Forming a corporation in Oregon can be very beneficial to your business, including legal protections that some other business structures don’t have. However, given the necessary paperwork, incorporating your business might seem overwhelming, but it doesn’t have to be.
Read our 10-step guide to form your corporation in Oregon.
How do I form a Corporation in Oregon?
Steps to form your Oregon Corporation
- Name Your Corporation
- Appoint Directors
- Choose an Oregon Registered Agent
- File the Oregon Certificate of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit your Corporation’s first report
To officially start a corporation in Oregon, you must file the Articles of Incorporation with the Secretary of State. However, there are additional steps to take before and after this filing. To simplify the process of forming a corporation in Oregon, we’ve put together 10 easy steps to form your business:
Step 1: Name Your Oregon Corporation
First, you’ll need to name your corporation. You can check the availability of your desired corporation name with the business name search database before you file. This tool looks for the main words of the name you’re considering and compares them with other businesses in the state.
Typically, if there are no discrepancies with your desired corporation name, you should be good to go; however, the final decision is in the hands of the filing officer when you officially file for the name.
Business names must include one of these words or their abbreviations:
- Corporation (Corp.)
- Company (Co.)
- Limited (Ltd.)
- Incorporated (Inc.)
Although a name might be technically available, this service checks for words that may confuse people. This may include but is not limited to words that sound alike but are spelled differently or have abbreviations that can cause confusion with other companies. The Oregon Secretary of State aims to approve corporation names that are “distinguishable on record.”
They will not consider the following to be enough to make one name distinguishable from another:
- Words that don’t change the meaning of the name
- Words that show what business entity it is (e.g., “Inc.,” “LLC,” “Co.,” “Corp.”)
If you’re not ready to file your Articles of Incorporation, you can choose to reserve your business name for 120 days by submitting an Application for Name Reservation. The processing fee is $100 to file online or by mail. You should mail the form to:
Secretary of State
255 Capitol St. NE, Suite 151
Salem, OR 97310-1327
If you wish to do business under a different name than the one listed in your Articles of Incorporation, you’re required to apply for a “doing business as” (DBA) name — referred to as an “assumed business name” in Oregon. If you want one, you’ll need to file an Assumed Business Name Registration application. The processing fee is $50, and the filing is good for two years. You may file online or mail your application to the address listed above.
Another thing you might consider is a trademark. A federal trademark can protect the name of your business and any goods and services that you provide from being used by others. Having a federal trademark is a good idea because every business can be subject to trademark infringement lawsuits. These lawsuits can be very costly, so you should check the federal trademark database (USPTO) even if you don’t want to register a trademark to ensure you’re not infringing on someone else.
The Oregon Secretary of State also has trademark registration. Even though it is only valid in Oregon, it can still help protect your business. You can check to see if your desired trademark is available or if you’re infringing on someone’s trademark using this website.
To register a trademark in Oregon, you will need to complete the Trade and Service Marks Registration form. The processing fee is $50. You will need to mail your application to the address listed above.
Step 2: Appoint Directors
Next, you’ll want to appoint directors to your corporation. The directors make up the board of directors, which direct and oversee business affairs for the corporation. It’s important to have a board of directors because they are needed to approve any major corporate actions. Officers, hired or appointed by the directors, manage the business on a more daily basis. In some cases, an owner/founder of the corporation may double as a director or officer.
In Oregon, a corporation must have at least one individual on the board of directors. However, the number of directors can be specified in the corporation’s Articles of Incorporation or bylaws if you choose to have more.
Step 3: Choose an Oregon Registered Agent
Given that a corporation is a separate legal entity, it cannot physically receive legal documents. For this reason, corporations need a registered agent. The Articles of Incorporation must include the name and address of the registered agent. This way, if any legal papers need to be given to the corporation, they can go through a registered agent.
Qualifications of a registered agent include:
- Must be a resident of Oregon or a corporation or limited liability company authorized to do business in Oregon
- Physical address in Oregon
- Someone present during business hours
- Able to deliver legal and/or tax notices to the corporation
Many corporations choose to go with a registered agent service because Oregon requires a physical office open during traditional hours. If the registered agent is not at the office when needed, you can receive fines and penalties.
Additional reasons for using a registered agent service include:
- Protection: Avoid embarrassment by ensuring you don’t receive tax or legal notices at your business.
