Starting a Limited Liability Company is a big decision and it’s a momentous occasion. It’s a lot of work, but there are a number of benefits to LLC formation. For instance, LLC formation is a bit simpler than the incorporation of a corporation because LLCs typically have less regulation on things like structure and meetings. And, of course, there’s also the protection of personal assets that entices many business owners to choose LLCs. But how long does the formation process take in Oregon? We’ll go over all the basics in this guide.
Discovering Oregon
Oregon shares borders with Idaho, Washington, Nevada, California and the Pacific Ocean. It’s home to Hells Canyon, which is 5,500 feet deep and America’s deepest river gorge. For context, around 5 Eiffel Towers could fit down in it. Crater Lake is also in Oregon, which is 1,943 feet deep, making it the deepest in the nation. You’ll find the Cascade Mountains and Klamath Mountains here, as well as the Oregon Caves National Monument. The state is home to mountains, semi-arid areas, lakes, fertile land, forests, cliffs, and beaches along the Pacific coastline.
In the 1840s, so many people came to the state via the Oregon Trail that the European nations that rightfully owned it abandoned their claim. And it became known as the Beaver State because of the animals that early settlers trapped there.
Economic Overview of Oregon
Oregon’s Gross State Product (GSP) is $240.4 billion, and it had a growth rate of 18.8k% from 2018-2023. The state’s biggest industries according to revenue are Health & Medical Insurance, Hospitals, Semiconductor & Circuit Manufacturing, New Car Dealers and Warehouse Clubs & Supercenters. The companies that employ the most residents in Oregon are the State of Oregon, Intel, Oregon Health & Science University, Nike, and Walmart Inc. And the sectors that have contributed the most to the state’s overall Gross Domestic Product (GDP) are Real Estate & Rental & Leasing, Manufacturing, Healthcare & Social Assistance, Professional, Scientific & Technical Services and Information.
Oregon’s economy once centered around its coastline with things like fishing and inland agriculture. Today some of its natural resources include opal, jade, agate and sunstone which are mined in the state. It’s also the nation’s biggest producer of softwood lumber. The state is transitioning to manufacturing and service industries in the modern age, and in areas around Portland, there’s a lot of support for the high-technology industry.
Business Environment in Oregon
Usnews.com ranked Oregon number 25 for Business Environment, Employment and Growth. It ranks number 27 for short-term fiscal stability and #22 for long-term fiscal stability. It’s #41 for Affordability and #23 for Economic Opportunity.
While the median household income in the state is slightly above average at $71,562 (national average is $69,717), the cost of living index in the state is 103.0 (100.0 nationally). This means that it’s expensive to live and do business in Oregon, which explains its low Affordability score.
State-Specific Regulations and Incentives for Forming an LLC in Oregon
Here’s a look at some of the various incentives and programs that the state of Oregon has in place to help business owners.
- Business Expansion Program (BEP): This program is designed to encourage high-growth industries and high-wage jobs to locate in the state. It provides forgivable loans to businesses creating a minimum of 50 permanent full-time jobs that pay wages at a minimum of 150% above state or county average wages, depending on which is less. Your company must employ at least 150 employees and be in a “traded” industrial sector. The amount awarded will be based on the estimated increase in income tax revenue as a result of the new jobs created, over a two year period. And the job creation commitment of the company must be met within two years and maintained for eight quarters after that.
- Strategic Investment Program (SIP) Property Tax Abatement: If you’re in a traded sector or are a manufacturer and make major capital investments, you could get a 15 year real property tax abatement levied on the investment that exceeds the threshold amounts. The minimum investments to qualify are $25 million in rural areas and $100 in other areas.
- Enterprise Zones: There are 76 different Enterprise Zones in the state, and if your business locates or expands to one then it could qualify for personal or real property taxes on equipment and new plants for three to five years. This could mean new equipment and machinery, high value personal property, new buildings and more. You can also qualify for incentives to help with tenant improvements if your business is in a shell building. You’ll have to notify the property owner and get them to agree to the program. Certain jurisdictions could require different minimum investments, average wages and other eligibility factors. In addition, the program offers a “Construction-in-Process” incentive which is an exemption for 2 years on property before it’s in service. There’s an extended 15-year exemption on property taxes if a company locates or expands to a rural enterprise zone. (There are 54.) Companies who enter into Enterprize Zone agreements are also required to enter a “First Source Hiring Agreement”, in which the company is added to a list with WorkSource Oregon of new positions.
- Oregon Investment Advantage: This is a program that provides a 10-year holiday from state income taxes for companies that start new businesses in one of 16 selected counties in the state and also create a minimum of 5 permanent full-time jobs that pay a minimum of 100% of the average wage in the county. Qualifying businesses can’t have a business in the state that’s similar, and can’t compete with other local businesses. Application for the program must be completed before the company hires employees or construction has begun on the new facility. To claim the exemption new operations must be running for at least 24 months and they must recertify every year during the exemption.
