Limited liability companies (LLC) are businesses that have many benefits over other types of business organizations. One of the main benefits is that the owner of the business is protected from being liable for the business, so the owner will not be held personally liable if the business is sued. In the state of Oregon, if you want your business to be formed as an LLC, you have to register it as such with the Oregon Secretary of State.
Oregon state laws require that any LLC being formed list a registered agent with a physical Oregon address where they can be served. Besides finding a registered agent, the LLC needs to choose if it wants to be run by its members (owners) or by outside managers. While there are no limits regarding the number of members that an LLC can have, there must be at least one member, and the members must be identified before any registration paperwork can be filed. In addition, LLCs must have a name that contains “limited liability company,” “L.L.C.”, or “LLC”.
Foreign LLCs are business that were originally formed in another country or state that now wish to register and do business in Oregon. If filing to register a foreign LLC, then you have to provide either the registry number in the home state or a certificate of existence.
In order to obtain LLC status, a company needs to file paperwork with the Oregon Secretary of State by either mailing in the paperwork or online via the Oregon Business Registry. Domestic LLCs need to fill out Articles of Organization. This form requires that you list the name of the company, its duration of existence (which can be forever), the name and address of the registered agent, and the name and address of members forming the business.
You also have to indicate how the company will be run, and if it is offering a professional licensed service. After that, you must then also state what services are being provided. Optionally, you can list the names and addresses of the members and other provisions like if you want it to be a benefit company or want indemnification for the members.
Rather than filing Articles of Organization, foreign LLCs are required to fill out an Application for Authority to Transact Business. This form asks for the company’s name, either a registry number or certificate of existence from the original state, when and how long the company will last, and which state it was organized in. You will also need to state a business address for the LLC, and the name and address of the registered agent.
The state of Oregon previously enacted a tax incentive law in 2015 that applies to LLCs, but only if they have more than one member. Taxes for LLCs are “flow-through” taxes, meaning that the LLC profits are taxed only as part of the owner’s personal income. In Oregon, the income tax for profits from LLCs is reduced down to between 7-9%.
However, in order to qualify for these reduced taxes the company has to have at least one employee who is not a member and that employee has to have worked at least 1,200 hour in Oregon that year during workweeks that have consisted of at least 30 hours.
A main reason that businesses might form themselves as LLCs is to protect the owner’s assets from being accessed to pay off a judgment against the company. While such protection is available in Oregon, a creditor in Oregon may be able to force the sale of a member’s stake in the LLC to pay off that member’s personal debt. So, if you own an LLC and incur a personal debt, that creditor can ask the court to make you sell your ownership in the company to settle that debt.
Also, LLC members are often restricted in some aspects. For instance, they might not be able to exercise as much control over company decisions as in other business structures (such as a partnership). They may also be limited in the way that they can contribute financially to the business from their own resources. These types of issues should be dealt with carefully in order to avoid costly legal violations.
The LLC business structure can provide many benefits, but there are many requirements and regulations that you must follow in order to set one up. If you want your business to function as an LLC, you should speak with an Oregon business lawyer to make sure you follow the requirements to set up your business correctly. Your attorney can provide you with legal advice and research for your business, and can represent you in court if needed.