How to Start a Business in Oregon
How do you start a business in Oregon? The short answer: sell something. You're automatically a sole proprietor. With no state sales tax and a highly educated workforce, Oregon is an excellent place to start a business. But to make money (and protect it), you'll need to take several additional steps. From choosing a business structure with liability protection to setting up your business website, we've got you covered. Here's your go-to guide for starting a business in Oregon.
Ready to Start a Business in Oregon?Let's Get You Started
Pick a Business Structure
Name Your Business
File Formation Paperwork
Draft Internal Records
Get Oregon Business Licenses
Organize Your Money
Get Business Insurance
Understand Your Tax Burden
Build Your Business Website
File Oregon Annual Report
Apply for Trademarks
1. Pick a Business Structure
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.
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.
Can an LLC be just one person?
Yes! An LLC owned by one person is called a Single-Member LLC. Single-Member LLCs have different taxation requirements than regular LLCs, so make sure to take a look at our comprehensive Single-Member LLC guide.
Read all about Single-Member LLCs.
2. Name Your Business
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.
Can I reserve a business name in Oregon?
Yes! Reserving a business name can be done by filling out a Business Name Reservation Form. You can mail or fax the completed application to reserve your name.
Keep in mind that this reservation does not constitute your business name’s legality. The state will verify your name is available when you submit your formation/incorporation documents.
What is a DBA?
What about trademarked names?
To trademark your company name, you first need to check to make sure no one else has trademarked the name. (Note: this is only necessary when you want to protect your business name as intellectual property. It’s not required or always needed.) Registering an Oregon trademark only protects it on a state-level, so if you want to register it nationally, he’ll need to apply for a federal trademark.
3. File Formation Paperwork
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.
What is a registered agent?
A registered agent is a person or company that accepts legal mail such as service of processes on behalf of your business. The registered agent must have a physical address in the state of Oregon, and there must be someone there to receive mail during regular business hours. This can be tricky, especially if you travel a lot or would rather not be tied to a desk all day. So, hire a registered agent—like us!
How can I keep my information off the public record?
The best way to protect your privacy while forming a business is to hire a registered agent. Unfortunately, since most of what you file with the Secretary of State is public record, anyone can look up your business information. By hiring a company like Northwest, you can keep your privacy intact, and we’ll list our business address instead.
4. Draft Internal Records
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.
5. Get Oregon Business Licenses
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.
How do I get an Oregon business license?
In order to get an Oregon business license, you’ll need to fill out the application’s paperwork and submit it, along with any fees, to the proper official. You can submit your business license applications online or by mail.
How do I get a professional license in Oregon?
The process for obtaining a professional license will vary depending on which professional license you need. Professional licenses are controlled by the board that regulates your industry. So, for example, the process for an accounting license is done through the Board of Accounting, while the process for getting an optometrist license is done through the Board of Optometry.
How do I get a local business license?
Each city and county has different licensing requirements and processes. To know precisely how to apply for a business license in your area, look up your local business center, and file as directed.
Generally speaking, the process includes filling out an application with general information like your business name and purpose and submitting a filing fee.
6. Organize Your Money
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.
How do you set up a business bank account?
Do I need a business bank account to accept credit card payments?
Probably. Payment processors require you to provide them with a bank account. This is where they’ll deposit funds from transactions. Most of the time, this needs to be a business bank account.
Some payment processors may let you get away with listing a personal bank account, but it’s not a great idea. Mixing your business finances with your personal finances erodes the separation between you and your business, weakening your liability protection. It also turns tax season into a nightmare.
Learn more about Payment Processing.
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.
What forms do my employees need to fill out?
Your new employees will need to fill out a W-4 to determine how much you’ll withhold and an I-9 to verify that the employee is eligible to work in the US.
What’s the difference between an independent contractor and an employee?
It’s important to understand the difference between an independent contractor and an employee. That’s because for employees, you’ll need to withhold and pay income, social security, and Medicare taxes. Independent contractors pay these taxes on their own.
An independent contractor is self-employed—how they complete their work is not directly controlled by an employer. An independent contractor may perform the same kind of work for other businesses, and can do the work when and how they choose.
An employee, on the other hand, performs their work how and when their employer chooses.
If you’re unsure, you can file Form SS-8 with the IRS and let them decide.
Learn everything you need to know about hiring independent contractors.
How do I get a Business Identification Number?
You can register for a BIN (Business Identification Number) online by registering with the Oregon Business Registry. A BIN will be assigned to you after you complete your registration. You can also submit a Combined Employer’s Registration form. A BIN must be issued to you before you can pay your employees.
7. Get Business Insurance
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.
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.
Do business owners need workers' compensation insurance in Oregon?
Not necessarily. The owner of a business will need to have workers’ compensation for their employees, but the insurance policy does not need to include the owner(s) themselves. An owner is typically exempt, legally speaking. If you would like to be covered by the policy anyway, you’ll need to work with your insurance provider to get covered under the policy.
Do I need business insurance for my home-based business?
Probably. That’s because you can’t count on your homeowners’ or renters’ insurance policy to cover damages related to your business. Most insurance companies offer a home-based business insurance plan.
8. Understand Your Tax Burden
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.
- 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.
Do I need an EIN if I’m self-employed?
If you’re operating a sole proprietorship or single-member LLC that doesn’t employ anyone else and you don’t need to file excise or pension plan returns, you don’t legally need an EIN.
However, you can still get one—and you probably should. Otherwise, you’ll have to use your own social security number to do business. Plus, you’ll likely need an EIN to open a business bank account.
How do I get an EIN?
To get an EIN, you can either apply online or file form SS-4 by mail with the IRS. Getting an EIN is free.
Check out our guide to applying for an EIN.
What is an S-Corp?
An S-Corporation is a federal tax election. Registered business entities like LLCs and corporations start out with a default tax status, but can file paperwork with the IRS to be taxed as an S-Corp. Like LLCs, S-Corps are taxed as pass-through entities. Like corporations, S-Corps can make distributions that aren’t subject to the 15.3% self-employment tax.
Learn more about the S-Corp tax election.
What is a C-corp?
A C-corporation is the default federal tax election assigned to corporations. Most corporations are taxed as C-corps, but LLCs can also apply for C-corp tax designation by filing paperwork with the IRS. C-corps file federal corporate income taxes and state corporate income taxes. C-corps can pay their shareholders in distributions, and the shareholders report those profits on their personal tax returns.
Learn more about the C-corp tax election.
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).
9. Build Your Business Website
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.
10. File the Oregon Annual Report
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.
What if I don’t file an annual report in Oregon?
If you don’t file your annual report in Oregon, you will have forty-five days before your business is considered “inactive.” While there is no late fee, your business could be dissolved if you do not submit your annual report.
11. Apply for Trademarks
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.
How do I register for a trademark in Oregon?
To register your trademark in Oregon, you’ll need to fill out the Application for Registration and pay the $50 filing fee. You’ll also need to include a drawing or photocopy of your trademark. This process can take a few weeks, but once completed, grants you exclusive rights to use the trademarked phrase or image in the state of Oregon.
Can I register a trademark before I use it?
No. But you can file an application with the USPTO under Intent-to-Use status. This gets your application in line before you’ve actually used the mark, which could be helpful if you’re worried someone else might register your mark before you’ve had a chance to use it.
For your trademark to become official, you’ll eventually need to show proof that you’re using it. An Intent-to-Use application buys you some time to do that.
Learn more about filing an Intent-to-Use Trademark.