When you’re looking to start a business in Oregon, one of the first things to decide is the type of entity you want to form. But with so many types of business entities to choose from, it can be difficult to know which entity type to select.
If you intend to provide professional services, an Oregon professional limited liability company (PLLC) might be a great option.
Under Oregon law, when you register a limited liability company (LLC), you also have the option to note that the LLC will provide a licensed professional service or services.
If you’re considering starting an Oregon PLLC, there are a number of things that you need to know. This guide will go over some important items about professional limited liability companies in Oregon and what you need to do to form one.
PLLCs are made up of professionals who intend to provide a licensed professional service. Licensed professionals include:
Other professionals may include those who provide a substantially similar service to the public that may be “lawfully rendered only pursuant to a license.”
Oregon law requires the name of Oregon limited liability companies to contain one of the following words or abbreviations:
Complying with this requirement is crucial. In fact, the following words and abbreviations are strictly prohibited for professional LLC entity names:
Additionally, the selected name for your Oregon professional LLC must be distinguishable from any other name found in the records of the Office of the Secretary of State. This includes names from other business entity types, such as corporations, professional corporations, cooperatives, nonprofits, and other entity types as well. Thus, it’s important to do a thorough search of your preferred business name before moving forward.
Fortunately, you can check the availability of your proposed professional LLC name using Oregon’s online business name search portal. By using this helpful tool, you can determine whether the name you want to use is already being used by another entity before you get too far into the process of forming your Oregon PLLC.
If you determine that your preferred name isn’t being used by another entity, that’s great news! Sometimes, however, you may not be ready to move forward quite yet. If this is the case for you, you might be wondering whether there is a way to reserve that name in the meantime.
Fortunately, there is! ZenBusiness provides a name reservation service to help reserve your proposed business name with the state to prevent another entity from taking it.
ZenBusiness also offers domain name registration services to secure and register your desired domain name. That way, you can use it to establish a website, email address, or advertisements. Registering your domain name prevents someone else from purchasing the domain name and helps promote your business.
Oregon law requires Oregon professional limited liability companies to designate an Oregon registered agent. Specifically, the business entity must continuously maintain a registered agent within the state. The purpose of the registered agent is to ensure that someone is available during business hours to accept service of process and other legal notices on behalf of the business.
A registered agent must be:
It’s imperative that you designate a trustworthy and reliable registered agent to see that your business stays in good standing. Let ZenBusiness take this off your to-do list. ZenBusiness’s registered agent service can connect you with a qualified Oregon registered agent so that you can focus on running and managing your business.
The Articles of Organization is the document you will file that formally creates your professional LLC. Filing your Articles of Organization with the Oregon Secretary of State is a required step to legally form your Oregon PLLC.
The Secretary of State provides an instruction list for completing the Articles of Organization for an Oregon PLLC. Oregon authorizes “organizers” to file the Articles of Organization for Oregon professional limited liability companies and requires organizers to be licensed to perform the professional service offered by the PLLC.
Oregon requires the Articles of Organization for an Oregon PLLC to contain:
Once you complete and file your Articles of Organization, you’re ready to take the next step.
Oregon doesn’t require PLLCs to have an operating agreement. Nevertheless, having one is almost always recommended.
An operating agreement in Oregon outlines the functions and financial decisions of a business. The operating agreement for your Oregon professional limited liability company will include details about things like:
Oregon PLLCs have to stay up to date on their taxes to maintain good standing with the state and the IRS.
Typically, LLCs benefit from what is called “pass-through” taxation. This means that the business entity itself doesn’t pay taxes to the federal government. However, the individual members must still comply with their federal tax obligations.
Additionally, if you’re an Oregon resident, you must report your professional LLC income on your state tax returns. Although Oregon doesn’t have a general sales tax, there are still a number of taxes that are imposed by the State of Oregon and certain municipalities and counties, depending on your specific location.
Thus, it’s a good idea to speak with a certified tax professional, so you meet your federal, state, and local tax obligations.
Unlike some states, Oregon doesn’t require businesses that operate within the state to obtain a general business license. However, licenses and permits may be required from state agencies for certain businesses. Oregon has a license directory business owners can use to find information about applying for and renewing licenses.
Additionally, there may be some local or industry-specific permits or licenses required to legally do business in your area. Unfortunately, there is no central location to determine what permits and licenses you may need to run your business. Thus, it’s your responsibility to know and obtain any such licenses or permits that may be necessary. ZenBusiness can help by compiling a report of the permits and licenses you need for your business based on your location and industry.
Due to the nature of professional limited liability companies, you will also need to check that every member of your LLC keeps their professional license up to date.
Before engaging in business operations, it’s also highly recommended that you obtain insurance for your Oregon PLLC.
Obtaining general business insurance, sometimes referred to as general liability insurance, is a great way to better protect your Oregon PLLC from various types of claims that can put your business and its assets at risk.
Such coverage isn’t required. However, it’s important to protect your business from losses and liability.
Oregon requires almost all employers to carry workers’ compensation insurance. Professional LLCs that have employees must secure and maintain workers’ compensation insurance to cover medical expenses, lost wages, and disability compensation for employees injured on the job.
Depending on the specific profession your LLC practices, you may also consider obtaining malpractice insurance. Again, while Oregon doesn’t require businesses to obtain malpractice insurance, doing so is highly recommended, as it can help protect the entity from serious liability issues in the event of individual malpractice suits.
Lastly, you will want to open a separate business bank account for your Oregon professional limited liability company. To do so, you will need to obtain what is called an employer identification number (EIN) from the IRS.
An EIN is a tax identification number, similar to a social security number for individuals, that allows the IRS to more easily identify your business entity.
Need help securing your EIN? ZenBusiness can help you obtain an EIN and take another task off of your plate.
ZenBusiness offers a number of valuable services to assist you in running and maintaining your Oregon business entity. For example, ZenBusiness can help you:
Don’t get bogged down in the many details of starting and growing a business. ZenBusiness can provide you with the assistance you need so that you can get back to what you do best — running your business.
Filing fees change frequently. You can visit sos.oregon.gov for the most up-to-date fee information.
You don’t necessarily need a lawyer to form an Oregon PLLC. However, it’s always a good idea to discuss any questions about legal obligations or consequences with a licensed Oregon attorney.
Oregon does offer licensed professionals the option to form a professional corporation, which is another type of professional entity.
Many states don’t permit professionals from different fields to form a professional LLC together. However, Oregon does allow professionals from different fields to do so under certain circumstances.
The default taxation format for an Oregon PLLC is pass-through taxation. That means that the business itself won’t be taxed, but the profits of the business are taxed on the members’ individual income tax returns. You can elect to change the default, but don’t do so without first speaking with a certified tax professional.
Oregon Business Resources
Start Your Professional Limited Liability Company
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Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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