How to start a business from zero

start a business development company and how to start a business 10 steps
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Corporation Division Secretary of State FilingInOregon.com OREGON START A BUSINESS GUIDE COMPREHENSIVE NEW BUSINESS CHECKLIST STEP 1 – PREPARATION Knowledge You should have experience in and knowledge of the business you plan to enter. If you don’t have either, consider working in the industry or with a successful owner/operator for at least six months. Experience Having prior experience in management of people and finances is critical to increasing your chances of business success. This is extremely helpful since the majority of businesses fail due to poor or inexperienced management. Oregon’s Small Business Development Centers are an excellent resource for training and assistance to help your business succeed. See “Small Business Development Centers” in this guide for more information. Research Do your homework. Hours spent studying your proposed business idea can save you money in the long run and give you the proper information to make sound business decisions. Oregon’s Small Business Development Centers (SBDC) provide services to Oregon’s small businesses. Find the SBDC in your area at bizcenter.org.  Visit the Oregon Business Xpress one-stop business portal at Business.Oregon.gov.  Check with the Small Business Administration at sba.gov.  Consult with a counselor at score.org.  Consult with a counselor at the Women’s Business Center at mercycorpsnw.org.  Consult with the Small Business Legal Clinic (SBLC) at Lewis & Clark Law School. They provide affordable legal services to low-income small and emerging businesses, including business financing, contract review and drafting, and entity selection and formation.  University of Oregon’s School of Law, Small Business Clinic (SBC) provides free legal services to small and start-up business. It also prepares law students to represent business clients through a clinical program in which students are trained in representing small businesses. All client work is performed by law students who are closely overseen by UO law SBC supervising attorneys, who are also practicing business lawyers. Contact the SBC at bizlaw.uoregon.edu/sbc.  Your banker knows a great deal about your area, including average income, level of competition, real estate, and rental values. Bankers can be of great assistance, if you take the initiative. Establishing a credit line with your bank can help develop a sound relationship with your banker, and a good record of payment is an advantage when applying for business loans.  Contact insurance brokers about coverage needed for your business activity and for approximate premiums. Since insurance is a competitive business, contact several agents for a comparison of both suggested coverage and premiums.  Visit your local library. The librarian can help you find the information you need.  Check with relevant trade associations and the local Chamber of Commerce. 8 8 OREGON START A BUSINESS GUIDE STEP 2 – PLANNING Business Wizard The Business Wizard is an online service offered by the Secretary of State. You answer a few brief questions to generate a customized referral list of:  Government Licensing Contacts.  Registration Information Contacts.  Regulatory Contacts.  Organizational Contacts.  City Contacts.  County Contacts. This referral list contains phone numbers for key agency contacts and internet links to appropriate forms, publications and information about requirements for doing business in Oregon. Write a Business Plan Whether you are just starting out or already own a small business, completing a basic business plan will help you succeed. Do you need help writing a business plan? The Small Business Administration (SBA) offers a step-by-step tool to “Build Your Business Plan.” Answering a few essential questions will help you clarify and organize what you already know – or need to know – about your business operations. A clear picture of the fundamentals of your business will create a strong foundation to build new ideas, markets, and strategies. Completing a business plan provides you with a better understanding of the financial needs and profit potential of your business. Seek Professional Advice Consult at least two professionals:  An attorney – Consider having an attorney examine the papers you sign. Get advice on any legal questions pertinent to your business such as tax law, liability issues, and labor laws if you plan to hire employees, or landlord-tenant laws if you plan to lease your place of business. If you do not have an attorney, you may call the Oregon State Bar toll-free at 1-800-452-7636, or visit online for referrals.  An accountant – A certified public accountant or a licensed tax consultant can advise you and possibly save you money on taxes if you are buying or starting a business. Your accountant can review tax forms with you, help you fill out the proper reports and give you prompt financial information. If you do not have an accountant, you may call the Oregon Association of Independent Accountants at 503-282-7247, or visit oaia.net, or contact the Oregon Society of Certified Public Accountants at 503-641-7200, or visit orcpa.org for referrals. Financing Identify how you will finance your business. New businesses often underestimate the amount of money it takes to get a business started. An entrepreneur needs to identify both the start-up capital costs and the cash-flow requirements for a business. The total of the two, plus a reserve, is the capital recommended for starting a business. For more information on state loan programs and other tools to raise capital, check the financing sections of Business Xpress or Business Oregon. Business Assistance Programs The business assistance programs listed in this guide are divided into three broad categories: management and technical services, financial resources, and marketing and international trade assistance. However, some of the 9 9 OREGON START A BUSINESS GUIDE programs provide assistance in more than one area. Note: This is not a complete list of resources available in Oregon; this list is intended to give you some initial contacts for assistance in these areas. MANAGEMENT & TECHNICAL SERVICES Business Xpress provides information and assistance to help you grow your business. Business Oregon provides reports and services for and about Oregon businesses. Small Business Development Center (SBDC) Network The Oregon Small Business Development Center Network provides a variety of services to the business community. Services include business counseling, training, and referrals, and are aimed at both new and ongoing businesses. Small Business Development Centers (SBDCs) – located throughout the state - have classes that provide basic background information for individuals starting a business. SBDCs also offer publications and other resources that can be helpful. Additional assistance is available in the areas of international trade and technology transfer. For more information on the services offered, call the SBDC Network Office or the SBDC in your area. There is an SBDC at each of Oregon’s community colleges and at two other state educational institutions. Oregon SBDC Network Office 1445 Willamette St. Suite 5 Eugene, OR 97401 