How to Incorporate in Oregon (May 2024 Update)
Deciding to take the leap and formally incorporate your business is an exciting next step on your entrepreneurial journey. While incorporating comes with substantial benefits - like personal asset protection and tax savings - it also involves understanding Oregon state-specific laws and filing the necessary paperwork. This comprehensive guide breaks down everything you need to know to successfully get your business incorporated in Oregon.
Benefits of Becoming an Oregon Corporation
As an unofficial business operating as a sole proprietorship or general partnership, you remain personally liable for any legal or financial issues faced by the company. Incorporating creates a separate legal entity that shields your personal assets like your home, retirement accounts, or vehicles. Lawsuits and other claims are limited to the assets owned by the corporation.
Incorporating can also give your small business greater legitimacy and trust in the eyes of customers, partners, and future investors. The formality of becoming an Oregon corporation leads to an enhanced reputation and provides long-term flexibility if you ever wanted to expand via issuing stock or seeking outside funding.
There are potential tax advantages as well. Corporations can deduct a wider range of expenses, and income may be taxed at lower corporate rates versus your personal income tax rate. You also gain flexibility in how corporate profits are distributed to owners and when income taxes are paid.
Oregon Corporation Requirements
To incorporate in Oregon, you’ll need to file Articles of Incorporation with the Secretary of State. This main form establishes your corporation as a legal entity and must include:
- Your business’ official name
- Total number of shares your corporation can issue
- The street address of your registered corporate agent
- Names and addresses of your corporation’s incorporators
Your business name must include a corporate designation like "Inc." or "Corporation" to ensure it’s distinguished from other companies. You’ll also need to choose a registered agent, an individual or business that receives important legal documents on behalf of your company.
Before submitting a name, you can verify availability by searching Oregon’s business registry database online. You can even pre-reserve a corporate name for 120 days by filing a Name Reservation Request.
Filing an Incorporation Application in Oregon
To complete the application process, you must file your Articles of Incorporation and pay a $100 filing fee. This can be handled online via the Secretary of State’s website or by mailing your paperwork.
Online filing through the state’s streamlined digital portal is recommended, as the approval timeline is extremely quick - most applications are processed within 1-2 business days. You will receive immediate confirmation upon submission and can securely provide payment via debit/credit card. Those choosing to mail filings should be prepared for a longer review period.
LLCs vs. Corporations: Key Differences in Oregon
When starting a business, one of the first major decisions is choosing between forming a corporation or a limited liability company (LLC). On a basic level, both structures shield owners from personal liability and allow the business to open accounts, enter contracts, and retain earnings. However, there are some important distinctions:
- Tax Implications: As pass-through entities, LLCs avoid double taxation - meaning profits pass directly to owners’ personal returns rather than being taxed at both corporate and individual rates. S-Corporations offer similar single layer taxation.
- Investor Appeal: The shareholder stock structure of a corporation has greater attraction for potential investors and easier facilitation of ownership percentages.
- Maintenance Needs: LLCs require less paperwork and need not adhere to corporate formalities like shareholder meetings and board of director votes. Corporations demand greater time investments for compliance filings.
Overall, LLCs are better suited to small businesses not seeking outside funding, while corporations make better long-term entities poised for growth. Assess your vision to determine the most fitting structure.
Meeting Annual Reporting Requirements
To remain legally compliant, Oregon corporations must submit an Annual Report along with a $100 fee each year by their anniversary incorporation date. This confirms your business remains active and allows updates to any officer changes over the past year. An annual tax return will also need to be filed – while this varies based on entity type, duration of tax year, etc. most commonly Form OR-20 or Form OR-20-INC is required.
Failure to meet annual reporting and tax requirements risks hefty penalties from the Secretary of State and Oregon Department of Revenue. This includes fines and the eventual administrative dissolution of your business if ongoing issues remain unresolved. Mark your calendar ahead of deadlines and budget for these yearly state costs.
Conclusion
As an entrepreneur ready to level up your business, learn all you can about the advantages of incorporating in Oregon. Follow the step-by-step application process, secure annual licensing, and don’t hesitate to bring in help navigating any clerical or legal intricacies. Taking these measures will successfully launch your company into its next chapter of growth and prosperity.