Oregon Tax ID (EIN) Number & Business Registration
Oregon is celebrating the peak of its current run of economic activity. Back in June, its jobless rate hit a record low, which indicates significant economic growth—and plenty of business opportunities for those looking for them. Its major cities, including Portland, Salem, and Eugene, are all major hubs of entrepreneurial activity with their own business development centers, networking events, and available resources to new business owners.
The entire state of Oregon is welcoming to small businesses, specifically—in fact, more than 99 percent of all businesses in the state are small businesses. Together, they employ 55 percent of Oregon employees, and are responsible for driving the state’s economic growth rate of 3.8 percent. And don’t let those 368,000 small businesses scare you off; there are plenty of economic opportunities for entrepreneurs who want to look for them.
Steps to Obtain your Oregon Tax ID & Business Registration:
- Business Formation in Oregon
- Obtain your Federal Tax ID (EIN) Number
- Oregon State Tax ID Number
- Oregon Local Licenses and Permits
Your first real step to forming a business should be to determine the best structure for your business. These are some of the most common:
- Sole proprietorships and partnerships. Sole proprietorships and partnerships are highly similar, with the core difference being that partnerships involve two or more founding members. These business structures are easy to create and manage, and they have a straightforward way to pay taxes—you’ll simply count all your income as personal income. However, they have a glaring weakness; they don’t provide their owners with any level of liability protection.
- Limited liability companies (LLCs). As the name suggests, LLCs are capable of providing their owners with some degree of liability protection. The business is treated as a separate legal entity, which means the business itself can take on debt and be held legally responsible for things, rather than the individuals who own that business. They’re also pass-through entities, which means business owners will only owe federal taxes on income they take from the LLC—and the LLC tracks income and expenses separately. In Oregon, LLCs aren’t responsible for paying additional taxes unless they’re being taxed as a corporation at the federal level. However, you will need to file an annual report along with a $100 fee.
- Corporations. Corporations are the most complicated business structure, because they have the power to raise funds by issuing public shares. They’re ideal for businesses with grand visions, or a plan to significantly expand. Corporations provide their owners with significant liability shielding, and are treated as pass-through entities much like LLCs. However, corporations are required to pay taxes on any eligible income they make, potentially resulting in a kind of “double taxation” for the owner. In Oregon specifically, corporations and LLCs being taxed as corporations will be required to pay 6.6 percent on the first $10 million of income, and 7.6 percent on all income above that $10 million threshold. A minimum tax is also required, based on your corporation’s total sales.
In some cases, you may be able to change your business structure in the future.
Once you’ve decided on a business structure, most businesses will need to get a federal tax ID, also called an employer identification number (EIN). This nine-digit, unique number will register your business with the federal government and serve as an identifier for your organization. Your business is required to have an EIN if you hire employees, or if it has multiple members (such as a partnership, corporation, or LLC). You’ll also need a federal tax ID if you plan to open a bank account for your organization, if you need to apply for licenses and permits, or if you plan on building business credit.
The fastest way to get a federal tax ID is to apply for one online, using a federal tax ID number obtainment service. You’ll fill out a questionnaire, providing various pieces of information on you and your company, and once the application is processed, you’ll have your federal tax ID emailed to you in under an hour.
Some businesses will also need to apply for a state-level tax ID in Oregon. This number will also serve as a unique identifier for your business, but will register your organization with the state of Oregon, rather than the federal government. You’ll need one if you’re going to owe sales taxes, excise taxes, or food and drink taxes in the state of Oregon. You may also need one if you plan to hire employees in the state of Oregon.
There isn’t a one-size-fits-all license that’s required of Oregon businesses, but many businesses operating in the state are required to have additional licensing and permits. In fact, there are over 1,100 different licenses, certifications, and permits to know about, especially in industries like construction, healthcare, and transportation. You can start your search with Oregon’s Business Xpress License Directory to see if your business will require this paperwork. However, you’ll also need to check in with your local Chamber of Commerce, since many cities and counties have their own rules and requirements for how businesses are registered.
Once you have most of the paperwork and legal requirements out of the way, you can start operating and generating revenue.