541-463-5250 541-345-6006 (fax) bizcenter.org Albany Gresham Milwaukie Roseburg Bend Klamath Falls North Bend Salem Clackamas La Grande Ontario Seaside Eugene Lincoln City Pendleton The Dalles Grants Pass Medford Portland Tillamook SCORE “Counselor to America’s Small Business” If you want individual counseling, contact the closest SCORE Chapter address listed below. When calling by telephone, please ask for “SCORE Counseling.” SCORE Chapter 11 SCORE Chapter 566 SCORE, Central Oregon 601 SW Second Avenue, 950 Clark College Chapter 701 Portland, OR 97204-3192 SCORE, TBG 232 PO Box 6416 (503) 326-3441 1933 Fort Vancouver Way Bend, OR 97708 (503) 326-2808 Fax Vancouver, WA 98663 (541) 316-0662 scorepdxwa-net.com (360) 699-1079 officecentraloregonscore.org portlandor.score.org infoscorevancouver.org centraloregon.score.org ftvancouver.score.org SCORE Chapter 460 SCORE Chapter 416 Electronic Counseling can be done P.O. Box 4024 c/o Chamber of Commerce via score.org Salem, OR 97302-1024 1401 Willamette Street (503) 370-2896 Eugene, OR 97401 score460gmail.com (541) 465-6600 salem.score.org (541) 484-4942 Fax scoreeugenechamber.com willamette.score.org 10 10 OREGON START A BUSINESS GUIDE Oregon Business Development Department The Oregon Business Development Department (doing business as ‘Business Oregon’) works to retain and create jobs in the state. In partnership with the private sector, the state’s business development agency provides direct services such as access to capital, lean manufacturing consulting, assistance with international markets, business recruitment, and more. The department offers information and a directory of primarily public sector sources to help customers with business plans and ideas about where to start looking for help. Those interested in doing business in Oregon should investigate private sources of assistance as well. Business Oregon 775 Summer Street NE, Ste. 200 Salem, OR 97301-1280 503-986-0123 1-800-735-2900 (TTY) oregon4biz.com Contact Business Oregon’s Development Officers http://www.oregon4biz.com/directory.php?d=1 Clatsop, Columbia, Tillamook counties.......................................................................................... 503-791-2732 Clackamas, Hood River, Multnomah, Wasco, Washington counties .......................................... 503-229-5115 Baker, Grant, Malheur, Morrow, Umatilla, Union, Wallowa counties ....................................... 541-508-3147 Marion, Polk, Yamhill counties ....................................................................................................... 503-837-1808 Crook, Deschutes, Jefferson, Gilliam, Sherman, Wheeler counties ............................................. 541-318-7923 Clackamas, Multnomah, Washington counties ............................................................................. 503-580-2680 Benton, Lane, Lincoln, Linn counties ............................................................................................. 541-346-8620 Harney, Jackson, Josephine, Klamath, Lake counties ................................................................. 541-219-2825 Coos, Curry, Douglas counties ........................................................................................................ 541-267-4651 Business Recruitment ............................................................................................. 503-894-0160; 503-551-0997 Business Finance .............................................................................................................................. 503-986-0172 International Trade .......................................................................................................................... 503-229-5221 Telecommunications ......................................................................................................................... 503-508-0178 Emerging Business Assistance Programs There are a number of organizations that offer assistance to small businesses with special emphasis on minority, women, and service disabled veteran-owned businesses. They provide resources for technical assistance and promote targeted economic opportunities for these businesses around the state. Oregon Association of Minority Entrepreneurs (OAME) The Oregon Association of Minority Entrepreneurs (OAME) is a non-profit organization that maintains a database of business opportunities, which are matched with its membership. The association has several loan programs available to members. They maintain a business incubator and conference rooms for meetings or events. For more information, contact OAME, 731 N. Hayden Meadows Drive, Portland, OR 97217, 503-249-7744, or visit oame.org. 11 11 OREGON START A BUSINESS GUIDE Certification Office for Business Inclusion and Diversity (COBID) The Certification Office for Business Inclusion and Diversity administers the Disadvantaged Business Enterprise, Minority and Women Business Enterprise, Service Disabled Veteran, and Emerging Small Business Certification programs. As the sole certification authority in Oregon, COBID provides “one-stop” certification services. These certification programs create a level playing field as they provide businesses the opportunity to bid on goal-oriented public projects, encouraging diversity and inclusion. COBID, a unit within Business Oregon, is located at 775 Summer Street NE, Ste. 200, Salem, OR 97301-1280, 503-986-0069, or visit oregon4biz.com. ONABEN – A Native American Business Network ONABEN, (Our Native American Business Network), founded in 1991, is a national non-profit organization that serves entrepreneurs and tribes throughout the Pacific Northwest. Since inception, ONABEN has been accomplishing its mission as a developer, facilitator, and content provider for a network of Tribally-sponsored Small Business Development Centers and projects. Its growth over the years mirrors the growth of entrepreneurship throughout Indian Country. ONABEN can be found online at http://www.onaben.org/. Oregon Main Street Oregon Main Street works with communities to develop comprehensive, incremental revitalization strategies based on a community’s unique assets, character, and heritage. Services are based on the successful Main Street Approach® developed by the National Trust for Historic Preservation and include training and technical assistance. The goal is to build high quality, livable, and sustainable communities that will grow Oregon’s economy while maintaining a sense of place. The Oregon Main Street Program is located in the Oregon Heritage Office, Oregon Parks & Recreation Department, 725 Summer St. NE, Suite C, Salem, OR 97301; phone 503-986-0670. Telecommunication Assistance Business Oregon provides technical and training assistance, consulting, planning and financial assistance to rural and distressed communities to improve access to advanced services, route diversity, and increased bandwidth. For more information, contact 503-508-0178, or visit oregon4biz.com. Small Business Legal Clinic (SBLC) The Small Business Legal Clinic (SBLC), located at Lewis & Clark Law School, provides business transactional legal services to low-income small and emerging businesses, primarily those owned by women, minorities, or recent emigrants. As part of Lewis & Clark Law School, the SBLC provides valuable hands-on