Incorporator The Journal of U.S. Formation
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Editorial 8 MIN READ

Oregon in October 2018: a $100 door and a $100 door every year after

The formation fee and the annual report fee match, which tells you something about how the state thinks about entities

The Editors
Staff, Incorporator.org
8 min read Updated
Contents 6 sections
  1. The mechanics
  2. Maintenance is the quiet half
  3. The tax layer, as of October 2018
  4. The registered agent question
  5. Who Oregon actually fits
  6. Sources

n Oregon LLC costs $100 to form and $100 a year to keep. The symmetry is unusual; most states charge you more to walk in than to stay, and the few that do the reverse usually have a franchise tax doing the heavy lifting. Oregon does not. What you see on the fee schedule is close to what the state actually collects from small entities, and that shapes who should be forming here.

This guide is for someone organizing an Oregon LLC in October 2018. It will not argue for Oregon against Delaware, because the argument is different in kind: people pick Oregon because they live here, run a business here, or intend to sell to customers here, and then the question is doing it correctly rather than doing it elsewhere.

The mechanics

You file Articles of Organization with the Oregon Secretary of State, Corporation Division. The form is one page. It asks for the LLC's name, its principal place of business, the name and address of the registered agent (who must have a street address in Oregon, not a post-office box), the mailing address for notices, whether the LLC is member-managed or manager-managed, the names and addresses of at least one member or manager, and an organizer signature. You can file online through the Secretary's business registry portal, or by mail on Form 601. The online route is materially faster; mail filings are worked in order of receipt and can sit for a couple of weeks in busy stretches.

The filing fee is $100. Oregon does not sell a menu of expedited tiers the way Delaware does. Online filings are processed within a day or two in normal times, which approximates what you would pay extra for elsewhere. If the name you chose collides with an existing registration, the Division will reject the filing and keep the fee; running a free name search on the registry before you submit is worth the five minutes.

Formation is governed by the Oregon Limited Liability Company Act, ORS Chapter 63. The statute authorizes perpetual duration by default, allows single-member LLCs, permits either member or manager management, and does not require you to file an operating agreement with the state. You should still have one. Oregon courts have been willing to look past informal arrangements when members dispute who agreed to what, and a written agreement is cheaper than the discovery it prevents.

After formation you will want an EIN from the IRS (Form SS-4 online, issued immediately), a state business identification number if you will have employees or collect certain taxes, and a decision about federal tax classification. Single-member Oregon LLCs default to disregarded-entity treatment; multi-member LLCs default to partnership treatment. Either can elect corporate treatment on Form 8832, or S-corporation treatment on Form 2553 if the eligibility rules are met. Most first-year founders leave the default in place and revisit once revenue is predictable.

Maintenance is the quiet half

Every Oregon LLC files an annual report with the Corporation Division on the anniversary of its formation. The fee is $100. That is the number that catches people, because it matches the formation fee exactly, which is rare enough to feel like a typo when you first see it. It is not a typo. Oregon charges the same to admit you and to keep you, and the steady-state cost of an Oregon LLC is therefore $100 every twelve months for as long as it exists.

The annual report itself is thin. You confirm the principal office address, the registered agent, and the list of members or managers. If nothing has changed, the filing is a click. If something has changed (a member leaves, the office moves, the agent resigns), you update it in the same form.

Miss the anniversary and the LLC goes into delinquent status. Oregon will administratively dissolve an LLC that fails to file for a sustained period, typically after roughly forty-five days past due followed by notice. Reinstatement is possible but adds fees and paperwork, and while the entity is dissolved its liability shield is in question for acts taken during the gap. Setting a calendar reminder for thirty days before the anniversary is the single highest-return habit for anyone running an Oregon LLC.

There is no separate state-level franchise tax on LLCs in Oregon. Pass-through income flows to members and is taxed on their Oregon returns. LLCs that have elected C-corporation treatment owe Oregon's corporate income or excise tax, which is a different conversation covered below.