- Governor’s Strategic Reserve Fund: This is an incentive that usually takes the form of a forgivable loan at the discretion of the governor and dispensed by the Oregon Business Development Department. It’s designed to support new and existing jobs, as well as promote companies to invest in targeted industries in the state.
Pros and Cons of Establishing an LLC in Oregon
There are both good and bad aspects of doing business in Oregon. Let’s start with the good.
The tourism industry in Oregon is big. Visitors spend $12.3 billion when they come to Oregon each year. It’s such a big industry that it supports the retail, hospitality and service industries in the state.
There’s a “buy local” movement in the state. This means that consumers in the state would rather spend their money at local establishments and support local business owners than big corporations.
There aren’t sales and use taxes in the state, and you don’t have to obtain a general state business license. This means that you won’t be forced to jump through quite as many hoops to get your business registered in Oregon as you would in other states.
Here are some of the negative aspects of doing business in Oregon.
Taxes are pretty high in Oregon. The corporate income tax rate ranges from 6.60%-7.60%. Personal income tax rates range from 4.75%-9.9%. Sure, if you’re an LLC then you may not have to deal with corporate income taxes unless you’ve chosen to have your LLC taxed as an S or C-Corporation. But, as a pass-through entity, personal income taxes are definitely something that will affect your business and the fact that Oregon’s are so high is bothersome.
Oregon imposes really strict environmental regulations on businesses. You’ll need to adhere to these if you start a new business in the state. Any time a state has a lot of requirements and regulations, it causes business owners a lot of headaches.
The unemployment rate is quite low in the state, which means you’ll likely encounter difficulty filling positions. It means that there aren’t enough jobless people in the state to make hiring employees easy.
Procedure of Establishing an LLC in Oregon
Before learning about how long it takes to get an LLC, we’ll discuss how to form an LLC in Oregon.
Necessary Documentation for Filing an LLC in Oregon
Here are the documents you should gather before filing for a Limited Liability Company in Oregon.
- Employer Identification Number (EIN): An Employer Identification Number is important for your business because you’ll need one in order to file taxes, open a business bank account or hire employees. Luckily, you can quickly and easily obtain one by filling out an application on the IRS website, and it’s free!
- Name Reservation Application: First, you must ensure that your business name meets all of the legal requirements for business names in the state and is available for use. Then the next step is to file an Application for Name Reservation to reserve that name with the Secretary of State so that other businesses aren’t allowed to use it.
- Articles of Organization: You’ll obviously need an application to start an LLC, and that’s what your Articles of Organization essentially is. It includes information such as your business name, address, contact information for LLC members, and your registered agent’s information.
- Operating Agreement: Drafting an operating agreement isn’t a legal requirement for LLCs, but it will help you in the long run. It’s a detailed set of instructions with rules for LLC members, as well as a guide to business operations. It can save you from breaking up arguments and dealing with a number of problems. In this document you’ll find information about the contributions and ownership shares of each LLC member, how profits and losses should be split among them, how to add or remove members, the steps to take if a member dies, and information about meeting schedules and voting rights for managers.
- Initial and Annual Reports: LLCs in Oregon must file an annual report each year, which keeps their information current with the Secretary of State. Your first one is sent along with your Articles of Organization.
- Tax Registration: Oregon doesn’t charge a sales and use tax, but you’ll still need to get your business registered with the Department of Revenue for tax purposes.
- Business Licenses: Oregon doesn’t require LLCs to have a general business license, but that doesn’t mean you don’t need any licenses or permits. You’ll need to check with the city and county clerks to find out about licensing in your area.
Legal Requirements for Starting an LLC in Oregon
Here are step-by-step instructions for forming an LLC in Oregon.
- Get Your Hands on an Articles of Organization Form: The first step is to get an Articles of Organization form. This is how the Secretary of State Corporation Division gets all of your business information and approves your LLC, so it’s important. You can easily obtain one from the Secretary of State’s website or by visiting their office in person.
- Decide on a Business Name: In Oregon (as well as many other places) your business name can’t be too similar to an existing business in the state, which means you need to check the Business Registry Database from the Secretary of State. Once you’ve found a name that you can use, you must also file an Application for Name Reservation to lock it in for your business.
- Pick a Registered Agent: Choosing a registered agent is an important decision because this is a person who could make or break your business simply based on their job performance. A registered agent is someone who will receive mail from government agencies as well as service of process on behalf of your company at their address during business hours, and missing this mail could cause your LLC to lose its good standing status with the Secretary of State. You’re allowed to choose a friend or family member to fill the role, but it needs to be someone extremely reliable. For added assurance, you could hire a professional registered agent service instead.