training to future business attorneys, while providing a service to those who need it most. Clients placed in the SBLC Intern Program work with upper-division law students who are closely supervised by a clinical law professor. For more information, visit online. Mercy Corps Northwest Mercy Corps Northwest provides small business support and training, as well as individual development accounts (IDAs) for qualified entrepreneurs. The Women’s Business Center (WBC) at Mercy Corps Northwest works to assist motivated low-income women to improve their lives through starting or expanding a small business. The WBC provides funding, matched savings and other services that help clients increase their economic self-sufficiency through self-employment. Mercy Corps Northwest programs serve women, men, minorities and veterans. Self Employment Assistance (SEA) The Self Employment Assistance (SEA) program allows qualified unemployment insurance claimants to start or expand a business while receiving unemployment benefits. Approved participants then work full-time on their self- employment venture instead of looking for work. The income earned from your approved SEA business while on SEA will not reduce your weekly benefit amount. SEA is a program for unemployment claimants who are likely to exhaust their unemployment benefits before they can find work in their regular occupation. When you apply for SEA, your business idea is evaluated, and you must continue to seek work until you are approved for the program in writing. Please go to workinginoregon.org or contact the Training Programs Unit at the Oregon Employment Department at 1- 800-436-6191. 12 12 OREGON START A BUSINESS GUIDE Office of Small Business Assistance The Office of Small Business Assistance serves as an independent voice for small businesses within state government. The Office’s Small Business Advocate helps entrepreneurs by investigating and helping to resolve business complaints about state agencies. Get Help If you feel your business has been unfairly or unreasonably treated by a state agency and you’ve tried to resolve the issue without success, request help online, via email, or call the Office of Small Business Assistance toll-free at 1-844- 469-5512. Office of the National Ombudsman The National Ombudsman’s mission is to assist small businesses when they experience excessive or unfair federal regulatory enforcement actions, such as repetitive audits or investigations, excessive fines, penalties, threats, retaliation, or other unfair enforcement action by a federal agency. Learn more about the Office of the National Ombudsman or file a complaint online. Office of the National Ombudsman rd 409 3 Street, SW, Suite 7125 Washington, DC 20416 Toll-free 888-734-3247 TTY 800-877-8339 FINANCIAL RESOURCES Federal, state, and local governments provide some financial assistance to small businesses in the form of loan programs. These loan programs generally do not provide funds for more than 30-50 percent of a business proposal and the loan applicants must demonstrate that they have sufficient capital, in addition to the loan, to fund the business. Loan applicants should demonstrate repayment ability, sufficient management expertise, and commitment to operate the business successfully. Many Oregon cities and counties have economic development programs, which include financial assistance. A business should contact the city and county in which they are located, or are interested in locating, for details of their programs. The following is a list of some financial resources available to small businesses. Contact your local Small Business Development Center or local economic development agencies for additional information on financial assistance in your area. Local Revolving Loan Funds There are many revolving loan funds for small business financing administered by local governments and development groups. In most cases, funding has been provided by the Department of Housing and Urban Development through the State of Oregon or by the federal Economic Development Administration. For additional information, contact the U.S. Economic Development Administration at 503-326-3078. Oregon Contacts for Revolving Loan Funds Portland Development Commission CD Business Development Corporation 1900 SW Fourth Ave Suite 100 744 SE Rose Street Portland, OR 97201 Roseburg, OR 97470 503-823-3201 541-672-6728 Cascades West Financial Services, Inc. Southern Oregon Regional Economic Development Inc. 100 High St. SE, Ste. M-210 332 West Sixth St. Salem, OR 97301 Medford, OR 97501 503-990-6860 541-773-8946 13 13 OREGON START A BUSINESS GUIDE Mid-Columbia Economic Development District Central Oregon Intergovernmental Council 515 East Second Street 334 NE Hawthorne Avenue The Dalles, OR 97058 Bend OR 97701 541-296-2266 phone 541-548-8163 Oregon Cascades West Council of Governments NE Oregon Economic Development District 101 NE First St Suite 100 1400 Queen Ave SE Ste 201 Enterprise, OR 97828 Albany, OR 97322 541-426-3598 541-967-8720 1-800-645-9454 SBA Loan and Loan Guarantee Programs The U.S. Small Business Administration (SBA) is a federal agency created by Congress to help small businesses. The SBA offers small firms financial assistance through guaranteed loan programs. To obtain information on the loan programs, contact the U.S. Small Business Administration, 601 SW Second Ave, Suite 950, Portland, Oregon 97204- 3192, call 503-326-2682, or visit SBA online. The SBA also sponsors programs, which provide business counseling and assistance with business development, international trade, and obtaining government contracts. In addition, the SBA furnishes assistance for women and minorities in business. Business Development Assistance Business Oregon focuses on creating opportunities for Oregon companies. These opportunities pave the way for businesses to expand production, enter new global markets, and compete and win in the global economy. Whether through its own programs and expertise, or by matching clients with specialized partners, Business Oregon’s job is to support Oregon business. Business Oregon has business development officers located across the state to work closely with businesses and local officials. Business Oregon helps businesses access capital, find industrial property, export to global markets, and identify available business incentives. Staff have a wealth of experience to do all this and help identify what programs or assistance are best suited to help grow Oregon’s industries. For more information, call 503- 986-0123 or visit oregon4biz.com. Small Business Assistance Business Oregon works with entrepreneurs and small businesses in Oregon to increase their potential for success. The department coordinates with venture funds, entrepreneurial organizations, and service providers by helping them to access different sources of equity capital. It facilitates improved communications and linkages among various providers of services, including small business development centers, government contracts, marketing, minority business, and other small business organizations. For information, call 503-986-0123, or visit oregon4biz.com. Access to Markets Business Oregon’s global trade strategists and overseas representatives can open the door for Oregon companies to market their goods and services