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How Much Does an LLC Cost in Oregon
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If you’re an entrepreneur in Oregon, you may be eager to start your business and sell to your customers. However, before you can open your storefront and make your first sale, you must fill out and file some administrative paperwork. For many small business owners, forming an Oregon LLC makes the most sense because it allows for pass-through income and minimal liability to each founding member.
Thankfully, Oregon makes the LLC formation process relatively simple and cost-effective. We’ve broken down all the various costs associated with forming an LLC so you can anticipate these expenses and get your business off the ground that much sooner.
General steps and costs when forming an Oregon LLC
Naming your Oregon LLC
The name of your new business venture is supremely important because it’s what you’ll use on every piece of paperwork. From the articles of organization to any business license, you must have a proper LLC name.
So, the first step to choosing a name is to ensure that it’s not already taken. The Oregon Secretary of State has a free business entity lookup tool you can use to search for other companies in the state. This tool allows you to find exact and partial matches so you can see if another company has a name similar to yours.
But what if you know your name is unique and want to reserve it so no one else takes it? In Oregon, you’ll have to file an Application for Name Reservation Form and pay a filing fee of $100. When you reserve a business name in Oregon, it will be yours for 120 days. Afterward, you must renew the reservation and pay a new filing fee.
While your LLC name may suit your business, what if you want to use a different name without forming a brand-new entity? In that case, you can register a DBA (doing business as). Many companies use DBAs to create more informal or informational names unrelated to their “official” name. DBAs give you much more flexibility to adjust your business as you see fit.
To register a DBA, you must file an Assumed Business Name form and pay a filing fee of $50. DBA registration is valid for two years before you have to renew it.
Filing articles of organization
Once you have a name and are ready to officially register your business with the state, you must file an Articles of Organization form with the Secretary of State and pay a filing fee of $100.
It’s important to note that the articles of organization only provide basic information about your business to the SOS office, not a detailed account of your company’s structure. These details include the name, address, and organizing members of your LLC. You must also list your registered agent and their office if it differs from your company’s.
Appointing a registered agent
A registered agent is someone who can accept official and legal documents on behalf of your business. Oregon requires all LLCs to have a registered agent when filing the articles of organization.
If you’re creating a single-member LLC (meaning you’re the sole business owner), you can act as your own registered agent. Since you’re the only one who has to worry about official documentation, it may not make sense to hire a third-party agent.
However, if you’re forming a multi-member LLC, it’s often best to rely on a third-party registered agent service. This way, there’s no conflict of interest, and everyone will be notified when a letter is sent to the agent’s office. Typically, registered agents can charge anywhere from $199 to $400 for the year, depending on the size and complexity of your business.
Creating an operating agreement
An operating agreement is much more organized and detailed than the articles of organization. Oregon does not require an operating agreement, but it’s always smart to have this document available. This agreement outlines how your company will be structured, including each member’s responsibilities and duties. The agreement may also spell out what to do if a founding member dies or wishes to leave the business.
You can create this agreement yourself with your other founding partners. If you’re forming a single-member LLC, you may not need an operating agreement because you’re the only owner. However, multi-member LLCs need this document to ensure there is no confusion later on. So, while you can create it yourself, it’s often better to rely on a third-party service.
Typically, law firms and business consultation companies offer operating agreement creation services. The main advantage of using a third-party is that you know the agreement will be legally sound and will cover all potential scenarios. This way, there are no surprises when something happens to the business. Third-party creation services can charge anywhere from $200 to over $1,000.
Other annual and additional Oregon LLC costs
Business licenses & permits
Oregon is unique compared to most other states because it doesn’t impose a sales tax. So, there’s no need to get a seller’s permit or apply for a sales tax agreement. Also, Oregon does not have a generic business license requirement. Overall, if you’re starting a retail business in the Beaver State, you should be able to get your storefront (physical or digital) up and running immediately.
That said, other types of businesses require unique licensing. Here are some common options to consider when forming an LLC in Oregon.