- Choose an LLC Address: A business address may seem like a no-brainer, but there are considerations to take into account here, as well. Your company’s business address will be made public information so that the Secretary of State, customers and process servers can locate and contact your company. That means that if you list your home address, literally anyone can find your home. To avoid a number of privacy and security risks, you could either look into a virtual address for your company, or ask your registered agent if you could use their address.
- Sign and Submit Your Documents: Make sure that all of the information is included and correct, then sign and file your Articles of Organization. If you don’t want to be listed as the LLC Organizer for your company, you could hire an LLC formation service. There are actually a few out there with accuracy guarantees that ensure that everything is correct before they submit it on your behalf.
Time Frame for Establishing an LLC in Oregon
Now we come to the main event, the portion of this article that everyone has been waiting for: How long does it take to get an LLC in Oregon? We’ll answer all of your questions about formation time frames in this section.
How Long Does the Initial Paperwork Take in the State of Oregon?
One thing you need to know about formation times is that there are two types of times you should concern yourself with: approval times and processing times. Approval times are the elapsed time from when you submit your paperwork until your Limited Liability Company is finally approved, and processing times are included in that. Processing times are simply the amount of time it takes for the state to enter your LLC’s information into the computer system and review the data.
Approval times for online filing in Oregon are 2-3 business days, or 6-8 weeks if you file by mail.
Processing Times in the State of Oregon
Processing times for mail filing are between 4-6 weeks, or 2-3 business days if you file online.
Common Delays in the LLC Formation Process in Oregon
Processing times are pretty standard and are pre-determined approximations that are dependent on which filing method you choose. But there are a few factors that could delay the formation process, which we’ll go over here.
- Filing Method: You probably noticed when we supplied you with processing times in the previous sections that it’s a bit quicker to file online. This means that choosing to file by mail will delay your formation by several days or weeks, depending on mail times.
- Your Documents: Everything must be in order when you submit your documents. All of the information is required to be included, and it must all be accurate. If you miss a section, make a typo, or forget to include two copies of your paperwork, then the Secretary of State could reject your application. Starting the process all over again is a significant delay, so ensuring the accuracy of the information on your documents is crucial.
- Time of Year: There’s a huge influx of filings for LLCs at the beginning of the year, which means that processing times around the first of the year are delayed.
- Workload: If the Secretary of State’s office receives a high volume of filings, it takes a while for them to get through them all. After all, they have to manually review many LLC filings!
Expedited Processing for LLC Formation in Oregon
Expedited processing is essentially a rush filing option that’s available in many states, and it can greatly expedite the formation process for business owners.
What are the Expedited Options Available?
There aren’t expedited filing options available in Oregon, unfortunately. Luckily, it only takes 2-3 days to process online filings in Oregon.
Additional Costs for Expedited Services in Oregon
In states that offer expedited services, you’re required to pay extra fees. This means that expedited service fees must be paid in addition to the filing fee. But since Oregon doesn’t offer expedited services, this isn’t a fee you’ll have to pay.
Comparing LLC Formation Time Frame in Oregon with Other States
When learning about the formation time in your state, it’s good practice to compare it to other states so you have something to measure it against, and so you can determine whether it’s worth it to you to form a foreign LLC, rather than a domestic LLC.
Brief Comparison with Key States
Processing time to file online in Oregon is 2-3 business days, or 4-6 weeks by mail and there aren’t any expedited services offered.
Oregon isn’t the only state that doesn’t offer online services. But believe it or not there’s a worse fate than having no expedited services: insanely slow expedited services. The expedited option takes 5 days in Arizona and 7 days in Maryland. There are certainly slower processing times for online filing, as well. It takes 12-14 days in Washington, 13-15 days in Texas, 2 weeks in Maryland, and 14-16 days in Arizona. And mail filings in Maryland take 5-8 weeks, it’s 4-8 weeks in Texas, and 8 whole months in New York.
There are faster processing times, too. Alabama, Alaska, Colorado, Kansas, Kentucky, Minnesota, Missouri, New York, South Dakota, Tennessee, Wisconsin and Wyoming all provide immediate processing on online filings. It takes only 1-2 days to process mail filings in Alabama, Massachusetts and South Dakota, or 1 day in Kentucky and Ohio. And when it comes to expedited processing, Delaware, Michigan, Montana, Nevada and West Virginia all have 1 hour options.
Why is Oregon a Favorable Place for Forming an LLC?
Oregon is a good place to form an LLC because it has a thriving economy fueled by tourism, there’s a “buy local” movement that encourages locals to buy from small local businesses, and you won’t have to obtain a general state business license or pay sales and use taxes.
