With hip urban centers, a business-friendly tax climate, and scores of beautiful, expansive state parks, Oregon is a popular state in which to live and operate a business. The state is renowned for its growing high technology sector, with many businesses clustered together in the Portland metropolitan area in what’s known as the “Silicon Forest”.
To aid those launching a venture in the Beaver State, we’ve put together the definitive guide to starting a business in Oregon. We’ll walk you through each key step of getting a company up-and-running in the state, including drafting a business plan, choosing a business structure, registering for taxes, and more.
Oregon small business statistics at-a-glance
- 377,860 small businesses operate in Oregon, accounting for 99.4% of the state’s total businesses.
- 852,983 Oregonians are employed by small businesses, which is 55% of the state’s workforce.
- The median income for Oregon residents self-employed at their own incorporated firms was $50,585 in 2017.
- Accommodation and food services is Oregon’s leading small business employer industry, followed by healthcare and social assistance, and retail trade.
- Tax Foundation ranked Oregon 8th in its 2020 State Business Tax Climate Index due to the fact that the state has no sales tax.
- 79.23% of Oregon startups survive their first year of existence, which is near the national average.
- Oregon startups create 5.15 new jobs in their first year, on average.
Starting a business in Oregon in 12 steps
1. Develop an idea
Every successful business starts with a good idea. Ask yourself these questions:
- Which product or service can your business provide that doesn’t already exist on the market?
- How does your business idea refine an existing product or service?
Determine your personal strengths and interests: developing an idea that suits your personality and positive traits will provide motivation to put in the long hours necessary in addressing the myriad challenges you’ll face in getting your business off the ground.
Figure out how to market your expertise: if your business idea is not something you totally believe in and can sell effectively, it will be much harder to succeed.
2. Do the research
Once you have an idea, it’s time to put it through the wringer and decide if it’s viable in the market. Conduct market research to arrive at answers to these key questions:
- Is there a demand for your product/service in Oregon?
- Who is your target market?
- Do existing businesses in Oregon offer a similar product/service?
- What makes your business unique compared to the competition?
Coming up with satisfactory answers may require refinement, or even a total overhaul, of your original idea. Be patient: you’ll only want to proceed with the next steps after determining that a niche exists in the Oregon market for your business idea.
3. Draft a business plan
Now it’s time to write the blueprint of your business. A great business plan should chart the path of your company from infancy to success while being able to attract investors to provide financing.
Your business plan ought to include the following sections:
- Executive summary – An overview of your business and why it will be successful
- Description of business – Explain the advantages of your business and the problems it solves
- Market research – Provide research on your industry, target market, and potential competitors
- Organization and staff – Detail the nuts and bolts of your business; how it’s structured and who will run it
- Product or service description – State what you are selling or offering
- Marketing plan – Explain your strategy for attracting customers
- Fundraising – The money you’ll need in the next five years to grow your business and how you’ll spend it
- Financial forecast – Data and balance sheets providing a financial forecast for your business
- Appendix – An optional section with supporting and/or requested documents like resumes, letters of reference, permits, etc.
4. Secure funding
Every business needs money to get off the ground. In fact 82% of businesses that fail do so because of a lack of cash flow, U.S. Bank found in a recent study. Your business plan should include a detailed estimate of the funds you’ll need to cover expenses for at least a year, so now it’s time to acquire the money.
If you aren’t wealthy enough to self-fund your business, you can choose from a number of other funding options. These include a loan from the U.S. Small Business Administration, taking out a loan from a commercial bank, launching an equity crowdfunding campaign, or securing funding from an angel investor or venture capitalist group active in Oregon.
An angel investor is a wealthy individual who invests their personal finances in a startup, typically in the beginning stages, whereas a VC is a group of investors that will fund a business throughout its existence.
Which route you choose depends on the specifics of your business: angel investors typically invest smaller sums to help get a startup off the ground, while VCs invest larger sums of money in exchange for a greater say in the operations of a business. Smaller startups usually opt to pursue funding from angel investors. Plenty of both types of investors are operating in Oregon.
