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Home / How to Start a Small Business in Oregon

How to Start a Small Business in Oregon

With no sales tax, fantastic economic growth prospects, and a bustling economy, Oregon is a great place to do business. It's also an excellent place to live, making it easier to attract talent from out of state. But how do you start a business in Oregon?

If you're looking to start your very own Oregon company, this guide will show you how. Ultimately, the process involves many important steps, all of which will be discussed in detail below. Here's how to start a business in Oregon, from start to finish.

First and foremost, you'll need to decide what kind of business you want to start. Chances are you already have something in mind, but if not, here are some things to consider:

  • What are you talented or naturally skilled at? Could this talent make you well suited to a certain type of business?
  • What business does your community need? Have you talked to people to find out?
  • What are you interested in? Can you combine any of your passions with a business idea?
  • Is this going to be a full time business, or more of a side hustle?

These are questions to ask yourself when deciding on a business idea. Once you have decided, move on to the next step.

Now it's time to start planning. This means coming up with a business plan, naming your business, researching locations, and more. There's a lot to cover here, so let's break it down:

Select a business name

Choosing a name is the next step, and it's a process that you'll want to take your time with. It's important to choose a name that is well suited to your business, brandable, and relevant to your industry. The name should ideally also be memorable for your future clients/customers.

Equally important is to choose a unique name. The state of Oregon requires that newly registered businesses use a name that is not already registered by another Oregon company. You must search the business registry database to verify that the name you want to use is not already taken by another Oregon firm.

In addition to finding a distinguishable name, there are other rules to be aware of, including:

  • Names for LLCs need to contain "limited liability company", or select approved abbreviations such as "LLC" or "L.L.C."
  • Names for corporations need to contain "corporation", "incorporated", or select approved abbreviations such as "corp" or "inc"
  • Other rules may apply. The full legal rules can be found here.

Once you've settled on a name, you can move forward with actually registering it following the steps laid out in the rest of this guide.

Oregon trade names

Oregon allows firms to utilize trade names, otherwise called assumed names or DBAs. When your business is fully formed, you will have the option to register additional assumed names, which you can then use to legally do business under. This allows for more versatility in how you brand and market your business.

Register a domain name

Once you choose a name, you should immediately register a domain name for your new business. In most cases, getting a .com domain name is ideal, but there are many other extensions (.biz, .net, etc.) that are worth considering.

You can use a tool like Namechk to search for an available domain name and find a great deal on the registration cost. You may find that your desired names are taken, so you may need to get creative.

Complete market research

Once you have an idea, you'll want to do some market research. You want to gain a better understanding of who your customers – and competitors – are. You can achieve this by conducting online research, running focus groups, sending out surveys, and more. There are also companies that can help you complete market research, for a fee.

Select a business location

Unless you plan to run a remote/virtual business, you will need to find a physical location for your company. Research commercial property in your area, and take note of typical costs. For customer-facing businesses (retail and some services), location is very important, so take your time in selecting the right area for your business.

Create a business plan

You will now need to create a detailed business plan for your new venture. This plan is helpful for your own purposes, and will also be necessary in order to obtain funding from a bank. A good business plan should contain these elements:

  • Finances: How much funding does the business need to get started? How many sales does it need each month to break even on expenses?
  • Product: What do you plan to sell? Is it a product or a service? What problem does your business solve, and how is it distinct from your competitors?
  • Marketing: How will you drive sales? What marketing and sales efforts do you plan to employ? How much money will you set aside to fund marketing efforts?
  • Staff & partnerships: How many people will you need to hire, and what skill sets do they need to have? Will you have any partnerships or arrangements with other local businesses?

If you need help, you can find business plan templates online that will help walk you through the steps you need to take to draft a detailed business plan. If you plan to seek funding, you may also wish to call your bank to see what they require in terms of business plans.

Before you form your business as a legal entity, you will need to decide which business structure you will use. There are a few different types of businesses, each with its own pros and cons.

Sole proprietorship

Sole props are single-person operations. Examples include freelancers, gig economy workers, and consultants. A sole proprietorship business is very easy and inexpensive to form, and tax reporting is also fairly simple. As a sole proprietor, your business taxes are reported as part of your personal tax return.

The downsides to a sole prop are that you cannot hire employees, and you don't have the legal liability shield that something like an LLC or corporation would provide. 100% of the debts and liability of a sole proprietorship go to the sole owner: you.

Partnership

A general partnership is an unincorporated business structure similar to a sole proprietorship, except with two active owners/participants. Partnerships do not have liability protection.

