Starting a corporation in Oregon comes with several advantages, such as a favorable tax system, access to capital, low operating costs, and a thriving startup community.
The following step-by-step guide will show you how to start a corporation in Oregon.
1. Select a name for your corporation
The process starts with naming your Oregon corporation. The name you choose for your corporation should also comply with Oregon naming laws and requirements.
General corporate name guidelines
Keep the following naming requirements in mind when deciding on a business name for your Oregon corporation:
- Your corporation name should not suggest that it is involved in any illegal or unlawful activity
- Your corporation name should not suggest that it is affiliated with any government or state agency
- Your corporation name should not suggest that it is an agency of the state
- Your corporation name must be different from other businesses registered in the same state, including reserved names
- Your corporation name cannot include the word cooperative
- Your corporation name must contain the word corporation, Inc., limited or company or at least an abbreviation of any of these words
Read through the Oregon state statute 60.094, which contains guidelines for naming a business entity in the state of Oregon.
If you plan on expanding your Oregon corporation to other markets, then you should consider getting a trademark for your business name. A trademark protects your business from intellectual property theft and ensures that your customers are never confused about who they’re doing business with. It also ensures that no other business in the state of Oregon will be able to trademark your business name.
To trademark your Oregon corporation name, check the Oregon Active Trademark Database to ensure that your business name hasn’t already been taken. To trademark your business name in the state of Oregon, you need to submit a trademark application to the Secretary of State’s office. The application takes anywhere between five to seven days until your trademark is confirmed.
Additionally, suppose you’d like to trademark your business name on a federal level. In that case, you need to apply via the US Patent and Trademark Office to ensure that your business name is trademarked nationally.
Your Oregon corporation’s entity name is simply its legal business name. This is the name that you use on all formation documents, as well as all correspondence with the federal and state government.
DBA (Doing-business-as) name
Business owners who intend on conducting business under any other name aside from the entity name will need to register or file a DBA in Oregon. DBA is short for doing business as name. It’s also referred to as a trade or fictitious name. However, in the state of Oregon, it’s more commonly referred to as an assumed name.
An assumed name is not a legal entity, and your business will still be registered legally under its entity name. The assumed business name will need to be filed with the Oregon Secretary of State, allowing you to conduct business under that name in the state.
Additionally, in the state of Oregon, there are no limitations on the number of assumed names that a business entity can register as long as the assumed name is a legal business. Registering an assumed name in the state will ensure that no other business will be able to use that name. When registering the fictitious name in Oregon, you’ll need to contact the Secretary of State and complete the necessary Assumed Name Form.
However, if you expect to conduct business in other states, then you need to register an assumed name with the United States Patent and Trademark office.
2. Nominate a registered agent
Every business entity in the state of Oregon is required to appoint a registered agent. Registered agents are usually referred to as statutory or resident agents as well. However, they all serve the same purpose, which is to receive government correspondence and compliance documents on your corporation’s behalf.
Additionally, the registered agent is the individual responsible for accepting service of process in the event that a lawsuit is brought against your Oregon corporation. Therefore, a statutory agent must maintain availability during normal business hours to ensure that they do not miss out on accepting or receiving important legal documentation.
Additionally, a statutory agent must be of legal age and must have a street address in Oregon where business activities are conducted. Lastly, a statutory agent must consent to the appointment.
3. Appoint initial directors at the organizational meeting
A part of the Oregon corporation formation process involves calling an organizational meeting. The organizational meeting is essential as this is where you will conclude the corporation’s formalities which involve creating and approving bylaws, selecting initial directors, determining your share structure, and executing an incorporator’s statement.
When it comes to the appointment of initial directors, your corporation will need to nominate at least one corporate director to oversee the operations of your corporation until the first shareholder meeting is held.
A corporate director is responsible for the adoption, amendment, and repeal of corporate bylaws, as well as the election, supervision, and removal of corporate officers.
4. File Articles of Incorporation
In order to legally conduct business in the state of Oregon, your corporation will need to file a document called the Articles of Incorporation. It’s also referred to as a Certificate of Incorporation, and this document officially creates your corporation or new business.
The document will need to contain some factual information about your corporation, such as:
- Your corporation’s street address and name
- The number of authorized shares your Oregon corporation is permitted to issue
- The street address and names of the organization’s incorporators
- The street address and name of the corporation’s registered agent
- The name of the initial president
- The address and names of the corporation’s secretary
The Secretary of State does provide an Articles of Incorporation Form. However, this form only allows you to set a corporation with one share class. In the event that you plan on going with a multiple share class structure, then you need to compose your own articles or attach an additional provision.
