You’ve decided to start a new path to achieve your goal of becoming a business owner. And you’ve decided to use this article as a guide for your journey. You’ve come to the correct location. This article is going to provide you all of the necessary information to start your business. Before moving forward, let’s take a look at the advantages of the LLC in Oregon:
- The first important point is that your business assets, debts will be separated. Your assets are different from your business assets.
- The filing process is straightforward.
- It is easy to file taxes.
- It has no limit on the number of members.
Please take a look at all of the critical data, which we have described in detail.
Step 1: Find a name for your LLC
The first step in creating your company is to give it a name. You should keep in mind that your name must be catchy, unique so that it attracts customers and helps you in marketing. The second is that it should be legal. There are some laws that you have to follow while deciding upon a name. The name must have the terms like LLC or its abbreviations. The name of the company must be distinguishable. You cannot use words related to some financial activity or imply that it is connected with the government. We said that the name of the company must be distinguishable. What does that mean? It means that there should be no other company with that name. If your name does strike some similarity, then you can make some changes under the Oregon administrative rule:
- Make some changes in the keywords: rearrange them, change the spelling, add or delete it.
- You can use numerals, Arabic, roman, etc.
If you have questions, you can visit the Oregon Secretary of State official website for the complete rules. After deciding upon a name that you love, you find out that there is still some time to launch your company officially. Now, you feel that someone might use the same name as yours while completing your paperwork, you have the option to reserve it. The best-reserved name can be locked for two years. So, you will have plenty of time. You have to apply the assumed name. After registering it, cancel the name before submitting the formation documents. You are writing with the assumed name, so remember to cancel the registration before submitting the Articles of organization. If your LLC is ready to go on the floor, then there is no need for the assumed name registration. There are two options available for this process: online or paper form. You can go to the Secretary of state’s official website and register it. You can also download the form, fill it, and send the form to the following address:
Secretary of State – Corporation Division
255 Capitol St. NE, Suite 151
Salem, OR 97310-1327
There is also an option for hand-delivery. You can straight away go to the office and personally deliver the application.
Any method you use will cost you $50.
Step 2: Appoint a registered agent
The appointing of an Oregon registered agent is compulsory. The role of the registered agent is to take care of the essential legal correspondence on behalf of the company. The registered agent will make sure that all the documents should reach the owner. So, there is no chance to miss anything. That is why the appointment of an agent is required. Also, the state sends all the documents to the registered agent to confirm that it reaches the appropriate party. A registered agent can be a person or can be an entity. Both should be present in Oregon and have a street address. Also, the registered agent has to be present during working hours. There is no fee in hiring the agent. Anyone with the requirements can work as an agent. Any individual is it your friend, co-worker, family, acquaintance, be your registered agent. You can also work as one. But there might be some drawbacks to it. The agent’s details are on the public records, and if you don’t want to make your details, such as your home address, public, you can opt-out. You can even hire professional services if you wish.
Step 3: Submit the Articles of Organization
Submission of the Articles of Organization with the State marks the official formation of your LLC. This document consists of all the details and information required to form an LLC. It gives the owners the legal rights to start their business. Some things must be present in this document:
- the name and address of the company
- the licensed agent’s name and address
- management structure: whether the LLC will be
- member-managed or manager-managed
You can get this form, fill it and submit it in three ways: online, postal mail, and in-person submission.
If you can’t wait any more days to start your LLC, go for the online submission. It is the fastest method. Go to the Oregon business registry online portal. Log in with your credentials; if you don’t have an account, you have to create one. After submission, your form will be processed instantly. You do have to pay a fee of $100.
For this way of submission, first, you have to fill the paper form and send It to the below-mentioned address and the payment of $100. The processing time might vary. You can get the recent processing time information on the state’s official business page.
Secretary of State
255 Capitol St. NE, Suite 151
Salem, OR 97310-1327
The third method is personally delivering the application. You can go to the same address mentioned above. After submitting, you have to wait while they process your application.
