Registering a business in Oregon

Businesses are required to register with the Oregon Secretary of State. Some businesses may be required to register with the Oregon Department of Revenue. You can find more information on registering your business here.  

S-Corporation Income Tax

Oregon recognizes the federal S-election, and Oregon s corporations are not required to pay tax to the state. However, individual S corporation shareholders will owe tax on their share of the corporation’s income.

S corporations are required to pay the $150 minimum franchise tax.

LLC/Partnership Income Tax

LLCs and partnerships are not required to pay income tax to Oregon. Instead, income from the business is distributed to individual LLC members or partners, who then pay Oregon income tax on that amount with their personal return. 

LLCs and partnerships are required to pay the $150 minimum franchise tax.

Composite Tax

Pass through entities with distributive income attributable to Oregon sources must file a composite return on behalf of electing owners. Composite tax filers will want to use the individual income tax rates below to figure estimated payments. 

Individual Income Tax

Individual Income is taxed at different rates depending  upon filing status and income.Tax rates are as follows. 

Due Dates 

Partnership returns are due on March 15th. S corporation returns are due on the 15th day of the month following the due date after your federal return is due. 

Individual income and composite returns are due on the 15th day of the fourth month following the close of the tax year. 

Estimated Payments

S corporations that expect to owe more than $500 in tax will be required to make quarterly estimated payments. Individuals who can expect to owe more than $1,000 will be required to make quarterly estimated payments. 

Estimated payment vouchers can be found at the link here

Filing an Extension

Pass through entities  and individuals will be granted a 6 month extension if one has been granted federally. If a federal extension is not necessary, taxpayers can use a payment voucher and check the extension payment box to request an extension. 

Penalties

Failure to file a timely return may result in a 20% penalty on the tax due for s corporations and individuals. Partnerships may be assessed a $50/ month penalty up to 5 months. 

Additional Information

Some cities and counties in Oregon may assess an income tax on businesses separate from any state taxes. As a key example, Multnomah County, which includes the City of Portland, assesses the Multnomah County Business Income Tax (MCBIT). The MCBIT applies to every entity doing business in the county that has gross income of $50,000 or more; the rate is 1.45% of net business income, with a minimum tax of $100.

If your business was formed or is located in another state, but generates income in Oregon, it may be subject to Oregon taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.

Oregon Secretary of State: 

https://sos.oregon.gov/Pages/index.aspx

Oregon Department of Revenue: 

https://www.oregon.gov/DOR/Pages/index.aspx

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