Oregon LLC Taxes

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Oregon LLC Taxes

Quick Start Guide
This Quick Start Guide is a brief overview of how to form an LLC in Oregon.

Detailed Lessons:

 

Oregon LLC Costs:
Oregon state fee: $100
Annual Report: $100

Need to save time?
Hire a professional to form your LLC in Oregon:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)

(check out Northwest vs LegalZoom)

Note: Our tax lesson is not as step-by-step as our Oregon LLC formation lessons, due to the uniqueness and variation among businesses formed in Oregon.

Taxes are not as straightforward as forming an LLC, and therefore, the information below is an overview, and not a comprehensive guide.

Recommendation:
We recommend speaking with a few accountants in Oregon to make sure you meet all your state and local tax obligations.

We recommend reading our How to Find an Accountant guide and then using Thumbtack and Yelp.

Overview

Federal Income Tax

Most Oregon LLCs do not pay taxes directly to the federal government. Instead, the members of the LLC are responsible for reporting income or losses on their personal 1040 tax return with the IRS.

LLC income is most often reported on a Schedule C, however, you may need to include additional Schedules, depending on how you derive your income.

By “most LLCs”, we are specifically referring to LLCs taxed in their default status. Unless you elect to have your LLC taxed as a Corporation (C-Corp or S-Corp), single-member LLCs are taxed like a Sole Proprietorship and multi-member LLCs are taxed like a Partnership.

Alternatively, an LLC can be taxed as a C-Corp, or more popularly, an LLC can be taxed as an S-Corp (in order to save money on self-employment taxes).

If an LLC is taxed as a C-Corp, it must file federally, using Form 1120. If an LLC is taxed as an S-Corp, it must file federally, using Form 1120S.

LLC taxed as an S-Corp:
Typically, most accountants recommend that your Oregon LLC’s net income (income minus expenses, but not including salaries) be around $70,000 per year (per Member), plus or minus. At this net income level, the accounting and administrative costs of maintaining the S-Corp tax election for the LLC are offset by the self-employment tax savings.

Oregon State Income Tax

If you are a resident of Oregon, you’ll need to report your LLC’s income/losses on your state income return. This will be done on your OR-40, OR-40P, or OR-40N form.

Again, make sure you speak with your accountant about how to prepare, file, and pay your state income tax.

Here are additional resources:
http://www.oregon.gov/DOR/programs/individuals/Pages/file-requirements.aspx
http://www.oregon.gov/DOR/programs/individuals/Pages/rates-tables.aspx

Other Taxes in Oregon

Oregon imposes the following taxes:

• Amusement Device tax
• Combined Payroll tax
• Corporate Income and Excise tax
• Emergency Communications (E911) tax
• Estate tax
• Fiduciary tax
• Hazardous Substance fee
• Lane Self-employment tax
• Lane Transit Payroll tax
• Marijuana tax
• OAA (Other Agency Accounts) tax
• Oregon Drivers License Reinstatement Program Partnership
• Petroleum Load Fee
• Senior and Disabled Deferral
• State Lodging tax
• Timber taxes
• Tobacco Consumer Products and Cigarette Consumer tax
• TriMet Self-employment tax
• TriMet Transit Payroll tax
• Withholding tax (assessment or deficiency)

No Sales or Use Tax

Oregon does not have a general sales tax or a use/transaction tax.

If you are purchasing good or products outside of Oregon and need to present the seller (or the state) with a Resale/Reseller Certificate, you can use this form provided by the Oregon Department of Revenue: http://www.oregon.gov/DOR/forms/FormsPubs/or-business-registry-resale-cert_800-002.pdf

This form can be used to exempt the transaction from the state’s sales, use, or transaction tax.

Some states may not accept this form though and they may require your LLC to complete one of their own state forms.

Oregon Tax Resources

Oregon Department of Revenue:
http://www.oregon.gov/DOR/contact/Pages/default.aspx
http://www.oregon.gov/DOR/revenue-online/Pages/default.aspx
http://www.oregon.gov/DOR/FAQ/Pages/default.aspx

Oregon Business Taxes Guide:
http://www.oregon.gov/DOR/programs/businesses/Pages/default.aspx

Oregon Business Xpress Taxes Guide:
http://www.oregon.gov/business/Pages/taxes.aspx

Local Taxes for Oregon LLCs

If your business is located in Oregon, you likely need to file and pay state and local taxes, including your city, township, or county.

Again, this depends on where your LLC is located and what type of business you are in. We recommend seeking professional assistance.

Our Recommendation

Calculating your tax obligations federally (with the IRS), on the state-level (with Oregon), and locally (with your city, county, or township), can be complicated and if done improperly can negatively impact your LLC.

We recommend that you get help from a local accountant once your Oregon LLC is formed. We recommend reading our How to Find an Accountant guide and then using Thumbtack or Yelp to find a local professional.

Hiring a tax professional will not only help you keep your Oregon LLC in compliance, but it will also give you an advisor to go to for other business questions.

You’ll want someone who’s a good fit for your company, makes you feel comfortable, and is willing to answer all of your questions. It should be someone you like personally as well as professionally. We recommend talking with at least 2-3 accountants before making your final decision.

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

2 Comments

  1. Jas August 2, 2018

    Hi Matt,
    I am planning to open a single-member LLC in Oregon but I am a WA resident and WA has no state income tax so I don’t need to file any state tax return. On the state level, will the pass-through income taxation follow where I reside or where the LLC is formed? Or both?

    reply
    • Matt Horwitz August 15, 2018

      Hi Jas, we don’t get into the details of taxation, so you’ll need to run this by an accountant. However, you’ll likely pay state taxes in your residence state and you may need to file a “zeroed out” state-level return in Oregon apportioning your income to Washington state. Please double-check on this though with a tax professional. Hope that helps and thank you for your understanding.

      reply

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