Step 4: Design an operating agreement
One of the critical documents of the LLC is the operating agreement. This document sets the rules for the essential decisions for the LLC, whether functional or financial.
Why is the operating agreement needed?
The state does not mandate an operating agreement. But it is essential to have one as it will help take care of the internal matters and operations of the company. It will make sure that the company is running smoothly and the matters are solved amicably. After agreeing to the terms, the members have to sign the document that would legally tie them to this agreement.
There are several reasons why an operating agreement is essential. Some of them are:
- As all the terms are mentioned in the operating agreement, it separates it from personal liability. It helps to keep the professional and personal things separate.
- A written agreement should always be considered than a verbal one. It comes in handy when there are some conflicts, as you can easily be referred to this written agreement.
- It protects you from the default laws. If you are working without an agreement and suppose some conflicts or any issue occur, you do not have an operational rule for your company. In that case, the state decides for you. This scenario is not always in favor of the company as these rules are not designed for a specific business, so they might not work in your favor.
Some things are present in the operating agreement. See, this agreement is flexible; you can add or delete anything you want.
- The rights and responsibilities of each member
- The share of each member
- How to distribute the profits and losses
- Procedures to hold meetings
- The method of addition or removal of a member
And many more you can add. You can draft the operating agreement for your company. There are several online templates that you can use. Or if you want, you also ask an attorney or a lawyer to write it for you. They are professional, so they are well aware of all the intricate details. They will make sure that even the tiniest details are present in the operating agreement of your company.
Step 5: Obtain an Employer identification number for your company
When you form an LLC, you have to employ for an EIN or Employer identification number. This number is usually used to file the taxes. The IRS provides this number, and they can keep track of your tax records. This number is just like your Social security number (SSN). If you don’t have an EIN, you’ll be forced to use your SSN for business purposes, which would result in a data breach.
As a consequence, use the Employer Identification Number for business purposes. The LLC has a flexible tax structure. The owners report their actual earnings and expenses in their income tax returns, rather than paying it directly to the Federal government. This does not, however, mean that the LLC is exempt from paying federal taxes. There are some conditions such as hiring workers, registering as a corporation, or selling goods. Besides, if the LLC wants to open a bank account, hire employees, and apply for business loans, they will need EIN. You can get an Employer Identification Number in one of three methods: online, by fax, or by mail.
The most convenient method is to use the internet. You can apply online between the hours of 7 am and 10 pm Monday to Friday, and you’ll get your number right away. So, if you need immediate assistance, use the online form.
You may also fax your submission. To do so, you must first obtain a copy of the SS-4 form. After that, fill out the form, sign it, and fax it to the office at (855) 641-6935. It may take a few days for your application to be accepted.
As part of this process, obtain Form SS-4, fill it out, and mail it to the IRS. This move takes a long time in contrast to the other two approaches. It should be sent to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Step 6: Business taxes and licensing
Till step 5, you have followed all the legal requirements, and the LLC is ready to operate. But before going on the floor, there are some details that you should know. These are vital for the success of the company. The first important thing is to know about the taxes. It is essential to pay them. Do not avoid the taxes, and it is a crime.
Federal income tax
We have discussed in step 6 a bit about the federal taxes. The Limited Liability Company does not pay the income taxes straight away to the government. What happens is that the owner of the business mentions the gains and damages on their income tax returns. As the LLC grants a flexible structure, it also gives the owners a chance to pay the taxes like corporations. If they choose to do so, they have to pay a separate corporate income tax return. Let us see how the state and local taxes work.
State and Local taxes
One good thing is that there are no different provisions for state taxes; they are similar to federal taxes. Here also the taxes are passed through to the income tax returns of the owners. And also, there are no taxes like privilege or franchise. Some states impose the Sales and Use tax for selling goods, but Oregon doesn’t do that. That is pretty good.