Oregon Angel Investors and VCs
- Portland Seed Fund – A high performing early-stage venture fund with a focus on companies based in the Portland area.
- Oregon Sports Angels – An angel network with a particular interest in funding sports, fitness, and outdoor products companies.
- Oregon Venture Fund – An active VC fund that has invested $57 million in 61 portfolio startups while creating 3,790 jobs since its founding.
Additional Investor Resources
- AngelList: Oregon Angel Investors – An exhaustive listing of over 5,000 angel investors seeking the opportunity to fund Oregon businesses with high success potential.
- Bend Venture Competition – A yearly competition where startups in three categories (early stage, growth stage, and impact) compete for $250K or more in investments. The competition is held in Bend, Oregon, but applicants from all over the country may apply.
5. Decide on a legal business entity
The form of business entity you choose will affect many factors going forward. There are 3 main options to decide from:
- Sole proprietorship – The name for running a business by yourself. Legally, you and your business are one and the same, with no separate legal entity for your business. A partnership is legally identical to a sole proprietorship, except that it comprises two or more people.
- Corporation – A complex legal structure that is a separate entity (providing legal protection to owners) from the owner and comprises directors, officers, and shareholders.
- LLC – AKA “Limited Liability Company”, this is a hybrid entity between a sole proprietorship and a corporation that possesses advantages of both. An LLCs provides the liability protection of a corporation, yet isn’t subject to double taxation as the profits go through your personal tax return.
Nowadays, LLCs are the option of choice for small business owners as they are easy to manage and provide the benefits of a corporation while lacking their complex structure. Taxwise, they operate more like a sole proprietorship.
You may want to consult with an attorney to help decide which entity works best for your business.
6. Register your business
After deciding on the business entity that’s right for your company, it’s time to register with the state of Oregon. The registration process is different for sole proprietorships, LLCs, and corporations.
For sole proprietorships
In Oregon, sole proprietors operating under their own names are not required to file with the state government, however, those that intend to use a business name separate from their legal name must register an assumed business name with the Secretary of State.
First, use the Oregon Secretary of State Business Name Search to confirm that your chosen business name is available in the state. If your business name, or one similar to it, is not already in use, you can go ahead and file your Assumed Business Name with the Secretary of State.
As of November 2019, online registration is currently unavailable, so you must print the form out, and mail it to the Secretary of State Office. The processing fee is $50 and the filing must be renewed every 2 years.
For LLCs and corporations
The first step for forming either a corporation or an LLC in Oregon is appointing a registered agent to be in charge of process notices and other government correspondence on a business’s behalf. This is mandatory in Oregon and most other states. If you have a physical address in the state, you can be your own registered agent, however, hiring a professional is affordable and recommended to ensure that the registration process goes smoothly.
Next, run a search to make sure your business name is available in the state. Then, you can go ahead and file the necessary form to create your business in Oregon.
- An LLC is formed in Oregon through filing Articles of Organization. The form can be found here. The processing fee is $100.
- A corporation is formed in Oregon through filing Articles of Incorporation. The form can be found here. The processing fee is $100.
Usually, these forms can be filed online, however, as of November 2019, the online registration portal is down, so forms must be filed through the mail until the online registration service is back up.
7. Acquire federal and state tax IDs
Now you should obtain a Federal Employer Identification Number (EIN), which is like a social security number for a business and allows you to open bank accounts, handle payroll, and file taxes.
Each state has its own laws and taxes regarding businesses. The Oregon Department of Revenue hosts an index of taxes applicable to businesses in the state, along with information on each tax. When the time comes to register for taxes, you can do it online through the Oregon Business Xpress portal.
8. Open business banking and credit accounts
Opening a bank account for your business is crucial because it allows you to separate company assets from your personal assets, and makes filing taxes a lot easier. This is a recommended step, even if you are operating a sole proprietorship.