internationally. Oregon businesses require a wide variety of tools and resources to remain profitable in an increasingly competitive technologically complex global economy. Business Oregon’s global strategies experts help Oregon companies’ access international markets by providing one-on-one business counseling, market research, market entry strategies, and grants to help companies appear at international trade shows. For more information, visit oregon4biz.com. Other export-related resources include:  U.S. Government contracts: 541-736-1088  Oregon state government contact: 503-378-4642 Getting started in international trade: 503-274-7482   Exports of agricultural products: 503-872-6600 14 14 OREGON START A BUSINESS GUIDE Access to Capital Business Oregon has a team of professionals to assist businesses with their financing needs by packaging loan programs or by matching a partner service provider with a business. For more information call 503-986-0172 or visit oregon4biz.com. Fixed asset and working capital loans are available through regional and local economic development organizations, the Small Business Administration, and state agencies. For more information, please call:  Small Business Administration loan guarantees: 503-326-2682. Oregon SBDCs offer assistance access to capital throughout the state. Visit http://bizcenter.org/240-capital-access- team Oregon’s Intrastate Offering Exemption, aka “Community Public Offering” (CPO) Most Oregon small businesses may raise up to 250,000 in capital per year through the intrastate sale of securities to Oregon residents. Oregon residents may invest up to 2,500 in any company with an active CPO per year. The securities are offered through Hatch Oregon and Chroma.Fund. For more information about using a CPO to raise capital for your business, check online. You can find a current list of business filings online, as well. MARKETING & INTERNATIONAL TRADE Business Oregon Business Oregon’s global trade strategists and overseas representatives can open the door for Oregon companies to market their goods and services internationally. Oregon businesses require a wide variety of tools and resources to remain profitable in an increasingly competitive and technologically complex global economy. Our global strategies experts help Oregon companies’ access international markets by providing one-on-one business counseling, market research, market entry strategies, and grants to help companies appear at international trade shows. For more information, visit oregon4biz.com. Government Contract Assistance Program The Government Contract Assistance Program (GCAP) is Oregon’s Procurement Technical Assistance Center (PTAC), helping businesses successfully compete for federal, state and local government contracting. GCAP provides 1) free counseling on every aspect of government contracting, 2) training workshops and conferences, and 3) a computer matching service that automatically matches a business with related federal, state, and local bidding opportunities and emails the leads on a daily basis. For example, if an Oregon business manufactures a product or provides a service, the GCAP bid-matching service emails the small business every time a solicitation matches their profile from any federal, state, local, or international government agency. GCAP offers the bid match service free for a 60-day trial, then, after the trial, it charges an annual subscription fee. GCAP provides training for your business on many topics, including registrations and certification, market assessment, solicitations, bids, and proposals, and the potential of getting your business on a GSA schedule. For more information. contact GCAP, 1144 Gateway Loop, Suite 203, Springfield, OR 97477; visit the website at gcap.org; or call 541-736- 1088 or 1-800-497-7551. OSBDCN Global Trade Center Oregon SBDC's offer assistance in international trade and export resources through the OSBCN Global Trade Center at the Portland Community College SBDC. Visit http://bizcenter.org/go-global/how-can-we-help Agricultural Products Marketing The Oregon Department of Agriculture works to promote, develop, and expand domestic and international markets for Oregon’s agricultural products. The staff works with producers, cooperatives, and processors; organizes overseas trade missions, and hosts incoming foreign business delegates. For more information, contact them at: 15 15 OREGON START A BUSINESS GUIDE Oregon Department of Agriculture Agricultural Development and Marketing Division 1207 NW Naito Parkway, Suite 104 Portland, OR 97209-2832 503-872-6600; Fax: 503-872-6601 Agmarketoda.state.or.us. The Oregon Department of Agriculture also produces the Oregon Agripedia, which combines the information of the Oregon Agricultural Statistics Bulletin, the Oregon Farmer’s Handbook, and the Oregon Agricultural Resource Directory into one handy reference for Oregon agriculture facts, laws, and resources. Visit online to view the Oregon Agripedia. Portland Export Assistance Center The Portland Export Assistance Center helps companies in Oregon and SW Washington who want to increase their export sales and expand into the global marketplace. The Export Center is a quick access point for all federal export assistance programs and offers business counseling in the following areas: information on markets abroad, international contacts, product promotion and export financing, and SBA export loan guarantees. U.S. Department of Commerce, Commercial Service offers  Research and counseling on identifying appropriate international markets.  Identifying potential international agents and distributors.  Participating in international trade exhibitions.  Qualifying international business partners.  Developing international documentation.  E-Commerce Services. Export Assistance Center, Portland One World Trade Center 121 SW Salmon Street, Ste. 242 Portland, OR 97204 (503) 326-3001 U.S. Small Business Administration offers  Research and counseling on identifying methods, strategies and programs.  SBA loan application information to finance export sales of small business exporters.  Loan packaging services for SBA’s Export Working Capital Program applications.  Information on export credit insurance programs and brokers’ contact list. Oregon District Office 620 SW Main Street Suite 313 Portland, OR Phone: 503-326-2682 Fax: 503-326-2808 16 16 OREGON START A BUSINESS GUIDE STEP 3 – SELECT YOUR BUSINESS ORGANIZATION STRUCTURE & NAME Consider many factors when choosing the best form or structure of business ownership. The choice you make can have an impact on multiple aspects of your business and personal life, including taxes and liability. Consult legal counsel and an accountant before deciding the type of business entity to form. How To Choose A Business Structure While there are many different business organization structures you may choose for your business, this guide will focus primarily on the five most common types used in Oregon: Sole Proprietor, General Partnership, Limited Liability Company, Business Corporation, and Nonprofit Corporation. Ownership, liability, management control, and taxation are just a few of the primary considerations when selecting a business organization structure. Each type has its own advantages and disadvantages. If you have questions on which structure is best for your particular situation, please consider consulting:  An attorney.  