- Organization: A registered agent service can keep your legal documents properly stored. ZenBusiness’s registered agent providers upload documents to your dashboard so that you can view and download paperwork at any time.
- Compliance: Ensure your legal requirements are covered.
Step 4: File the Oregon Articles of Incorporation
The Articles of Incorporation detail the basic information that Oregon needs to incorporate your business. It contains information about the corporation needed for public records and details corporate stock information.
Filing the Articles of Incorporation in Oregon has a $100 nonrefundable filing fee. You can find the PDF for the Articles of Incorporation here.
In your Articles of Incorporation, you’ll need to include the:
- Name of the corporation
- Principal office (This must be a physical location.)
- Registered agent and their address
- Number of shares
- Names and addresses of all incorporators
- Names and addresses of the initial president and secretary
- Name and address of at least one director or controlling shareholder
You can complete the Articles of Incorporation online or mail your document to:
Secretary of State
255 Capitol St. NE, Suite 151
Salem, OR 97310-1327
Step 5: Create Corporate Bylaws
Corporate bylaws cover rules for the officers, directors, and shareholders. Typically, bylaws will contain information about the number of votes required to pass something and requirements about selling shareholder stock.
In short, bylaws:
- Define the corporate structure: The bylaws define the duties, responsibilities, and rights of members (e.g., officers, board).
- Set rules: Bylaws set the rules that deal with how the organization is governed. This includes rules for individuals nominated, elected, and removed from governing positions in the corporation.
- Direct the board: Bylaws outline processes and rules that shareholders and the board of directors will use to run the business. The bylaws act as a guide for the corporation.
Step 6: Draft a Shareholder Agreement
Next, you’ll need to draft a shareholder agreement. The shareholder agreement must be signed by all shareholders at the time of the agreement. It can be amended only by the shareholders if there are not agreements stating otherwise.
Usually, a shareholder agreement includes:
- Restrictions for the powers of the board of directors
- Terms and conditions for the transfer of property or services between the corporation and any shareholder, officer, employee, director, etc.
- Voting power for shareholders and directors
- Rules regarding the dissolution of the corporation
Step 7: Issue Shares of Stock
Issued shares of stock are the number of shares distributed to shareholders. Issued shares are used to determine ownership. All corporations in Oregon need at least one share of stock and a minimum of one shareholder.
Although they are commonly confused with authorized shares, they are not the same. Authorized shares are the maximum number of shares that the board of directors may issue. Note that a corporation can authorize as many shares of stock as they want.
Why do corporations issue stock?
- More capital to build or improve the facility or place of business
- Expand the corporation into new markets
- Create new products
- Pay off debt
The board of directors has the power to authorize shares. All public companies must register with the U.S. Securities and Exchange Commission (SEC) when issuing stock. Corporations will need to file quarterly and annually to the SEC. You’ll also want to familiarize yourself with Oregon’s securities laws via the Oregon Division of Financial Regulation.
Step 8: Apply for Necessary Business Permits or Licenses
Oregon does not have a general business license. That said, some business activities will require special permits or licenses. Check if your business activities require any local licensing. In some cases, you may need a license for operating in specific cities or jurisdictions, but this can vary from place to place.
In addition, you’ll want to check if you need to apply for any federal licenses or permits. Note that fees depend on the licenses or permits needed. Not every business will require a federal permit or license. However, many do, so it is wise to ensure that your corporation is compliant with federal regulations.
We suggest doing a diligent search for any permits or licenses required at the local, state, and federal levels.
Step 9: File for an EIN and Review Tax Requirements
To pay federal taxes, hire employees, open a business bank account, and apply for federal business licenses or permits, you will need an Employer Identification Number (EIN). Applying for an EIN is simple and can be completed online for free on the IRS website. You can also apply for an EIN by fax or mail; however, these methods will take longer.
In addition to federal tax laws, your corporation will be subject to Oregon’s state taxes. If you expect to owe tax of $500 or more to the state, you must make quarterly tax estimates. These estimates are due on April 15, June 15, Sept. 15, and Dec. 15. Note that corporate filing requirements can vary based on the type of corporation and more.
Oregon has a new Corporate Activity Tax (CAT), which is based on the total amount a business realizes from transactions and activity in the state. This tax applies to C and S corporations, but not nonprofits.
