LLC stands for limited liability company.3 min read
Checkout this video:
- 1 LLC Basics
- 2 How to Form an LLC in Oregon
- 3 Choose a name for your LLC
- 4 File the Articles of Organization
- 5 Appoint a registered agent
- 6 Create an operating agreement
- 7 Maintaining Your LLC
An LLC, or limited liability company, is a business structure that combines the features of a corporation and a partnership. An LLC is a legal entity that has its own assets and liabilities separate from its owners. LLCs can be formed in any US state and are governed by state law.
What is an LLC?
A limited liability company (LLC) is a business structure allowed by state statute. LLCs are popular because, similar to a corporation, they offer limited liability protection to their owners. Other features of LLCs include pass-through taxation and the ability to choose your business structure.
LLCs were first created in Wyoming in 1977 and are now recognized in all 50 states. You can form an LLC in any state. The process for forming an LLC is usually fairly simple and can be done online or by mail. Fees vary from state to state but are typically around $100.
To form an LLC, you must file articles of organization with the secretary of state in the state where you plan to do business. These articles are also sometimes called a certificate of organization or a charter. Once your LLC is formed, you will need to file annual reports and possibly other paperwork, depending on the rules of your state
The benefits of forming an LLC
An LLC can give you the personal liability protection of a corporation, while allowing you the flexibility and tax benefits of a sole proprietorship or partnership. Other advantages include:
– Pass-through taxation. LLCs are taxed as partnerships, so there is no double taxation as there is with C corporations. This means that profits (or losses) “pass through” the business to the LLC owners and are taxed at the individual level.
– Increased credibility. An LLC can help you build credibility with potential customers and suppliers who view your business as more professional and established than a sole proprietorship or partnership.
– Easier to raise money. If you want to raise money from investors, they’re often more willing to invest in an LLC than in a sole proprietorship or partnership because of the increased personal liability protection an LLC offers them.
– Separation of personal and business assets. By forming an LLC, you can keep your personal and business assets separate. This can help protect your personal assets if your business is ever sued or incurs debts it can’t pay
How to Form an LLC in Oregon
LLCs are a popular choice for small businesses because they offer personal liability protection and tax advantages. If you’re thinking of forming an LLC in Oregon, there are a few things you need to do. This guide will walk you through the process of forming an LLC in Oregon, step by step.
Choose a name for your LLC
Your LLC’s name must comply with Oregon law and follow these naming rules:
The name must contain the phrase “Limited Liability Company” or “L.L.C.”
The name cannot contain words that would confuse it with a government agency
The name cannot imply that the LLC is engaged in an activity that it isn’t actually engaged in
You can reserve a name for your LLC by filing an Application for reservation of limited liability company name form with the Oregon Secretary of State. The form costs $100 and is valid for 120 days.
Once you have a reserved name, you can file your Articles of Incorporation to form your LLC.
File the Articles of Organization
The first step in forming an LLC in Oregon is to file the Articles of Organization with the Oregon Secretary of State. You can do this online, by mail, or in person.
For your convenience, you can find the Articles of Organization form on the Oregon Secretary of State website. However, you will need to have the following information handy before you begin filling out the form:
-The name of your LLC
-The names and addresses of all LLC members
-The address of your LLC’s primary place of business
-The name and address of your LLC’s registered agent
-The date you would like your LLC to begin operating
Once you have gathered all the necessary information, you can fill out and submit the Articles of Organization form. After your form is processed, you will receive a certificate of organization from the Oregon Secretary of State. Keep this document in a safe place; you will need it when filing your annual report and other important paperwork.
Appoint a registered agent
Before you form your LLC, you must appoint a registered agent in Oregon. A registered agent is a person or business that agrees to receive service of process and other legal notices on behalf of your LLC.
You can name yourself as the LLC’s registered agent, but we don’t recommend it. If you travel often or plan to move out of state, it can be difficult to keep track of legal notices. And if you’re serving as the registered agent for more than one LLC, things can get even more complicated.
For these reasons, we recommend hiring a professional registered agent service, such as Incfile. For a small annual fee, we’ll handle all the paperwork for you and make sure you always know when there’s something important for your LLC.
Once you have a registered agent in place, you’re ready to start the LLC formation process in Oregon.
Create an operating agreement
Once you’ve filed your Articles of Organization and paid the $100 filing fee, you’ll need to create an operating agreement. This is an internal document that outlines how your LLC will be run and details the relationships and roles of the members. While Oregon doesn’t require LLCs to have an operating agreement, it’s a good idea to have one in place to prevent future disagreements and help keep your LLC running smoothly.
Your operating agreement should cover the following topics:
– How decisions will be made
– How profits and losses will be allocated
– The rights and responsibilities of each member
– What will happen if a member leaves the LLC
– What will happen if the LLC is dissolved
Maintaining Your LLC
Congratulations on taking the first step in forming your LLC in Oregon! Now that your LLC is formed, it is important to maintain it in good standing with the state. This means keeping up with your annual report, filing your taxes, and staying in good standing with the Oregon Secretary of State.
Comply with annual reporting requirements
An LLC must file an annual report with the Oregon Secretary of State. The report is due on the anniversary of the LLC’s formation, and must be received by the Secretary of State no later than five months after the due date. The report must include:
-The name and address of the LLC
-The name and address of the registered agent
-The LLC’s federal tax identification number
The annual report must be signed by a member or manager of the LLC, and can be filed online, by mail, or in person. There is a filing fee of $100.
If you do not file your annual report on time, your LLC will be automatically dissolved.
Hold annual meetings
Even though Oregon LLCs only have to have one member, we recommend that you hold an annual meeting. This will help you keep good records and maintain your LLC status. You can hold your annual meeting anywhere in the world, as long as all of the LLC members can participate. We recommend using a web-based meeting platform like Zoom or GoToMeeting so that everyone can see and hear each other clearly.
Keep business and personal finances separate
You worked hard to set up your limited liability company (LLC). But to keep your personal assets protected, you need to maintain a clear separation between your business and personal finances.
That means keeping separate bank accounts and credit cards for your business, and not commingling business and personal funds. You should also avoid using your LLC as a personal piggy bank—making personal withdrawals from the business account or using business funds to pay for personal expenses.
Keeping good records will help you stay on top of your LLC’s finances and spot any potential problems early on. Be sure to keep track of all income and expenses related to your LLC, including receipts, invoices, bank statements, and canceled checks. You may want to hire an accountant or bookkeeper to help you stay organized, or use accounting software like Quickbooks or Freshbooks.
It’s also a good idea to put together a budget for your LLC—just as you would for a household or any other type of organization. This will help you keep track of actual versus expected income and expenses, and make adjustments as needed.
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