A certified public accountant.  One of Oregon’s Small Business Development Centers.  If business is in a regulated industry, contact the appropriate State licensing or regulatory agency. Benefit Companies An Oregon Business Corporation, Professional Corporation or Limited Liability Company can also elect to become a Benefit Company. An Oregon Benefit Company is a type of corporation or limited liability company (LLC) that wants to consider its impact to society and the environment, in addition to profit, in the business’s decision-making process. Benefit companies differ from traditional corporations and LLC’s in regard to their purpose, accountability, and transparency. The purpose is to create a general public benefit, which is defined as “a material positive impact on society and the environment, taken as a whole, from the business and operations of the company.” An Oregon Business Corporation, Professional Corporation, or Limited Liability Company that would like to be a benefit company must:  Include a statement (usually in the optional provisions) in the Articles of Incorporation or Organization that says, “The Corporation (or Limited Liability Company) is a benefit company subject to ORS 60.750 – ORS 60.770.”  Adopt a third-party standard to assess performance against, and  Annually prepare a benefit report identifying the actions and methods used to provide a general or specific public benefit, any circumstances that hindered or prevented a benefit, and assess how well the benefit company met or exceeded the third party standard. For more information on becoming an Oregon Benefit Company, please visit http://sos.oregon.gov/business/Pages/benefit-company.aspx. 17 17 OREGON START A BUSINESS GUIDE Business Organization Structure Types SOLE GENERAL LIMITED BUSINESS NONPROFIT PROPRIETOR PARTNERSHIP LIABILITY CORPORATION CORPORATION COMPANY Not required, except Not required, Yes, File Articles Yes, File Articles Yes, File Articles REGISTRATION for Assumed except for of Organization & of Incorporation & of Incorporation & 1 REQUIRED Business Name Assumed Business annual reports annual reports annual reports Name GOVERNING A business plan is Partnership Operating Bylaws Bylaws 2 DOCUMENT recommended agreement agreement One owner Two or more One or more One or more No owners. partners (owners) members (owners) shareholders Assets must be (owners) given to another OWNERSHIP nonprofit upon dissolution Unlimited personal Unlimited personal Members (owners) Shareholder Operators are not liability for debts of liability for debts have limited liability limited to personally liable 3 the business and of the business liability for debts loss of their paid- for debts of the LIABILITY yourself including your of the LLC in investment business partners actions Owner makes Partner control and Member managed, Shareholders elect May have members decisions decision making or owners may directors to who may elect responsibility set appoint a manager oversee policies directors; Must MANAGEMENT out in partnership per the Articles of and appoint have directors to 4 CONTROL agreement Organization officers oversee policies and appoint officers Owner reports and Each partner Choose to be taxed Corporation pays Nonprofit pays pays taxes on reports and pays as a partnership or taxes on income; taxes on income, 5 TAXATION personal tax return share of taxes, on a corporation for shareholders pay unless tax exempt personal tax returns income taxes on dividends Choose a Business Name What Names Are “Available”? Your selected business name must be available for registration purposes, meaning no other business with exactly the same name has an active registration on the Corporation Division’s database. There may be businesses with that name that have let the registration lapse or expire. There may be businesses in other Oregon counties, states, or countries that do business under that name. There may even be businesses in Oregon that are operating under that name, but have not yet registered. The Corporation Division’s records do not include every business that may be using a name. If the name is not already taken by an active registration on the database, it is available for you to register in the public record. That said, just because a name is “available” does not mean that registering the name is advisable. See the section on “Protecting and Defending Your Name” for more information. 1 Assumed business name registration required when owner’s “real and true” name is not part of the business name (Note: corporation and limited liability company name is the “real and true” name). 2 Governing documents are internal to the business, they are not filed with the Corporation Division. 3 Limited liability protection may be forfeited by the courts in cases of fraud or misconduct. 4 Charities (public benefit nonprofit corporations) must have at least three directors. 5 Additional business, payroll and property taxes may also apply 18 18 OREGON START A BUSINESS GUIDE The law requires the Secretary of State to accept names that are “distinguishable upon the record.” A business name is “distinguishable” if it does not exactly copy a name already on record. A word, the order of key words, addition of numbers, creative spelling, or even a letter’s difference in a name is often enough to tell it apart from another name in the database and make it distinguishable. In addition, an assumed business name is filed according to county, so there may be identical names in the database but associated with different counties. You can check a name for availability prior to submitting an application. A name availability check does not guarantee the name will still be available by the time the Corporation Division processes the application. What Are “Real and True” Names? A “real and true” name means the first name, middle name or initial, and last name of each business owner. For corporations, limited liability companies, and other business entities, the business name registered with the Corporation Division is the real and true name of the business. Assumed Business Names A business name must be registered with the Corporation Division as an assumed business name if the “real and true” name of each person who is carrying on the business is not disclosed in the business name. Each person’s “real and true” name must include first name, middle name or initial, and last name. Nicknames are not ‘real and true’ names and must be registered as assumed business names. If there are words that suggest additional owners, such as “company” or “associates”, the business name must be registered. Registration of a business name that includes the “real and true” names of all owners is optional. A corporation, limited liability company, limited liability partnership, or limited partnership does not need to register its name as an assumed business name, unless the entity wants to use the name without the entity type designation. If a person transacts business with an unregistered assumed business name, he or she may not have standing in court to pursue or defend legal actions, and may find it difficult to do business, for example, getting licenses, opening bank accounts, and entering into contracts. Since an assumed