Limited liability company (LLC)

A limited liability company, or LLC, is a popular choice for business owners because it provides liability protection to the owners. It separates the business from the owners, which means the personal assets of owners will not be at risk if the company gets sued or goes into bankruptcy.

LLCs are also a bit easier to form than corporations. Even so, there is definitely more work involved with an LLC than there is with a sole proprietorship.

Corporation

A corporation is owned by its shareholders and is a separate entity. There are a few different types of corporations (C-corp, S-corp, etc), with the main differences being the way they are treated tax-wise.

Corporations are more regulated than LLCs, which makes them more attractive to outside investors. For this reason, most large companies are corporations. The downside is that it takes more effort, and more paperwork, to form a corporation.

Nonprofit

A nonprofit is a legal entity that is set up with charitable status, meaning that its goal is not to make a profit, but rather to address a certain cause. Nonprofits are funded by donations, rather than investors, and are subject to many regulations. They are exempt from most forms of taxation, although tax returns must still be filed.

Next up, the time has come to actually establish your company as a legal business entity. This could be a sole prop, a corporation, an LLC, or another entity type (see section above for more details). Regardless, you will need to file some paperwork with the Oregon Secretary of State, which can be done online or by mail.

There's an easier option to consider: using a paid business formation service. These services charge a small fee to walk you through the business formation process step-by-step. This saves you time and also helps ensure that everything is handled accurately. If you don't mind paying a bit extra, it's well worth it to use one of these services.

Some good options to consider using are Northwest Registered Agent , ZenBusiness , and Incfile . All three offer excellent service and low prices on business formation packages.

If you prefer to complete the process on your own, the basic steps include:

  1. Naming your company
  2. Choosing a registered agent (this individual/company is responsible for receiving legal documents on behalf of the business)
  3. Filing paperwork with the state
  4. Obtaining business licenses and permits if necessary
  5. Applying for an EIN from the IRS

There are specific steps to follow, which vary a bit depending on the type of business entity you are forming. More on this below.

Form an Oregon sole proprietorship

Follow these steps:

  1. Decide if you will operate under your legal name, or use a trade name
  2. If you use a name other than your own, you may need to register a trade name
  3. Apply for a business license and/or other necessary permits from local governments (city/county), as needed
  4. More information here

Form an Oregon LLC

Follow these steps:

  1. Name your new LLC (see notes above)
  2. Choose an OR Registered Agent (or use a service such as Northwest Registered Agent). This Oregon registered agent will be the individual or company responsible for accepting notice of lawsuits and other important documents on behalf of your company.
  3. File the LLC Articles of Organization online or by mail, and pay the $100 filing fee
  4. Draft an LLC operating agreement
  5. Apply for an EIN with the IRS

Form an Oregon corporation

Follow these steps:

  1. Decide on your desired corporate tax structure (S corp or C corp)
  2. Name your new corporation
  3. Choose a Registered Agent for your business (or use a service)
  4. Hold an organizational meeting and appoint directors
  5. File the OR Articles of Incorporation online or by mail, along with the $100 filing fee
  6. Apply for an EIN from the IRS

Our picks of the best registered agent services

Registering your business and forming an LLC or corporation is an important part of starting your business – but in order to operate legally, you will likely also need to obtain certain permits and/or business licenses.

The specifics vary depending on the type of business you are running, as well as your location. For example, restaurants will need health permits, bars will need liquor licenses, and medical service providers will need various professional licenses and federal permits. You will need to research the specifics that relate to your business type.

There are different requirements at each level of government:

  • Local: Cities and counties may require certain business licenses or permits. Contact your county clerk for details.
  • State: Oregon may require additional permits and/or licenses in order to operate legally in the state. Check the Oregon Business Xpress website for details.
  • Federal: Federal permits/licenses may be required for certain regulated industries, such as construction, medicine and legal services. Check the Small Business Administration (SBA) guide for more details.

At this time, you should also apply for an Employer Identification Number (EIN). An EIN is a federal tax ID that is required to hire employees. You can apply for an EIN online with the IRS – the application is free and quick.

For most businesses, some startup funding will be necessary in order to get started. In step #2, you should have calculated your funding needs while drafting a business plan. Use this information to determine how much funding you need to raise.

For bootstrapped companies, you may be able to get by with your own personal savings, or some seed investments from friends and family. If your funding needs are small, this is likely your best route.

If your business plan indicates that substantial funding is needed, you will likely need to apply for a loan and/or a grant.

  • Small business loans are offered by banks, credit unions and other lenders. They can range from as little as a few thousand to hundreds of thousands. Specifics will depend on your business, as well as your personal creditworthiness. Most small business loans are issued in a lump sum, and paid back on a monthly basis, with interest.
  • Small business grants are offered by government agencies and some nonprofits. They are essentially business loans that don't need to be paid back – but they usually have substantial fine print. It's worth looking into, however, as there may be grants available, particularly for businesses serving an important social need, or for underprivileged entrepreneurs starting their first business.

