fact that the company is distinct from you personally. Are you signing for the company or for yourself personally if you sign a signature line in a company contract with your name under it?
Keeping this in mind will help you explain that the company is independent from you and that you are not personally liable for the company’s debts on a regular basis.
Meetings of the company, if required under the LLC’s operating agreement, should be documented in formal minutes maintained in a professional way with the records of the company. Decisions of the company should be reflected in resolutions signed by the members.
These tasks are often called “corporate formalities.” The term “formalities” may be misleading, though, in that it may be thought to imply that the tasks are not necessary, or are “just formalities.” In the context of maintaining the corporate veil, however, this documentation is important and necessary.
You do not need to record your decisions in your day-to-day life; it is sufficient that you understand why you took those actions and that you recall that detail. Creating an LLC, on the other hand, is the formation of a separate entity—a separate “self”—from yourself and your mind.
Since the company’s brain is incapable of remembering the decision-making process and justifications for decisions, it is important to record them on paper. This “paper trail” is critical for keeping the company’s liability shield—the corporate veil—intact because it demonstrates that you are conducting business as usual.
Protecting your Oregon LLC with the below steps
Opening a Business checking account
By opening a business checking account, you will be able to separate your personal assets from your Oregon LLC assets which is a necessary step for personal asset protection. It also additionally helps make accounting and tax filing easier.
Getting a business credit card
Getting a business credit card for your Oregon LLC helps you to separate any personal and business expenses. It also simultaneously helps build your company’s credit history which is useful to raise any capital such as short term or long term loans later on.
Hiring a business accountant for your Oregon LLC
A business accountant will help prevent your business from overpaying on taxes while helping you to avoid any penalties, fines and other costly tax errors. A business accountant also helps to make bookkeeping and payroll easier while leaving you with more time to help focus on growing your business.
You will also be able to manage your business funding more effectively by discovering any unexplored areas of profit or loss.
Getting business insurance for your Oregon LLC
You will control risks and concentrate on increasing your company with the help of business insurance. In Iowa, you can obtain three different forms of business insurance for your LLC.
General Liability Insurance: This is a comprehensive insurance policy that protects the company against claims and is the most common form of insurance purchased by most small businesses.
Professional Liability Insurance: Professional Liability Insurance covers malpractice and other business negligence lawsuits for professional service providers such as consultants and accountants.
Worker’s Compensation Insurance: This form of insurance protects workers for illnesses, disabilities, or deaths that occur on the job. Worker’s compensation insurance is required by law in Iowa for those companies with one or more workers.
Ensuring compliance of your Oregon LLC
Getting business permits and licenses
You must meet federal, state, and local government regulations in order to run your LLC. Restaurants, for example, are likely to require health permits, construction permits, signage permits, and other permits.
The specifics of business licences and permits differ by jurisdiction. Make sure you read everything thoroughly. Don’t be shocked if some short classes are also needed.
The cost of acquiring a business licence or permit varies depending on the type of licence you require.
Oregon does not impose a sales tax
If you are an LLC in Oregon that recruit workers, you must register for an Oregon Business Identification Number (BIN) in order to report and pay ORegon payroll tax which includes Unemployment Insurance tax as well as the Employee Withholding Tax on the Oregon Secretary of State’s website.
Federal LLC tax filing requirements
Most LLcs are required to report their income to the IRS each year using a Form 1065 Partnership Return or FOrm 1040 Schedule C.
Filing your Oregon LLC annual report
Oregon requires all LLC s in the ORegon state to file an annual report with the Oregon secretary of state Corporate division and it can be submitted online. There will be a fee to submit your annual report online of $100 that is non-refundable. The due date to submit your annual report is due each year by the date on which the LLC is formed in the Oregon state.
In case of any late filings of the annual report, Oregon LLC s can be dissolved after 45 days for failure to file the annual report.
If a LLC fails to file one or more state forms, it may be subject to fines and even automatic dissolution. LLC owners risk losing their limited liability rights if this occurs. By notifying you of imminent filing deadlines and sending reports on your behalf, a good registered agent service will help you avoid this result.
Certificate of good standing
A Certificate of Good standing in Oregon is also known as the Certificate of existence which verifies that your LLC was legally formed and has been properly maintained when forming an LLC. A certificate of good standing is great in situations when you require to obtain or renew specific business licenses as well as seeking additional funding.
In this Certificate of Good Standing guide, we will discuss the requirements on how to get a certificate of good standing and to understand how a certificate of good standing is actually important.
You will be able to get a certificate of good standing by mail with a refundable $10 fee and mailing it to
Secretary of State, Corporation Division
255 Capitol St. NE
Salem, OR 97310
Dissolving your LLC in Oregon
If you decide you no longer want to do business with your LLC in the future, you must legally dissolve it. Failure to do so on time will result in tax liability and fines, as well as legal consequences. There are two basic steps to dissolving your LLC: closing your business tax accounts as well as filing the Articles of Dissolution which is opposite of the Articles of Organization
Q: What is an LLC?
The acronym LLC stands for Limited Liability Company. It’s a straightforward business structure that provides more versatility than a conventional company while still delivering much of the same advantages.
Q: Do I need to get a DBA or Trade Name for my business?
A DBA isn’t needed for most LLCs. The LLC’s name can be used as the company’s brand name, and you can accept checks and other forms of payment under that name. If you want to do business under a different name, you might want to file a DBA.
Q: Can I be my own registered agent?
If you wish, yes, you are able to be your own registered agent for your LLC or anyone in your company for that matter.
Q: Is a Registered Agent service worth the cost?
Using a licenced Registered Agent service to handle your LLC’s government filings is a cost-effective option. The benefits of using a professional service far outweigh the annual costs for most companies.
Q: How long will it take to form an LLC in Oregon after filing the articles of organization?
Filing the Articles of Organization may take about 24 hours online or 3-5 days by mail.
Q: What is the difference between a domestic Oregon LLC and a foreign one?
When an LLC conducts business in the state where it was created, it is referred to as a “domestic LLC.” Normally, when we talk about an LLC, we’re talking about a domestic one. If an existing LLC wants to extend its operations to another territory, it must form a foreign LLC.
Q: How much does it cost for forming an LLC in the state of Oregon?
The cost is $100 to start an LLC in Oregon
Q: How do I get an EIN if I do not possess a social security number?
Obtaining an EIN does not necessitate the use of a Social Security number. You may simply leave section 7b blank on the IRS Form SS-4. Then, to finish your application, call the IRS at (267) 941-1099.
Q: What tax structure should be used for my Oregon LLC?
When you apply for an EIN, you will be told of the various tax classification options available to you. The default tax status is preferred by the majority of LLCs.
Some LLCs, on the other hand, may reduce their federal tax liability by electing S company status.
Q: Do I need an EIN for my LLC in Oregon?
An EIN is needed for any LLC with employees or more than one member. The Internal Revenue Service (IRS) needs this.
Starting a business correctly doesn’t have to be difficult. With over 15 years of experience consulting new businesses and start ups, Matthew is probably the best person to help you set a strong foundation for your business.