business name is registered by county, there may be identical names in the database but associated with different counties. Examples of Assumed Business Names Real and True Name Doing Business As Don’t Need to Register ABN Need to Register ABN Tom Sorenson Construction Tom Sorenson Construction, Inc. Tom Sorenson Construction, Inc. Tom Sorenson Homes TSC Homes Jane Jones Enterprises Jane’s Enterprises Jane Jean Jones Jane Jean Jones Enterprises Jones Enterprises Jane J. Jones Enterprises Jane J. Jones & Company Jane Jones & Associates Michael Jones & John Smith Michael L. Jones & John Jay Smith Mike Jones & John Smith Michael Leonard Jones Michael Leonard Jones & John J Smith M. Jones & J. Jay Smith John Jay Smith Michael L Jones & John J Smith M. Jones & J. Smith Michael L. Jones & John J. Smith Jones & Smith Enterprises M & J Enterprises 19 19 OREGON START A BUSINESS GUIDE  Sole Proprietor - If the name of the business does not include the “real and true” name of the business owner, registration of an assumed business name is required. See the previous section on assumed business names for more information.  General Partnership - If the name of the business does not include the “real and true” name of each business owner, registration of an assumed business name is required. See the previous section on assumed business names for more information.  Limited Liability Company - The name of the limited liability company must contain the words “limited liability company” or the abbreviation “L.L.C.” or “LLC” as the entity type designation at the end of the name.  Corporation - The name of the corporation must contain the words “incorporated,” “corporation,” “limited,” “company,” or their abbreviation as the entity type designation at the end of the name. Note: The corporation or limited liability company name registered with the Corporation Division is the “real and true” name of the business, so additional registration as an assumed business name is not required, unless the entity wants to use the name without the entity type designation, or wants to use a nickname. Protecting and Defending Your Business Name Registering your name does not give you the right to use it. The law requires business owners to register a public record of assumed business names and entities such as corporations, but the authority to use the name comes only through asserting those rights through use and legal action. Registering your name does not mean you can legally use it. For example, you might be able to register “Starbucks Coffee and Tea” with the Corporation Division, but the real Starbucks could still sue you. In addition, someone may register a business name that is similar to yours, but not exactly the same. That does not suggest they have a right to use that name, it just means they have told the public they want to do business using that name. Your right to your business name is mainly established by using the name in business, and is enforced by private legal action – not by the State of Oregon. This may mean you will need to sue in court to stop the offender. If you find yourself in this situation, it is very important to get the advice of an attorney. Consider what the loss of business and reputation will cost you if you do not get proper advice. If you weigh the time and expense it will take to straighten out mix-ups with the other business against a visit or two to a lawyer, you will have a better idea of just how valuable a consultation might be. To find a business attorney, check the Oregon Bar Association’s free referral service at 1-800-452-7636, or ask other business owners whom they recommend. When you are ready to select a business name or an assumed business name for your business, check the Business Registry database for name availability. Sole proprietors may conduct business under their own full legal name (first name, middle name or initial, and last name) or they may choose to register an assumed business name. See “Business Name Requirements” in this guide for more information. It may also be helpful to do a national trademark search at uspto.gov (click on the Search Mark button). You can view more information on trademarks in the back of this guide. 20 20 OREGON START A BUSINESS GUIDE STEP 4 – REGISTER YOUR BUSINESS The Oregon Secretary of State, Corporation Division is the place to register your Business Corporation, Nonprofit Corporation, Limited Liability Company, Limited Liability Partnership, and Assumed Business Name. Most business types can be filed online through the Oregon Business Registry. Forms are also available online. BUSINESS REGISTRATION & RENEWAL Register Online For the fastest and most convenient way to register a business in Oregon, register online. Renew Online For the fastest and most convenient way to renew a business in Oregon, renew online. Express Delivery Documents delivered to the Corporation Division at the address below, by express delivery companies such as FedEx or UPS, are processed within one business day. US Mail Please allow one to two weeks for processing documents submitted by mail (including US Postal Service overnight mail and Express Mail). Forms to register are also available online. Submit the completed form and the non-refundable processing fee, payable to the Corporation Division, to the following address: Corporation Division Public Service Building 255 Capitol Street NE, Ste. 151 Salem, OR 97310-1327 Sole Proprietor Registration A sole proprietor does not have to register with the Corporation Division, unless an assumed business name is used. See assumed business name registration below for more information. General Partnership Registration A general partnership does not have to register with the Corporation Division, unless an assumed business name is used. See assumed business name registration below for more information. Assumed Business Name Registration To register an assumed business name, submit an assumed business name application and a non-refundable processing fee of 50 to the Corporation Division. The name must be registered in at least one Oregon county, but you can register for all Oregon counties for no additional charge. If the name is distinguishable and the application completed according to Oregon law, the Corporation Division processes the document and returns an acknowledgment to the customer. Register Online Fastest way to file Forms for mailing Limited Liability Company Registration To form a domestic limited liability company in Oregon, submit articles of organization and a non-refundable processing fee of 100 to the Corporation Division. If the name is distinguishable and the articles completed according to Oregon law, the Corporation Division processes the document and returns an acknowledgment to the customer. Register Online Fastest way to file Forms for mailing 21 21 OREGON START A BUSINESS GUIDE Business Corporation Registration To form a domestic business corporation in Oregon, submit articles of incorporation and a non-refundable processing fee of 100 to the Corporation Division. If the name is distinguishable and the articles completed according to Oregon law, the Corporation Division processes the document and returns an acknowledgment to the customer. Register Online Fastest way to file Forms for mailing Nonprofit Corporation Registration To