Beyond securing funding, there are other routine tasks that you need to take care of to get your business' finances in order. This includes:

  • Opening a business checking account. You should have a separate business bank account that you use solely for business purposes. You can open this account at most banks, credit unions and financial institutions. Call ahead to see what documents will be required to open this account.
  • Open a business credit card or line of credit. This is not strictly necessary, but most businesses can benefit from having a business credit card, and/or a business line of credit. This can be used for day-to-day expenses and purchases, and may also earn you some rewards.
  • Set up your accounting system. As a business owner, you will need to keep very detailed records about all revenue and expenses. To do this, you'll want to set up the proper foundation from day one. This could be investing in an account software such as QuickBooks or Xero, hiring a bookkeeper, or at the very least establishing a spreadsheet to track everything. If you do not have any accounting experience, it's wise to hire a professional to help.
  • Purchase business insurance. Most businesses should have some form of liability insurance, and potentially other forms of business insurance as well. Insurance policies can help protect your equipment and buildings from costly damage, and help shield your company from liability if a worker or customer is injured or otherwise harmed. Speak with a local business insurance provider to get started.

In this day and age, having a solid web presence for your business is very important. And social media profiles, while important, are no replacement for an actual website. You will want to build a professional business website that you can use to drum up business, inform your customers, and stay connected with your clientele.

The simplest way to build a website is to use a website builder from a web hosting provider. When you register a new domain name, look for a provider that also offers web hosting and a site builder, so that you can purchase everything at once and get your site set up quickly.

Our picks of the best website builders

An easy-to-use website builder that lets users create attractive online stores.

Visit Square Online

Get online quickly with a domain, hosting, blog, and professional email.

Visit Web.com

Unless you plan to operate a solo business (with you as the only worker), you will likely need to hire employees. To do this, you will need a federal employer identification number (EIN), which is a free tax ID number issued by the Internal Revenue Service (IRS).

You will also need to satisfy all state-level requirements for employers. One important requirement is to report new hires to the state of Oregon within 20 days of the date of the hire/rehire.

You will also need to register for and pay Oregon employer's taxes, including withholding tax and payroll taxes. There will likely be additional tax reporting requirements; check with your tax advisor for details.

It's also important to verify that your new employees are able to legally work in the state of Oregon and that they hold any necessary licenses or permits. Restaurant workers, for example, will need to have health permits on file.

At this point, you also should look into setting up your payroll system – whether you handle it yourself, or use a payroll service.

Now it's time to get down to business and engage with the day-to-day activities that are sure to bring your business success. This means marketing your products and services, maintaining good relationships with your return customers, and setting yourself apart from the competition.

Still have questions about running a business in Oregon? Here are some answers to frequently asked questions.

What are some business resources in Oregon?

Oregon is home to dozens of helpful business incubators, nonprofits, and other small business resources. One of the best resources available to Oregon entrepreneurs is the Oregon Small Business Development Center (SBDC). The OR SBDC provides no-cost business consultation and coaching, and tons of other useful resources. SCORE Portland is another great resource, as is the US Small Business Administration (SBA), with offices in Portland.

What is the minimum wage in Oregon?

The Oregon minimum wage is $12 to $14 per hour, depending on the location (as of 2021). The current wage rates are $12.00 per hour in non-urban areas, $12.75 per hour in standard counties, and $14.00 per hour in the greater Portland metro area.

Oregon's minimum wage is also scheduled to increase every year on July 1st. In 2022 it will rise to $12.50-$14.75 depending on the location, and it will increase each year after that based on the increase in the Consumer Price Index (CPI). Check the Oregon Department of Labor and Industries for the latest information.

What business taxes does Oregon have?

Firms in Oregon may be subject to a variety of state taxes. Oregon has no sales tax, but there are other tax reporting requirements for businesses, including corporate activity tax, excise tax, payroll taxes, and more.

This page on Oregon.gov provides an overview of all the necessary tax reporting requirements.

How do I dissolve an LLC or Corporation in Oregon?

To close an Oregon business, the owners must "dissolve" it. This involves filing voluntary dissolution paperwork with the state of Oregon, reporting the business closure to the IRS, filing final tax returns, and more. You will also need to send final paychecks to your employees, shut down tax accounts, and more. See this guide for more information.

There are many complex steps involved in closing a business entity; it's recommended to work with a CPA for best results.

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How to Start a Small Business in Oregon

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