Step 10: Submit Your Corporation’s First Report
All Oregon corporations must submit an annual report or renewal. You will need to submit your renewal on the anniversary of your original filing. The Secretary of State will send a notice 45 days before the due date.
You can submit your renewal information on the Secretary of State’s website. Even though you can renew by mail, it’s recommended that you file online. This will expedite the process so that you do not have to wait days for approval. By filing online, renewal can occur in just a few minutes. Plus, payment confirmation will be sent to your email.
The filing fee is $100.
How much does it cost to start a corporation in Oregon?
At a minimum, it costs $100 to file your Articles of Incorporation and $100 for your annual report. This cost can increase depending on additional services needed to run your business, including reserving a business name and any necessary licenses or permits.
Luckily, with ZenBusiness’s starter package, you can benefit from the pros when incorporating your business in Oregon. At ZenBusiness, we have passionate and experienced staff who can handle the red tape. We’ll help keep your business compliant with state and federal laws, helping you start your corporation correctly and avoid additional fees.
What are the benefits of a corporation in Oregon?
Incorporating your business in Oregon can help protect you from potential litigation. Incorporating a business helps keep your and your business’s liabilities separate. In the event of a lawsuit, having an incorporated business can prevent your personal assets from being taken.
Although corporations have additional taxes and paperwork, they come with many benefits:
- Owners aren’t held personally liable for business debts
- Boosts the credibility of the business
- Easier to raise capital by selling shares of stock
- Internationally recognized
For many, incorporation is the best step for their business. Even so, there are some drawbacks. One thing to note is that corporations are more scrutinized by the government. Since they are so closely regulated, you will need to ensure that your business is compliant with all local, state, and federal regulations.
Additional disadvantages include:
- C corporations experience double taxation, which means that the corporation is taxed, and then the shareholder is also taxed when they receive their share.
- Corporations must pay fees for filing the Articles of Incorporation, naming the corporation, annual renewal, etc.
How is an Oregon corporation taxed?
In Oregon, you will be subject to federal and state income taxes. In some cases, you might qualify for Oregon’s Investment Advantage or other tax incentives. You can find these programs on Oregon’s business website.
There are three types of corporations: S corporations, C corporations, and nonprofit corporations. Each are taxed a bit differently:
- S corporations: S corporations do not pay federal income tax at the corporate level. This avoids the double taxation drawback of other structures. Instead, profit is passed through to the shareholders’ personal tax returns. For state taxes, though, Oregon S corporations must file Form OR-20-S, Oregon S Corporation Tax Return, and pay the minimum excise tax. Also, as we mentioned above, S corporations must pay the Oregon Corporate Activity Tax.
- C corporations: C corporations are the most common type of corporation. Unfortunately, they often experience double taxation. This means that the corporation is taxed at the business level. Once the revenue goes through taxation, it goes to the individual owners. The owners then have to pay an additional tax on their earnings. As mentioned above, the C corporation will also be responsible for Oregon taxes, including the Corporate Activity Tax.
- Nonprofit corporations: Nonprofit corporations must benefit the public. Unlike other corporations, they can apply to the IRS to be exempt from federal income tax. They can also apply to be exempt from many of Oregons’ state taxes. Although they pay fewer taxes, they must also file ongoing paperwork to maintain their tax-free status.
Oregon Corporation FAQs
Does running a corporation in Oregon involve more paperwork than running other types of businesses?
Incorporating your business will require more paperwork. However, it protects you and your business from many legal issues.
What is the difference between an LLC and a corporation in Oregon?
A limited liability company (LLC) is a mix between a partnership and a corporation. An LLC operates as a separate legal entity and is popular among many entrepreneurs because of the legal protections and limited paperwork required to form an LLC. On the other hand, a corporation has a different financial process and additional paperwork that an LLC does not. Corporations are best for larger businesses with shareholders.
How do I change my corporation’s name in Oregon?
You can change the name of your corporation in Oregon by filing Articles of Amendment with the Secretary of State.
How many people are needed to form a corporation in Oregon?
A single person can form a corporation in Oregon.
Can I form my Oregon corporation online?
You can form your Oregon corporation online using the Secretary of State’s online filing system.
How do I dissolve my Oregon corporation?
To dissolve your corporation, you will need to file the Articles of Dissolution and pay $100.
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