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Food service license – If you’re selling pre-packaged foods or opening a bakery, you’ll need a food service license from the Oregon Department of Agriculture. The annual fee depends on your total sales, and it ranges from $159 to $824 for retail outlets and $286 to $1,900 for bakeries. If you’re opening a restaurant or food stand, you must secure a license with the county. Multnomah County is the most populated, and its food service licenses range from $730 to $1,160 for restaurants. However, you must also pay for a plan review, which costs $950 for new construction and $890 for a remodel. -
Liquor license – If you plan to sell alcohol, you’ll need a corresponding license from the Oregon Liquor and Cannabis Commission (OLCC). License costs vary from one type of business to the next. For example, breweries pay a $1,000 fee, while a distillery pays $200. If you’re opening a liquor store, the license costs $800. -
Contractor license – You must secure a general contractor license from the Oregon Construction Contractors Board before you can do any projects. In addition to paperwork and testing, you must also pay a $325 licensing fee, which is valid for two years.
Other types of businesses will also require additional licensing and permitting. For example, if you want to open a dispensary, a tattoo parlor, or a hair salon, you’ll need to apply for a permit with the corresponding state agency. Cities and counties may also set their own licensing fees and requirements, so you’ll have to do some homework before starting your business.
Annual report
To maintain your LLC, you must file an annual report with the Secretary of State. In Oregon, the renewal date is the same as your registration date. So, if you formed your LLC on March 1st, you’ll need to file the annual report by March 1st every year. The SOS office sends a reminder letter 45 days before the date so you never forget.
The cost of filing this report is $100. Unless you’ve made any significant changes to your business in the last year (e.g., moving addresses, adding or losing members, etc.), the report will be pretty simple and straightforward.
What LLC formation expenses you can write off
Thankfully, while forming an LLC doesn’t cost too much in Oregon, you can write off most of these expenses on your business taxes. The IRS allows companies to deduct startup costs, such as the following:
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Cost of completing articles of organization – Not only can you deduct the filing fee for registering your LLC, but you can also deduct any labor costs or fees associated with completing the paperwork. -
Filing fees – As you’ll notice, you may have to pay a number of filing fees when starting your business. These fees can be for everything from reserving a business name to getting a food service permit and plan review. -
DBA fees – If you register a DBA for your business, you can deduct the registration fee. -
Operating agreement costs – If you create your own operating agreement, you can’t deduct any of the costs because there aren’t any. However, if you use a third-party creation service, you should be able to deduct the full amount. -
Registered agent costs – Since you need a registered agent, you can deduct the costs of using a third-party service. However, if you act as your own agent, you can’t deduct anything. -
Attorney fees – Depending on the type of business you’re starting, it may be a good idea to consult an attorney to ensure you’re setting everything up legally. You can deduct all or most of these expenses, depending on the amount. The IRS typically caps startup cost deductions at $5,000.
Oregon LLC Costs – Summary
|
Articles of Organization |
$100 |
|
Food Service Permit (Multnomah County) |
$730 to $1,160 |
|
Liquor License (Brewery) |
$1,000 |
|
Business Name Reservation (Optional) |
$100 |
|
DBA Registration (Optional) |
$50 |
|
Registered Agent Services (Optional) |
$199 to $400 annually |
|
Operating Agreement Creation (Optional) |
$200 to $1,000+ |
Conclusion
As you can see, it’s not too expensive to form an LLC in Oregon, especially if you don’t need any extra permits or licenses. Although the state is not as much of a tax haven as other states, it’s a fantastic option for small businesses who want to connect with customers and avoid cumbersome sales taxes. Now that you have all this information, you can start your new venture as soon as possible!
FAQs
Typically, it takes about two to three business days for your LLC to be approved in Oregon. If you mail your paperwork (instead of filing online), it could take longer.
Yes, you can absolutely use a business account to pay for startup costs and filing fees. However, if you’re trying to secure a business account before forming your LLC, keep in mind that most banks require excellent credit and a comprehensive business plan.
Related LLC articles
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How to Do a Business Entity Search in Oregon
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