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Oregon is a great place to start a small business. Due to the state’s laws and certification programs, small businesses have a significant advantage in the market, especially when it comes to government contracting. The simplest business setup is the sole proprietorship. If you are self-employed or you want to start a one-person business in Oregon, this article will guide you through the registration process.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
What is a sole proprietorship?
A sole proprietorship is the easiest way of starting your own business in Oregon and it comes with many advantages. It is somewhat similar to, but also quite different from having a single-member LLC. Unlike a single-member LLC, a sole proprietorship provides you with more flexibility between your professional and personal assets. Of course, this also means that you will be personally liable for your business’s legal obligations. In case your business gets sued, your personal assets can be seized by creditors.
How to register a sole proprietorship in Oregon
Oregon sole proprietorship registration is a quite easy and straightforward. You may not even have to go through a business registration process or pay any fees, depending on what industry your business operates in. However, you will still need to take care of some crucial things before you can start.
Choose a name or “Assumed name”
The first thing you will need to do when you want to register sole proprietorship Oregon is to choose a name for your business. Even though the State of Oregon allows sole proprietors to use their given name as the name of their business, it is usually better to choose a different one to indicate your professional trade. If you decide to use your legal name as the name of your business, you won’t need to officially register your business name. However, if you opt to do business under a different name, you’ll need to ensure it’s available. To confirm the name you chose is available, check the Oregon Business Name Database.
Keep in mind that if you’re a sole proprietor in Oregon running a business with an Assumed name, you are required by the state to file it with the Secretary of State Business Registry.
Obtaining a business licence
Depending on what falls under the domain of your business you might need to get a sole proprietor Oregon business license, once you register the name of your company. Even though the State of Oregon doesn’t require you to get a general business license, specific occupations or activities will require a special license, certificate, or permission. In case you’re not sure whether your business needs a license, you can check at the official Oregon license directory.
Taxing for sole proprietors in Oregon
Since a sole proprietorship isn’t financially separated from the owner in Oregon, you won’t need to file a separate tax form or refund. Namely, you should file your sole proprietorship Oregon taxes along with your personal ones. As a one-person business, any profits and losses you might have, are directly tied to your own finances, and therefore, taxes. Keeping this in mind, you can get a Tax ID number for your business, if you want to, or open a separate bank account. However, you may use your own Social Security Number as well. Finally, you will have to report any payment of $600 or more in a single tax year when hiring independent contractors with a Form 1099-NEC (Nonemployee Compensation).
This goes the other way around; if you are getting more than $600 from a client, you will need a 1099-NEC for for yourself.
Note: Nonemployee compensation used to be reported with a Form 1099-MISC until 2020, when the IRS reintroduced Form 1099-NEC.
When it comes to working as a sole proprietor, you may be eligible for tax deductions. Expenses such as home office, phone or car, and even health insurance and travel is deductible as well.
Business liability insurance policy
A sole proprietorship in Oregon isn’t required by law to get insurance, but you may want to consider getting one anyway. Business liability insurance is a way for you to keep prepared for any eventuality regarding your services.
It covers your business from property damage and bodily injury to slander lawsuits that could be filed by your clients. Getting a professional liability insurance is a good option if your business provides a service. However, if your business deals with products, you will need to get a different kind of insurance.