Starting a business is exciting, but it’s also important to understand and take care of the legal requirements. To help with one aspect of starting a business, I have a guide to starting an Oregon LLC, where I’ll cover the different steps involved in establishing an LLC.
Related: Guide to starting a business in Oregon
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What are the steps to Form an Oregon LLC?
Step 1: Choose a Name for the LLC
The first step in forming an Oregon Limited Liability Company is to make sure the name you want is available. This step is important because the name of each LLC must be distinguishable from other entity names registered in the state of Oregon. The Oregon Business Registry on the Secretary of State’s website makes it easy to do an Oregon LLC name search to make sure your LLC name is available.
In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:
- Limited Liability Company
- L.L.C.
- LLC
A comma may be used after the business name and before the designator. “Cascade Peaks Brews LLC” and “Cascade Peaks Brews, LLC” are both acceptable.
If you are not ready to register the LLC, you can file the Application for Name Reservation with the Oregon Secretary of State, Corporations Division, to reserve a company name for up to 120 days.
Before settling on a name, you may want to see if a domain name is also available to match your business name and website address.
Step 2: Appoint an Oregon Registered Agent
Every LLC in Oregon is required to have a registered agent, which is simply someone with an Oregon street address who will be responsible for any legal correspondence, for example, if the business is served papers in the event of a lawsuit.
Many LLC owners are their own registered agent, but it is possible to hire a registered agent service like Northwest Registered Agent. The reasons why someone would hire a registered agent service include when the owner lives in another state or if the owner prefers that their personal address not be on public record.
Related: What is an Oregon registered agent?
Step 3: File the Oregon LLC Articles of Organization
The paperwork to officially create an LLC in Oregon is called the Articles of Organization. To submit the paperwork, either file online through the Oregon Secretary of State’s website or download and file the Articles of Organization.
Related: How to fill out the Oregon Articles of Organization
When filling out the Articles of Organization, there are a few sections, and terms can be confusing. I’ll explain some of the ones that typically trip people up.
Activity description: Provide some basic information about what the business does in fewer than 250 characters. Entering something now does not force the LLC only to perform that business activity forever, as this statement can be changed later. One way to keep the activity description more open-ended you can enter “Any legal business activity for which a Limited Liability Company may be organized in Oregon.”
Related: How to Answer the activity description
Duration: In this section, indicate how long the LLC intends to remain in existence. Most LLCs will choose a Perpetual duration; however, some businesses (usually investment-related) will have a specific closure date.
Principal place of business: In this section, enter the street address, city, state, and zip code of the initial principal office. This address can be the LLC’s physical address, or it can be the address where the business records are stored. You may not use a PO Box for the designated office.
Assign the organizers: An LLC Organizer is someone involved with the formation of the Articles of Organization. The Organizer may or may not become an LLC member, such as a mentor, attorney, or accountant, but any initial member can be listed as an organizer.
At least one organizer must be entered.
Register individuals with direct knowledge: The Oregon Secretary of State requires that at least one person who is a member or manager of the limited liability company or an authorized representative with direct knowledge of the operations and business activities be on file.
Enter at least one person’s name and address.
Statement of management: This question asks how the LLC will be managed. The two choices are:
- Member-Managed: An LLC with members who have an active involvement in the management of the LLC. Most LLCs fall into being member-managed.
- Manager-Managed: An LLC whose members hired a manager to run the LLC, similar to a CEO of a corporation.
Declare the initial members or managers – This is an optional section to include the names, contact information, and titles of the LLC members and managers. Some banks will request this information before allowing LLC bank account signing authority.
Professional services rendered: If the LLC offers services that require state licensing, enter “Yes” and choose from the list of professions. Some common services that require licensing include accountants, acupuncturists, architects, attorneys, chiropractors, dentists, engineers, landscape architects, podiatrists, psychologists, and real estate appraisers.
Optional provisions: This is an optional section and is not used by most LLCs. Here you would include additional rules for the operation of the LLC.
- Indemnification: The company elects to indemnify its members, managers, employees, and agents for liability and related expenses under ORS 63.160 to 63.170. Many LLCs will elect the indemnification clause.
- Benefit company: Not as common for an LLC to select, but a benefit company is a blend between a not-for-profit and for-profit company. There are some requirements to be an Oregon benefit company.
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What To Do After Starting An Oregon LLC
Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.
Prepare an Oregon LLC Operating Agreement
The operating agreement is a document that governs the framework of an LLC. This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.
Most states (including Oregon) do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:
- The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
- Member’s personal liability protection may be diminished.
- Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.
Related: Oregon operating agreement template
Obtain an EIN
If the LLC will hire employees or is owned by more than one member, an EIN is required.
The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.
Related: How to apply for an EIN
Open an LLC Bank Account
Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.
Several documents will be needed to open a business bank account, such as:
- A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
- Copies of the original LLC formation paperwork from the state showing the creation of the LLC.
- Driver’s licenses of the members.
- Occasionally, the bank will request an Oregon Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.
Related: How to open a business bank account for your LLC
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:
- Business license: Some cities require businesses to obtain licensing before they can start.
- Professional license: Certain services from barbershops, accountants, salons, and others must obtain licensing.
- Oregon Business Identification Number: All businesses operating in the state must obtain a Business Identification Number from the Oregon Department of Revenue, which includes registration for Unemployment Insurance Tax, Employee Withholding Tax, and Oregon state taxes.
Related: What business licenses are needed in Oregon?
File the Oregon LLC Annual Report
LLCs are required to file an annual report with the Oregon Secretary of State. The fee for the annual report is $100 and is due each year on the LLC’s anniversary date.
Related: How to File an Oregon LLC Annual Report
Oregon LLC FAQs
What are the benefits of an LLC?
An Oregon LLC, or Limited Liability Company, is a type of business structure (also called a business entity) that combines the flexibility of a sole proprietorship with the liability protection of a corporation.
This means that the owners, known as members, are generally not personally responsible for the company’s debts or legal problems. This makes the LLC a popular choice among small business owners because it’s easy to set up and manage, and it offers a way to protect personal assets while running a business.
Related: What are the benefits of an LLC?
How much does it cost to start an LLC in Oregon?
The state filing fee to start an LLC in Oregon is $100.
How long does it take for an LLC to be approved in Oregon?
Oregon LLCs formed online normally take 1-2 hours, while mailed-in forms can take 5-7 business days for the Secretary of State to process.
Is there an annual fee for an LLC in Oregon?
An annual report and $100 LLC annual renewal fee are due each year for Oregon LLCs.
What is a Foreign Limited Liability Company?
A foreign LLC isn’t a special type of LLC. Instead, it’s an LLC that was formed in another state but wants to physically operate in Oregon. Physically operating means having a presence, such as having an office or hiring an employee.
Before an out-of-state LLC can operate in Oregon, foreign qualification can be granted by submitting an Application for Authority to Transact Business
Related: What is a foreign LLC?
What is a Professional Limited Liability Company?
Businesses that require occupational licensing in Oregon, such as accountants, architects, veterinarians, etc., will want to file for a Professional Limited Liability Company (PLLC) instead of an LLC. Filing for a PLLC is very similar to that of an LLC.
Related: What is the difference between a domestic Oregon LLC and a foreign LLC?
Can you use a PO Box for your LLC in Oregon?
A PO Box can only be used as a mailing address for the LLC. A physical street address in Oregon must be used for the Registered Office and Registered Agent.