It’s also a wise idea to obtain a credit card for your business because it will help you isolate business expenses and build up credit for your company, which may help in securing investment in later stages.
Banks operating in Oregon good for small businesses
9. Get the necessary licenses and permits
Depending on the type of business you are opening, you may need to apply for a number of permits and licenses to operate legally. For example, a restaurant will need a liquor license, and a pawn shop will need a reseller’s license. The paperwork may prove a hassle, but it’s a necessary ordeal that will protect you from fines, lawsuits, and other legal hazards.
Check the online license directory offered by the state of Oregon for information on over 1,100 licenses, permits, and certifications available in the state. You should also check with your city and county governments to find out about local licensing requirements. Visit the Secretary of State Business Information Center for the contact information of the licensing offices in Oregon’s major cities.
10. Choose a location
Whether you are running an online business or opening a restaurant, location is everything. Be aware of the demographics of the neighborhood or town that you are considering: Are the local residents likely to visit your business? Will nearby competitors take a share of your potential profits?
Oregon’s best city in which to start a business is Portland. In fact, Oregon’s largest city was ranked 10th in the nation in Inc.com’s list of the best places in the U.S. to start a business, due to high marks in the rate of entrepreneurship, wage growth, and net business creation. Business is booming in Portland thanks to the high performance in the cannabis, health care, and electronics manufacturing sectors.
11. Get insured
No matter what type of business you form, buying insurance coverage to protect yourself in the case of property damage or legal action is a good idea. In fact, businesses with employees are required by the federal government to have two types of insurance, while others are strongly encouraged, or required at the state level, depending on your business type. Consult with a licensed insurance agent to find out which types of insurance you should get.
Required forms of insurance:
- Workers’ compensation: Covers medical costs and disability benefits if an employee is injured or becomes ill on the job.
- Unemployment insurance: Provides benefits to workers after a loss of job through no personal fault.
Recommended forms of insurance:
- Professional liability insurance: Covers losses as a result of property damage, medical expenses, libel, slander, and negligence claims.
- Commercial property insurance: Covers property damage to business owned properties and possessions as a result of fire, theft, or storm.
- Disability insurance: Provides short-term benefits for employees suffering an illness or injury. Required in certain states such as California, New York, and Hawaii.
12. Develop an internet presence
Establishing an identity on the web is an important investment in a business’s future development. Here are some key steps in the process:
- Register a domain name for a company website (You can use domain.com, Bluehost, GoDaddy.com, Namecheap.com). Design the website and fill it with content.
- Create profiles on the popular social media services (Twitter, Facebook, Instagram)
- Register a Google profile for your business
- Create accounts on review sites such as Yelp, Google Reviews, and TripAdvisor
Oregon small business resources
- Oregon Secretary of State: Register a Business – Take care of all of your business filings.
- Oregon Business Xpress: Taxes – File and pay state business taxes online.
- Oregon License Directory Search – Find out about licenses, permits, and certifications issued in the state of Oregon, and how to apply for them.
- Oregon Small Business Development Center – Aids Oregon entrepreneurs through a free consultation, classes, and connection to funding sources.
- Oregon Entrepreneurs Network – An organization dedicated to boosting the entrepreneurial ecosystem in Oregon. Sponsors events, programs, and educational workshops.
- The Haven – A large coworking space in Bend, Oregon.
- ActivSpace – An affordable coworking space in Portland that has been open for over 15 years.
- Eugene Mindworks – A coworking space and business incubator with over 14,000 square feet of space to work with.
- Portland Incubator Experiment – A Portland accelerator that has helped boost dozens of successful Portland-area companies in its lifespan.
- Portland | SCORE – The nation’s top business mentoring network’s highly active Portland chapter, boasting 70 counseling volunteers.
- Central Oregon | SCORE – SCORE’s Central Oregon chapter, which has 20 volunteers on staff.