The tax layer, as of October 2018

Oregon's 2018 tax environment is unusually legible for a state its size, because there are only a few levers and they are all visible.

Individual income tax is graduated, with a top marginal rate of 9.9% on taxable income above the top bracket threshold. For a pass-through LLC, that rate is what most of the income will see once a member clears the lower brackets, which happens quickly. Oregon permits a reduced pass-through rate for qualifying non-passive income from pass-through entities with employees (ORS 316.043), but the eligibility rules are specific and should be run with a CPA before you count on them.

Corporate income tax (and the parallel corporate excise tax) runs at 6.6% on the first $250,000 of Oregon taxable income and 7.6% on income above that, following the 2018 changes enacted in HB 3063. There is an Oregon corporate minimum tax keyed to Oregon sales, ranging from $150 at the lowest tier to $100,000 at the top, which applies to C-corporations and to S-corporations that have revoked out. An Oregon LLC taxed as a partnership is not subject to the corporate minimum; one that has elected C-corp treatment is.

Oregon has no general state sales tax, which removes an entire category of compliance for retail and e-commerce sellers based here. That advantage is real and it is specifically Oregon's; Washington and California have broad sales tax regimes, and the cost of collecting and remitting in a multi-state business is not trivial.

The forward tension this fall is the corporate activity conversation. HB 2164, carried over for the 2019 session, would introduce a broader corporate activity tax framework, and the debate through 2018 is whether Oregon will follow Ohio and Washington toward a gross-receipts model to fund education spending. The bill is not law, and nothing in this guide assumes it will pass; if you are forming an entity that will book meaningful Oregon-sourced revenue, it is worth understanding that the tax base being discussed is receipts, not net income, and the mechanics behave very differently.

The registered agent question

An Oregon registered agent must have a physical Oregon street address and be available during business hours to receive service of process. That person can be you, if you live in Oregon and are willing to list your home address in a public database. For most founders the calculus favors a commercial registered agent. The going rate in 2018 runs from roughly $50 a year at the commodity end to $150 or so for a full-service firm that will forward legal mail the same day and remind you about the anniversary report.

The practical reason to use a commercial agent has less to do with privacy than with reliability. A service of process delivered to a home office while the resident is on vacation is a service of process not answered, which becomes a default judgment. Outsourcing that specific failure mode is worth the three-digit expense.

Who Oregon actually fits

Three kinds of entities belong in Oregon in 2018.

The first is any business whose customers and operations are already here. If you sell to Oregonians, employ Oregonians, or operate a physical location in the state, you will need to be qualified in Oregon regardless of where you form. Forming at home removes one annual filing, one registered agent relationship, and one state of law to track, and it does so for the same $100 you would pay a Delaware registered agent in any case.

The second is a small investment or holding vehicle for owners who live here. Oregon's LLC Act under ORS Chapter 63 is conventional and workable, and the state does not punish you for using it. The absence of sales tax and franchise tax means the total friction on a holding entity that does not generate employment or payroll runs close to $100 a year plus a registered agent fee.

The third is a pass-through operating business at a size where the 9.9% individual rate is already in play and state-level incorporation choice does not meaningfully change the tax outcome. At that size the question is where your employees are, where your customers are, and where your real estate is. For a business whose answer to all three is Oregon, forming elsewhere introduces complication for no federal tax benefit; the state tax is paid on the income, not on the entity's state of organization.

Oregon fits less well for a venture-backed startup that expects institutional money, because the investors will want Delaware and you will convert. It fits less well for a pure-play e-commerce operation whose customers are everywhere and whose preferred state of organization is a pricing decision rather than a geographic one. For those, the home state is not the argument.

If you are organizing this quarter and the business is local, Oregon-operated, or held by Oregon residents, file online, pay the $100, calendar the anniversary, and move on to the work. The next decision the state will ask you to make is the annual report twelve months from now, and the thing worth doing well in the meantime is the operating agreement, which nobody will ever ask you to file but everybody will wish you had written when it is needed.

Sources

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