When setting up a company in Oregon it is important to comply with all relevant state and federal laws. The state imposes an income tax on every person and an excise tax on all corporations doing business within the state.

Most businesses are also required to make contributions to the state’s unemployment compensation trust fund in addition to providing workers’ compensation insurance for their employees. Likewise, the federal government will impose a tax on all income from the business.

For tax purposes, you must understand the differences among, and keep careful records of the following

  • ordinary and necessary business expenses
  • travel and entertainment expenses
  • capital expenditures; depreciation
  • investment tax credit
  • other matters relating to your assets and income

Your business also may be subject to other state and federal laws and regulations. For instance, the regulation and control of air, noise, water and solid and hazardous waste is governed by the Oregon Department of Environmental Quality. Oregon also has laws dealing with minimum wages, length of hours of work and working conditions. Your employees will be subject to federal and state labour laws.

When opening a new company in Oregon, you need to decide what form your business organisation will take.  It could be a sole proprietorship, a partnership, corporation or a limited liability company.

1. Sole proprietorship is the simplest form of company set up as it has the lowest start-up costs. The owner keeps all the profits and is personally liable for all debt. The downside is that this type of business is restricted by the owner being the only source of capital.

2. A partnership is formed by two or more persons who share the profit and responsibilities. Partners should be chosen carefully though.

3. A corporation is a more complex form of business organisation and is strictly regulated by the state law during its formation and operation. It has the same rights and obligations as an individual. A corporation is formed by filing articles of incorporation with the Oregon secretary of state. Shareholders are generally not individually liable for company debts and a corporation gives continuity of the business even after the death of a shareholder of transfer of shares.

4. Limited Liability Company or LLC is another statutory entity, similar to a corporation because it provides limited liability protection for its owners. It is taxed however as a partnership, proprietorship or as an entity like a corporation.  An LLC is formed by filing articles of organisation with the Oregon Secretary of state.

Five easy steps to incorporate or form a LLC in Oregon

  1. Register a business name with the corporation division in the secretary of state’s office. Make sure your choice of company name is available. It must include the right corporate or LLC identifying words. For Corporations the choices are Corporation, Incorporated or an abbreviation. For LLC’s the choices are: Limited Liability Company or an abbreviation.
  2. Filing paperwork at the Oregon state filing office.Corporations must file Articles of Incorporation and for LLC’s you must file Articles of Organisation.
  3.  Hold an Organisational Meeting and adopt the company’s Bylaws (Corporations or Operating Agreement (LLC’s).
  4.  Obtain a Federal Employer Identification Number (FEIN) for your company and open a company bank accoun
  5.  Obtain a local business license from the appropriate city or county.