form a domestic nonprofit corporation in Oregon, submit articles of incorporation and a non-refundable processing fee of 50 to the Corporation Division. If the name is distinguishable and the articles completed according to Oregon law, the Corporation Division processes the document and returns an acknowledgment to the customer. Register Online Fastest way to file Forms for mailing Foreign Business Entity Registration Business entities formed under Oregon law are called domestic business entities, while those formed under the laws of another state or country are called foreign business entities. When a foreign entity is “doing business” in Oregon, it must apply for authority to transact business by submitting: 1) an application of authority to transact business, 2) a certificate of existence or similar document, or registry number from the state or country where formed (date of certificate must be within 60 days of the date of application), and 3) a nonrefundable processing fee of 275 payable to the Corporation Division. If the name is distinguishable and the application completed according to Oregon law, the Corporation Division processes the document and returns an acknowledgment to the customer. Register Online (Foreign Business Corporations and Foreign Limited Liability Companies only) Forms for mailing 22 22 OREGON START A BUSINESS GUIDE STEP 5 – UNDERSTANDING TAX OBLIGATIONS Understanding your tax obligations is an important consideration for any business. You may wish to consult with a professional tax advisor or an accountant to help you understand your tax obligations. Learn about requirements to report personal property (the physical capital owned by your business) to your county assessor’s office. See the section below on Business Personal Property Tax. You will also want to check on other taxes that may apply to your business. Most businesses will need to apply to the Internal Revenue Service for a federal employer identification number (EIN). See the Income Tax section in this guide for more information on federal and state income taxes. If you plan to hire employees right away, you may also need a Business Identification Number (BIN), which is your state payroll tax identification number. Obtain this payroll tax reporting number online through the Oregon Business Registry or by completing a Combined Employer’s Registration form available from the Oregon Department of Revenue or the Oregon Employment Department. Please refer to the separate publication Employer’s Guide for Doing Business in Oregon for more information. All businesses are required to file a personal property report with the county assessor’s office each year. The report should include all personal property on the business premises on the assessment date. If your business has personal property in more than one county, you must submit a separate return in each county. See “Personal Property Tax Report” in this guide for more information. As a self-employed individual, you may be subject to federal self-employment taxes if you are a sole proprietor or a partnership. This includes Medicare and social security taxes. You may wish to consult a professional tax advisor to determine your personal tax responsibility as a business owner. Apply for Tax Identification Number (SS-4) To obtain a Federal Tax Identification Number, you can file online or complete an SS-4 Form. SS-4 Forms are available at all IRS offices or the IRS will send you a form, if you call 1-800-829-3676. Be sure you include a daytime phone number on the application, in case additional information is required. Online: A provisional number will be assigned immediately when the form is submitted online. A confirmation letter will be mailed two to three weeks after the form is processed confirming your EIN number. Phone: 1-800-829-4933 You will need a completed SS-4 in hand Fax: You can fax the completed Form SS-4 (PDF) application to your state fax number (see Where to File – Business forms and filing Addresses), after ensuring Form SS-4 contains all of the required information. If it is determined the entity needs a new EIN, one will be assigned using the appropriate procedures for the entity type. If the taxpayer’s fax number is provided, a fax will be sent back with the EIN within four (4) business days. Mail: Internal Revenue Service Attn: EIN Operation Cincinnati, OH 45999 Fax-TIN (859) 669-5760 You will receive your EIN by mail in four to five weeks. 23 23 OREGON START A BUSINESS GUIDE Sales Tax Information Oregon does not have a state sales tax. The Department of Revenue has created a website for questions about sales tax information that includes a self-authenticating “Resale Certificate” that business owners can fill out to use for buying wholesale or for exemption of sales taxes on goods purchased in another state. Income Tax Information Federal and State Income Taxes All businesses must fulfill their tax obligations to the federal government and the state of Oregon. When you start a business, it is important to determine what kind of tax obligations you will have and when you will be required to pay your taxes. This section identifies the federal and state tax forms filed by different types of business entities to meet their income tax obligations. However, for specific requirements and responsibilities, contact the Internal Revenue Service and the Oregon Department of Revenue. For information on federal taxes, contact: For information on Oregon taxes, contact: Internal Revenue Service Oregon Department of Revenue 1220 SW Third Avenue 955 Center Street NE Portland, OR 97204 Salem, OR 97301-2555 1-800-829-4933 in Oregon 503-378-4988 irs.gov 1-800-356-4222 oregon.gov/DOR Income Tax for Sole Proprietors Sole proprietors must file Form 1040 with a Schedule C or Schedule C-EZ to meet their federal income tax obligations. A sole proprietor is liable for self-employment tax and Social Security tax, which is filed on Schedule SE if net profit is 400 or more. To meet state obligations, a sole proprietor files state Form 40 with an attached copy of the federal Form 1040. A sole proprietor may be required to make estimated tax payments. A non-resident sole proprietor files state Form 40N with an attached copy of the federal Form 1040. Income Tax for Partnerships Federal tax law requires that a partnership (both general and limited) file Form 1065, and each partner receives a Schedule K-1 explaining how to place income, expenses, credits, etc., on their personal Form 1040 tax return. To meet state tax obligations, a partnership files Form 65 with an attached copy of the federal filing. Individual partners file Form 1040 for federal income taxes and may be liable for self-employment taxes and Social Security taxes filed on Schedule SE if net income from the partnership is 400 or more. For state income taxes, the individual partners file state Form 40 with an attached copy of the federal Form 1040. Partners may be required to make estimated tax payments. Non-resident partners should contact the Department of Revenue for instructions specific to their need. Income Tax for Limited Liability Companies Generally, a limited liability company (LLC) files the same tax forms as a partnership: federal Form 1065 and state Form 65 with an attached copy of the federal filing. Write “LLC” on top of the state Form 65. Individual members file Form 1040 for federal income taxes and may be liable for self-employment taxes and Social Security taxes filed on Schedule SE, if net profit is 400 or more. For state income taxes, the individual members file state Form 40 with an attached copy of the Federal Form 1040. Members may be required to make estimated tax payments. 