Once you compile the relevant information, go ahead and file the articles with the Oregon Business Registry. The second option is to file the Articles of Incorporation via mail to the following address:
Secretary of State
255 Capitol St. NE, Suite 151
Salem, OR 97310-1327
5. Create and approve bylaws
The corporate bylaws is a document that governs the way a corporation is operated. Additionally, it may contain any provisions relating to the management of the business and anything that pertains to the regulation of the affairs of the corporation.
Typically the bylaws will outline the rules and procedures for selecting corporate directors and corporate officers, as well as the voting rights of shareholders.
The bylaws are not filed with the Secretary of State. However, they need to be kept on record for reference as and when needed.
Additionally, fulfill the following requirements in your corporate bylaws:
- The bylaws must be adopted by the Board of Directors or incorporators
- The bylaws cannot include any information that comes into conflict with the law or the corporation’s Articles of Incorporation
6. Select a share structure
A share of stock indicates the unit of ownership of a corporation. Consequently, each share of stock indicates the percentage of ownership of the corporation.
So if your corporation issues one share of stock to a stock owner or shareholder, then that individual owns a hundred percent of the corporation.
Shares are often structured into classes, with each class, also known as a share class, possessing a unique set of rights and privileges. Your Oregon corporation is allowed to have multiple classes, and each class is allowed to hold any number of shares.
7. Obtain an EIN
An Employer Identification Number is required for every formal business in the state of Oregon. Essentially an Employer Identification Number which is also called an EIN is a government-issued ID assigned by the Internal Revenue Service or the federal government to large and small business entities in the state.
Consequently, it’s used as a form of identification and is more or less a Social Security number for your corporation. Once you obtain an EIN, you’ll be able to open a business bank account, hire employees and submit paperwork for tax returns and tax purposes.
Obtaining an EIN is completely free of charge when you apply via the IRS website after forming your company.
The online application is also the quickest way to get an EIN. However, if you’d like to download the IRS Form SS-4, you may do so and then mail it to the IRS at the following address:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
8. File Oregon state taxes
Depending on whether you’ve formed your business as a C corporation or an S corporation, your Oregon business may be liable for one or more corporate taxes:
- Corporation excise tax: Corporation excise tax is applicable to corporations that are doing business in Oregon. The excise tax is calculated on the corporation’s income.
- Employer Taxes: Oregon corporations that have employees will need to register for employer taxes via the Oregon Secretary of State website.
- Sales tax: There is no sales tax on goods and services in the state of Oregon.
9. Oregon business licenses and permits
The state of Oregon does not have a state business license. In addition to this, there is no state sales tax and, therefore, no seller’s permit.
However, businesses in certain professions may need to get specific licenses and permits to operate.
So if you’re running a professional corporation, then you may need to obtain a professional license before being able to legally offer your services in the state. For additional information on licenses and permits in the state of Oregon, refer to the Oregon Business Xpress License Directory.
10. Annual report requirements in Oregon
Irrespective of whether you’re forming a corporation, limited liability company, or nonprofit corporation, the state of Oregon requires an annual report to be filed each year. The annual reports must be submitted to the Oregon Secretary of State, Corporation Division.
11. Costs of starting a corporation in Oregon
The filing fees below apply to all Oregon corporations:
- Name reservation: $100
- DBA name: $50
- Articles of Incorporation: $100
- Annual report: $100
- Oregon Certificate of Good Standing: $10
Next steps after forming a corporation
After forming your Oregon corporation, you’ll need to take a few additional steps to ensure that your business runs smoothly:
Oregon certificate of good standing
A certificate of good standing is known as a certificate of existence in the state of Oregon. Basically, it verifies that your corporation is formed legally and has followed the necessary steps required by both the federal government and the state. A certificate of good standing is necessary when it comes to seeking funds from lenders and banks, obtaining business licenses and permits as well as forming a business in another state.
Get a business bank account
Separating your personal and professional finances is imperative to ensure personal liability protection. This way, your personal assets will not be affected in the event that a lawsuit is brought against your corporation. Additionally, it also helps simplify and streamline accounting processes. In order to open up a separate bank account for your corporation, you’ll need to take your corporation’s formation documents as well as your Employer Identification Number to the bank.
A sole proprietorship often requires less paperwork and is easier to maintain than corporations, general partnerships, and other types of business structures. However, the disadvantage is that business owners are liable for debts.
It is suggested that your corporation hold at least one annual meeting or annual shareholder’s meeting per year. You may hold more than one meeting each year, however, one is the minimum.
Double taxation basically refers to taxes being paid on the same income source twice. Essentially, corporate earnings are taxed, and then shareholder dividends are taxed again; however, the income source is the same.
A few business structures are considered separate legal entities. In other words, they are legally separate from personal assets. S corporations, C corporations, and limited liability companies are all considered separate legal entities from their owners or shareholders.
Corporate paper records should be stored in a way that makes them easily accessible but also protected against environmental damage. Additionally, electronic documents should be organized into logical categories and folders and copies should also be stored on flash drives.