Now, there are some Local taxes too. Some local governments might impose tariffs specific to their location. So, contact them to get the full details.
Some conditions require the additional tax. For example, if you hire employees, you must pay the Unemployment taxes and the withholding tax. To pay for the taxes, you have to go to the Combined employer’s registration form or the Oregon business registry to register.
A business license is required to run the business. Different industries have different license requirements. If you want to open a café, you will need a food and service license, health permit. If you’re going to open a bar, you will need a business license, liquor license, etc, different business, different license requirements. If you want to know more about these permits and approvals, you check out the Oregon.gov page, where there is a complete section for the Licenses, or check out the business Xpress license directory.
Step 7: Annual reporting
This step comes after a year of formation of your LLC. Why we are telling it now because you might forget it being too busy handling your business, and it is too important to ignore. You have to file the report every year; it is also known as annual recurring. You have to diligently submit it as if you failed to deliver it even after the forty-five days of the due date, and your company can be dissolved. It will cost you $100 if you are a domestic LLC, and for the foreign LLC, the price is $275. You can submit the report online, or you can send it via mail.
Steps to follow after the formation of the LLC
Mere forming an LLC is not enough; to ensure the successful running of your company, you have to take some additional steps.
- Bank Account
This step is the essential one; you should have a separate bank account for your business. This is important in separating your business and professional assets. LLC offers personal, limited liability protection. That means that if your business is in trouble, is in debt, or gets sued by someone, in that case, your assets will not be affected. You will not be held liable for the actions of your company. This news is good. But if your assets are all jumbled up, how will you prove your and what belongs to the company. That is why a separate business bank account is a must.
- Credit card
Just like a bank account, a credit card for the business is highly advisable. With a credit card, you can easily take up loans for your business, and you can handle the expenses with this card. In this way, your costs will be separated from your professional ones. Also, it will be easy to keep track of your finances and manage them.
Customers. Yes, that is the ultimate goal for any business. More customers mean the business is flourishing. But how do we get them? The answer is through marketing. You have to implement a good marketing strategy. It will make sure that the new customers are intrigued. You have to raise their curiosity. How can you do that? Today is the digital world. You can post it on social media, send emails, or send out a press release. These all will bring customers to your business. Now, how will they know how to reach you? The answer is the next point.
Create a website: a well-articulated website can do wonders for you. After they hear or get to know about your business, they will indeed look you up online. Your website will explain what you do, how to contact you and order, and your store. Nowadays, in the world of technology, creating a website is like a piece of cake. You can create a beautiful and fantastic website for your business.
Okay, handling the business and all the finances sometimes can be a lot. A little help here and there does no harm. After forming the LLC, you should appoint an accountant. He/she will give you all the information about the taxes and advise you on saving them. He/she can help you to save money during the tax season. And who doesn’t want to save money, right?
- Legal guidance
You can also hire a lawyer. There is nothing to worry about. While running a business, one might overlook some legal formalities that could end up in big trouble. Having a lawyer can help a lot. A lawyer will advise you on drafting a contract, or what the laws are, and many more. He/she will help you make legal decisions easily.
- Protect your identity
Yes, you read it right. Today is the world of competition, especially in the field of business. You have to safeguard your company’s name, logo, etc. you can do so with the help of a trademark. You can trademark your business identity. It means that no one can use your company name, logo, design. And if they do so, you can sue them. You have put your blood and sweat into forming your company, so nobody else should have the right to use it just like that.
Nobody wants to be in that situation where they had to use the insurance. But insurance does play a massive role in getting up back on foot. Insurance will secure your back, and you can work freely knowing that even if something happens, you are secure.
Finally, we are at the finishing line. The process might seem long, but in the end, it is worth the time. If you have made it till here, that means you are determined. You have to follow all the steps, and we are sure in no time you will have formed your LLC. It is time for you to go out, fulfill your dreams, and then dream again, get a colossal business opportunity, and so on. Amazing things are coming your way. Good luck.