Forming an LLC in Oregon
So, you've decided to start a business in Oregon and, after reviewing the different options for business structures, you think that a limited liability company (LLC) is the best fit. To properly start an LLC, you'll have to comply with the requirements set forth under Oregon law. Similar to other states, to form an Oregon LLC, you need to file articles of organization with the Oregon Secretary of State. There are several other steps that you'll need to take after forming your LLC. It's essential to be aware of the requirements to form your Oregon LLC and maintain the business in compliance with state LLC laws.
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Steps To Start Your Own LLC in Oregon
Step 1: Name the LLC
It's easy to overlook the importance of naming your LLC. Not only does the company name affect your marketing plan and efforts, but it also has legal implications. If you don't choose a business name that complies with Oregon laws on LLC names, then you could face problems down the road.
First, your business name must be different from all other business names on record with the Secretary of State. You might be wondering how you'd know if a name you'd like to use for your LLC has already been registered or reserved with the state. You'll have to do a name search to check for name availability. If a name you like is already taken, you'll need to choose another name instead.
Also, note that your LLC name must include one of the following terms, phrases, or abbreviations:
- Limited Liability Company
You can reserve a business name if you find that a name you'd like to use is available, but you're not quite ready to register your LLC. Name reservation costs $100 in Oregon.
Step 2: Select Your Oregon LLC Registered Agent
To comply with the laws of the state of Oregon, you'll need to select a person or a company to act as your LLC registered agent. This person or company will have the duty of accepting legal papers on behalf of the LLC if the company gets sued. You'll need to appoint a person or company that can be available during regular business hours for service of process. The registered agent for your Oregon LLC will also need to have a physical street address (not a P.O. Box). Finally, the registered agent you select must either be a resident of Oregon or a business entity authorized to do business in the state of Oregon.
Step 3: File Your LLC Articles of Organization
Filing your LLC Articles of Organization is crucial because it creates the LLC. Once you're ready to file, you either file online or download the form to submit your paperwork by mail.
Your Oregon Articles of Organization for your LLC must include:
- The name of the LLC;
- The full address of the LLC's initial registered office and the name of the registered agent at that office;
- A mailing address, if different from the LLC's address;
- If the LLC will be managed by managers (instead of by its members), a statement to that effect;
- The name and address of the organizer(s);
- A statement that its existence is perpetual or the date at which the LLC will dissolve; and
- If the LLC will provide professional services, then the services that will be provided.
The filing fee for Oregon LLC Articles of Organization is $100. There's also an annual report for your LLC that costs $100 to file each year.
Step 4: Draft Your LLC Operating Agreement
An LLC operating agreement is an internal document you should create (although you're not legally required to create one). Operating agreements for LLCs tend to contain provisions relating to: rights and responsibilities of the members, admission of new members, voting powers, liabilities, ownership, and dissolution. Without an operating agreement, state LLC laws may apply in case of conflict or a dispute among organization members.
Step 5: Get an EIN
An EIN (Employer Identification Number) or Tax ID number is a number that the IRS (Internal Revenue Service) assigns to business entities. It's similar to a social security number. You'll likely need one of these numbers to open a business bank account and hire employees for your LLC.
It's easy and free to apply for your EIN. You can get it done online through the IRS website.
Step 6: Get a Business Bank Account
You'll want to have a separate account for your personal and business funds so that you can maintain personal liability protection. Personal liability protection or personal asset protection is one of the most significant features of Oregon LLCs. It means that your personal assets are safe in the event of a lawsuit against your company. Failing to maintain a separation between your personal and business funds could put your personal assets at risk, so it's best to open a business bank account and get a business credit card for your LLC as soon as possible.
Frequently Asked Questions (FAQs) About Oregon LLC Formation
1. What are the benefits of establishing an LLC in Oregon?
Oregon LLCs offer personal liability protection, which means that your personal assets are safe in the event of a lawsuit over a business debt or obligation. This is important to many small business owners.
LLCs also offer tax advantages. "Pass-through" taxation is a benefit of LLCs, and you also have the option to have your LLC taxed as a corporation. For information about state taxes for your LLC, contact the Oregon Department of Revenue.
2. How much does it cost to set up an LLC in Oregon?
It costs $100 to file the Articles of Organization that formally create your LLC. There is an additional fee if you decide to reserve your name before filing your Articles of Organization.
3. Do I need to get a DBA or a business license for my LLC in Oregon?
A DBA ("doing business as") name is a name that must be registered if you're using it to conduct business, and it's different from the name you registered with the state. If you're only doing business under the LLC name you registered with the state, you don't have to file a DBA name.
Many businesses need business licenses or permits to operate the business. The licenses or permits you need are based on the type of business you're running and its location. The best course of action is to check out Oregon's Business License Directory and contact officials if you need additional help.
Note: State laws are always subject to change through new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.
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