If you’re an Oregon small business owner, you likely already know that to stay legally compliant, most businesses must pay taxes. Taxes occur at the federal, state, and local levels, making keeping up with all the requirements a stressful prospect even for the most experienced business owners. We’re here to help make this process easier, which is why we’ve put together a short guide to Oregon state business taxes. Read on to learn more about what kinds of taxes you may face and how and when to pay them. You’ll also learn which of our products and services are designed to help make your life a little easier when tax time rolls around.
If you’re looking for more complete compliance help, we’ve got you covered. When you sign up for our Worry-Free Compliance Service, we store and organize your important business documents right on your personalized dashboard. When required filings like annual reports surface, we’ll remind you of deadlines to make sure you stay legally compliant.
If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses.
Step 1: Establish your Oregon business’s corporate income tax obligations
The Oregon small business taxes your company will owe depends on its structure, location, and business activities.
Corporations that do, or have authority to do business in Oregon must pay an excise tax. Corporations that don’t, or don’t have the authority to do business in Oregon but still generate income from a source in Oregon pay income tax. In other words, if you have a corporation created under Oregon law, you pay excise tax.
As of 2021, the Oregon business tax rate is 6.6% on taxable income of $1 million or less. For taxable income above $1 million, the rate is 7.6%.
All returns, including tax payments, are due by the 15th day of the month following the due date of your corporation’s federal income tax return.
Pass-through entities like limited liability companies (LLCs) and partnerships are taxed differently than corporations. These entity types pass their income through to the owners who then report the income on their personal tax returns.
In Oregon, partnerships, S corporations, and LLCs must pay a $150 minimum excise tax for the privilege of doing business in the state. LLCs get to choose if they want to be taxed as a corporation, partnership, or sole proprietorship. After they choose which option they want, they’ll be subject to the tax obligations of their chosen entity.
Cities and counties in Oregon may also impose their own income taxes, which are separate from the state’s.
Step 2: Determine your Oregon business’s employment taxes
Employers who pay employees that work in Oregon must report and pay Oregon payroll taxes. To avoid confusion, keep in mind that the Oregon Department of Revenue’s website uses the terms “payroll tax” and “withholding tax” interchangeably.
Every employer must also register for a business identification number (BIN) as part of the reporting process. Oregon employers use the Combined Payroll Tax Reporting System to report and pay their payroll taxes.
The tax rates range anywhere from 0.9% to 5.4%. The taxable wage base for 2022 will be $47,700. The wage base is the maximum amount of an employee’s pay that can be subject to payroll tax in a calendar year. Oregon payroll taxes are due on the last day of the month following the end of the quarter (April 30, July 31, October 31, and January 31).
Step 3: Establish your Oregon business’s additional state tax obligations
There are some other taxes Oregon business owners should be aware of, as well as the ones mentioned above.
Oregon doesn’t have a general sales tax.
A franchise tax is a tax on the privilege of doing business in a state. In Oregon, they call it an excise tax. This is imposed on C corporations, S corporations, partnerships, and LLCs. The amount is $150.
When an Oregon employer pays payroll taxes, that money is put into the Oregon Unemployment Insurance Trust Fund. This fund pays unemployment insurance benefits to Oregon residents. The unemployment tax rate is on a self-adjusting schedule. For 2022, the average rate will be 1.97% on the first $47,700 paid to each employee.
These taxes are due on the last day of the month following the end of the calendar quarter.
An excise tax is a tax on a certain good or service. For example, in Oregon, there are special taxes on cigarette and tobacco products, marijuana, bicycles, and the rental of heavy equipment.
Step 4: Prepare to file and pay your Oregon business taxes
The main taxing agency in Oregon is the Department of Revenue. You can file your returns by mail or online. You can submit electronic filings through either an approved software vendor or the IRS’s Modernized e-File (MeF). To sign up for MeF, you’ll need to have basic information about your business handy (e.g., Federal Employment Identification Number, business address, etc.). You can also pay your taxes electronically with the Department’s Revenue Online system or by mailing in a check.
As you prepare to file your business taxes in Oregon, you need to have your business documents in order. This means that tracking your business’s expenses and income is very important. You may need previous tax returns, accounting records, receipts, and legal documents. This is where we can help. With our ZenBusiness Money App, we can help you keep track of invoices and manage your business finances.
Do I need an accountant?
Although hiring a tax preparer is never required, in most cases, a small business needs professional accounting help to make sure their taxes are done correctly. You can face serious consequences, such as penalties, fines, and falling out of good standing with the state, if you make errors on your tax returns. Missing a filing deadline can also be a costly mistake.
Not sure how to stay compliant? Learn more about legal compliance for small business owners.
How We Can Help
We understand that taxes can feel a bit overwhelming, but don’t panic. We are here to support you with the services and resources you need to help you prepare to file your taxes. As mentioned above, our ZenBusiness Money App can help give you control over your finances. The app allows you to easily send custom invoices, accept credit card and bank transfer payments, and manage your clients from an easy-to-use dashboard to make things easier at tax time.
No matter what stage your business is in, we have the tools you need to help you succeed.
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.