Oregon Startup

The process to form an Oregon startup depends on which type of business you're forming. Before starting a business, it's important to look at each of the main business types—assumed business name, corporation, limited liability company, etc.—to determine which factors are most important to you and your own unique circumstance.

Oregon Assumed Business Name

An Oregon assumed business name is a type of business that does not create a separate legal entity; the assumed business name is simply that: a business name assumed by an individual for use in the state.

Known as a DBA or Fictitious Name in other locations, an Oregon assumed business name is referred to as an assumed business name (ABN or DBA) and can be registered by a legal person or business in the state. If an individual applies for an assumed business name, this is what is known as a sole proprietorship.

Incorporate in Oregon

Incorporating in Oregon will create a separate business entity from its owners, which can exist in perpetuity and pass on to new owners upon the original owner's death or resignation.

Corporations must maintain a registered agent on file with the state. This registered agent must have a physical address in Oregon; PO boxes or mail center addresses are not valid registered agent addresses. Registered agents should be available during normal business hours to receive service of process on behalf of the corporation.

For-profit corporations will choose one of two tax classifications at the federal level: C corporation, or S corporation.

C Corporation

Upon filing Articles of Incorporation, a C corporation is formed. This type of corporation provides great structural flexibility, allowing for any number of shareholders of any type (individuals, both US citizens and non-citizens, and corporate entities), but it has a higher tax responsibility.

S Corporation

To form an S corporation, a business will incorporate with the state, and then submit an S Corporation Election Form to the IRS. Upon acceptance, this filing enables the corporation to have a lighter tax burden, but it is limited to 100 shareholders, all of whom must be US citizens or legal aliens.

Oregon Foreign Corporation

Before transacting business in Oregon, a foreign corporation registration is required; this is done by submitting an Application for Authority to Transact Business, along with a Certificate of Good Standing from the original state of registration (dated within 60 days of registration), to the Oregon Secretary of State's office.

There are some exceptions to this requirement. While the state is not responsible for determining whether a business is considered to be "transacting business," they do include a list of activities that, on their own, are not considered to be transacting business. This list includes:

  • Maintaining a bank account
  • Holding shareholder meetings
  • Maintaining or defending legal proceedings
  • Selling through independent contractors

The state can provide an expanded (though not exhaustive) list of business activities not considered to be "transacting business," but it is best to check with your lawyer or tax advisor if you are unsure whether your business is required to register as an Oregon foreign corporation.

Oregon LLC

An Oregon LLC can be registered with the Secretary of State, but note that "LLC" is not accepted by the IRS as a tax classification. Rather, your LLC will select a tax classification for federal use. Available tax classifications will depend on whether you are a single-owner LLC or a multiple-owner LLC.

Oregon LLCs are registered by filing Articles of Organization with the Secretary of State's office. Like corporations, an LLC is required to have a registered agent on file who resides in the state and can accept service of process on the business's behalf.

Oregon Nonprofit Corporation

Forming a 501c3 nonprofit corporation is a process with two main steps.

  1. First, you must register as an Oregon nonprofit corporation by filing nonprofit Articles of Incorporation with the state.
  2. Then, you must apply for 501c3 tax exempt status from the IRS, something only granted to nonprofits with specific business purposes (such as religious, charitable, scientific, or educational).

It is important to recognize that only when your application has been accepted by the IRS is your organization legally able to accept tax-deductible donations, enjoy reduced postage, and take advantage of other federal benefits afforded to a 501c3 nonprofit organization. Before this application is approved, the organization is strictly an Oregon nonprofit corporation and cannot act as if it were a 501c3 organization.