24 24 OREGON START A BUSINESS GUIDE Income & Excise Tax for Oregon Corporations Corporations file federal taxes using Forms 1120 or 1120A. Corporations doing business in Oregon pay excise tax and file state Form 20 with an attached copy of their federal tax forms. “Doing business” is defined as being engaged in any profit-seeking activity in this state that is not protected by federal Public Law 86-272. A taxpayer with one or more of the following in Oregon is clearly doing business here:  A stock of goods.  An office.  A place of business (other than an office) where affairs of the corporation are regularly conducted.  Employees or representatives providing services to customers as the primary business activity, such as accounting or personal service, or services incidental to the sale of tangible or intangible personal property, such as installation of a product or warranty work.  An economic presence through which the taxpayer regularly takes advantage of Oregon’s economy to produce income. Generally, if you have an Oregon address, you file Form 20. There is a minimum excise tax as provided in ORS 317.090. Corporations not doing business, but having income from an Oregon source, pay income tax and file Form 20-I with a copy of their federal tax forms. There is no minimum income tax. Income is from an Oregon source if it is derived from:  Tangible or intangible property located in Oregon; or  Any activity carried on in Oregon, whether intrastate, interstate or foreign commerce. Insurance companies, other than title insurers, file Oregon Form 20-INS. Title Insurers file Oregon Form 20. For information on state tax credits for corporations, contact the Oregon Department of Revenue online or by phone 503-378-4988. Income & Excise Tax for S Corporations An S corporation files its federal tax return on Form 1120S. Shareholders receive a Schedule K-1 explaining how to place income, expenses, credit on their personal return Form 1040. The state tax return is filed on Form 20-S with a copy of Federal Form 1120S attached. Shareholders of the S corporation should obtain information on their reporting requirements from the IRS and the Oregon Department of Revenue. Estimated Income Tax Payments (Individual) A sole proprietor, partner, limited liability company member, or shareholder may be required to make quarterly estimated income tax payments. In most cases, if you expect to owe at least 1,000 in federal taxes for the year after subtracting any withholding and tax credits, you must file Form 1040-ES each quarter with the IRS. Or, taxes can be paid using the free Electronic Federal Tax Payment System (EFTPS). Generally, if you expect to owe 1,000 or more on the tax-to-pay line on your Oregon tax return, you are required to file Form 40-ESV each quarter with the Oregon Department of Revenue. Interest is assessed if payments are not made when they are due. Contact the IRS and the Oregon Department of Revenue for specific information. Estimated Income Tax Payments (Corporations) A corporation that expects to owe tax of 500 or more at the federal level is required to make estimated tax payments to the IRS. A corporation that expects to owe tax of 500 or more at the state level must pay estimated tax payments to the Oregon Department of Revenue. A taxpayer can make estimated tax payments by Electronic Federal Tax Payment System (EFTPS). If a corporation is required to use EFTPS to pay its federal estimated tax, it must also use EFT to pay its Oregon estimated tax. A corporation may pay Oregon estimated tax with Form 20-V, if it is not required to pay by EFT. Interest is assessed if the correct installment of the tax due is not paid by the due date. More information about paying corporation estimated income and excise taxes by EFT is available online, or call the EFT message line at 503-947-2017. 25 25 OREGON START A BUSINESS GUIDE Personal Property Tax Report Personal Property All businesses are required to file a personal property report with the county assessor’s office each year. The report should include all personal property on the business premises on the assessment date. If your business has personal property in more than one county, you must submit a separate return in each county. The personal property tax form can be found online. The form itself contains more information on what property is and is not subject to tax and how to file, or you can find information online at http://www.oregon.gov/DOR/forms/FormsPubs/form-or-cppr_553-004_2017.pdf Examples of taxable personal property include machinery, furniture and equipment, tools of the trade, non- inventory supplies, leased equipment, and libraries (such as repair manuals, sample books and law books). Any property not currently used in the business or expensed on your federal income tax business return is considered taxable personal property and must be reported. Property placed in storage is also taxable and must be reported. Before You Buy - If you are purchasing used personal property from another business, you should check to see if there is any tax owing on the property before purchasing it. Complete due diligence before you buy used business personal property or risk ending up with a previous owner’s tax debt. Due Diligence: 3 Steps in 3 Days Complete within 3 days of purchase to protect your interests: 1. Ask the seller for a signed and dated disclosure statement printed on company letterhead. It should contain the following information. (If the seller doesn’t have this information, they should say so in the disclosure.) a. Whether there is tax debt and/or liens associated with the personal property; b. The name of any Oregon county in which the personal property has been assessed, other than the county where purchase is taking place. c. The name and address of any other person who has owned or had possession or control of the property; and d. The fact that ORS 311.641, regarding due diligence to achieve bona fide purchaser status, may apply to the transaction. 2. Contact the tax clerk in the Oregon county where the purchase is taking place. Ask if there are tax liens against the property you want to purchase. If multiple counties are listed in the seller’s disclosure statement, contact the tax clerk in all listed counties. 3. Search the Oregon Secretary of State’s UCC system with the name of the previous owner(s). Print the results of your search. Keep the results of your three-step due diligence process. If you find tax debt associated with the property, you can 1) opt not to purchase; 2) ask the seller to clear the debt/lien prior to purchase; or 3) discuss alternative payment arrangements with the county, such as a compromise payment to settle the lien. Learn More You can contact your tax professional, county tax assessor or the Secretary of State’s Office of Small Business Assistance with questions. County tax assessors and the Office of Small Business Assistance cannot provide legal or financial advice. 26 26