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Advantages of Incorporating a Business in Oregon

What is the most important factor to consider before setting up a start-up company Oregon? The business climate! Yes, the business climate is like an economic ecosystem, which consists of several drivers like business incentives, cost of doing business, availability of skilled work force, and transportation infrastructure and cost. Oregon is a state that offers a good business climate or a strong economic ecosystem that is aimed at supporting growth and expansion of businesses including small businesses and start-ups. The beaver state is not only home to a diverse manufacturing base but its innovation culture is also quite impressive. At 3.3%, Oregon provides businesses with the lowest effective tax rate amongst all states.

Drivers of Business Growth for Start-ups

In order to take advantage of this economic ecosystem, you need to register a new company in Oregon. You can form different types of companies although the most common are Limited Liability Companies and Corporations. Let’s take a look at some of the advantages of these two business entities:

Advantage#1: The benefits of Incorporation or LLC formation

C or S Corporation

  • Oregon Corporation Tax Credits: If you register a new company in Oregon then you will be able to benefit from the variety of tax credits available and these include:
    – Agricultural workforce housing: There is a significant tax credit on loans taken for rehabilitation or construction of agricultural workforce housing in the state.
    – ​Business energy: This type of tax credit is applicable to business facilities that are being used for processing or using renewable energy resources that exceed the regulatory or industry standards by at least 10 percent.
    – Electronic commerce zone investment: This type of tax credit is available for a qualified startup company Oregon that is primarily engaged in e-commerce within an approved enterprise zone.
  • Independent life: When you register a new business in Oregon as an S Corporation, it will enjoy an independent life. This means that the incapacitation or death of a stockholder will not have a negative impact on the business operations.
  • Federal taxation: If you register a new company in Oregon as an S corporation then the corporation or firm will not pay any income tax. Instead, each shareholder or owners in the company will be liable to pay tax on their personal tax returns.

Limited Liability Company

  • Oregon New Markets Tax Credit (NMTC): If you register a new business in Oregon then it can be eligible for several types of tax credits including the highly popular Oregon New Markets Tax Credit (NMTC). The program was earlier known as the “Oregon Low Income Community Jobs Initiative” and its main objective is to promote financial investments by businesses and create new jobs especially in low-income communities. As a part of the program, the tax credits can be realized over a period of seven years. The total tax credit is calculated as 39% of the total qualified investment. The tax credits are available as follows:
    0% in year 1 and 2
    7% in year 3
    8% in years 4, 5, 6 and 7
    NMTC-App-Packet
  • Limited Liability: As an owner of a Oregon LLC, you will be able to enjoy limited liability protection quite similar to what a corporation enjoys.
  • Flexible Profit Distribution: A start-up company in Oregon which is also an LLC has the benefit of being able to select different ways of distribution of profits unlike a partnership where the distribution is 50-50.

Advantage#2: Oregon Business Incentives

Once you register a new company in Oregon, there are several business incentives and programs that your business entity can benefit from. Let’s take a look at some of the most popular programs:

  • Oregon Business Expansion Program (BEP): A start-up company in Oregon as well as individuals can take advantage of the Oregon Business Expansion Program (BEP), which is basically a cash-based incentive program. This program is capitalized using state Lottery Funds. More information
  • Oregon Electronic Commerce Zone: Some of the zones in Oregon’s 70 plus enterprise zones have received a special status directed at encouraging electronic commerce investments. One of the important benefits that a business can derive is “Local Property Tax Abatement”. Tax abatements are valid on newly installed personal property including movable equipment and machinery to be used for the purpose of electronic commerce. E-Commerce Designated Zones
  • Oregon Investment Advantage: As a part of the “Oregon Investment Advantage Program”, a start-up company in Oregon can enjoy a tax holiday of up to 10 years. One of the requirements for qualifying in this program is enhance creation of a minimum of 5 new full-time jobs. More Information

Are there any Disadvantages of Incorporating in Oregon?

What disadvantages could possibly be there for a start-up company in Oregon? In reality there are none except a few that are common to different types of businesses. For example, the processing of incorporation documents can be time consuming and corporations would require more paperwork while LLC formation has the disadvantage of a limited life. These are small disadvantages compared to the many incentives the Beaver State has to offer.

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