How to Form a Professional Corporation in Oregon


Steve Goldstein
Steve Goldstein
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Form a Professional Corporation in Oregon

Are you considering starting a professional corporation in Oregon? Congratulations! Establishing a professional corporation is an excellent choice for entrepreneurs and professionals alike who seek to benefit from a business structure that provides limited liability protection, tax advantages, and enhanced credibility. However, navigating the process of forming a professional corporation in Oregon can be daunting.

This article aims to provide a comprehensive guide on how to form a professional corporation in Oregon, covering everything from understanding the basics of this business entity to the essential steps and requirements you must comply with to launch your new venture successfully. Let’s dive in and explore the ins and outs of forming a professional corporation in Oregon!

What is a Professional Corporation in Oregon?

A professional service corporation (PSC), sometimes called a professional corporation (abbreviated as PC), is a type of organization authorized by state law to allow owners of particularly licensed professions in Oregon. The owner of a professional corporation is responsible for their own negligence or misconduct, but they are not held personally accountable for the actions of other owners. PC or P.C. is a regularly used abbreviation to identify professional corporations.

PCs and LLCs provide personal asset protection; that is, the personal assets are free from business debts. However, they do not have similar tax benefits. There is no secret formula as to which type of business structure is better than the other. It solely depends on the requirements of your business. However, forming an LLC is easier than setting up a PC in Oregon.

LLCBuddy Editorial Team

Unlike other types of corporations, owners of Professional Corporations get two types of citizenship. One is where they incorporated the corporation, and the other is where they conduct the business. This benefit is not available for other types of corporations. You can form a free LLC in Oregon if you hire a professional service that provides LLC formation at $0.

How to Form a Professional Corporation in Oregon

To form a Professional Corporation for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Oregon, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

  • Doctors
  • Architects
  • Engineers
  • Accountants
  • Lawyers and others

You should be qualified to have a license to provide your service. In most cases, once you have graduated with your studies, passed the exam, and got your license, you may now form a professional corporation. However, if you work in an industry that doesn’t offer a license or professional certification, you should consider forming a corporation or limited liability company.

Step 2: Name your Professional Corporation in Oregon

After you have decided on the idea to form a professional corporation in Oregon, deciding the name for your corporation is significant. There is a complete guide on Oregon LLC name guidelines for you to have a proper business name. Here are some regulations you must follow while naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • No confusion with a government entity name.
  • A unique name is needed with no match
  • Limit of restricted words that need a license.

In Oregon, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 120 days. To keep the name, you must file a name reservation application with Oregon Secretary of State.

A professional corporation, professional association, service corporation, or professional service corporation must be present in the name if it doesn’t already. You might opt to register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for a DBA (doing business as). In this manner, you can choose any name you desire to run a clinic or law firm.

Step 3: Choose the Oregon Registered Agent

The next step in forming a professional corporation is hiring the Oregon Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Oregon. Forming a professional corporation for your service will be easier if you have Registered Agent in Oregon.

Alternatively, you can serve as your own Oregon Registered Agent if you have the time. However, you must stay compliant to avoid missing any important documents from Oregon.

Step 4: File the Articles of Incorporation in Oregon

After you hire a Oregon Registered Agent to form a professional corporation, the next step is to file the Oregon Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information should be written. You should also include the names of all co-owners. All owners have to prove they have the proper license to practice the specific profession they intend to.

Filing the Articles of Incorporation in Oregon may be done with two methods, online and by mail. The Articles of Incorporation fee may vary from different states. However, in Oregon, it costs $100 for online and by mail filing. Create an account/Log in to the SOS site, get the online form, fill it, and submit online. For offline filing, Send the form by mail to Secretary of State, Corporation Division, 255 Capitol St. NE, Suite 151, Salem, OR 97310.

Step 5: Write an Operating Agreement in Oregon

An operating agreement is a document that contains all of your company’s organizational details. It is not required to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The Oregon operating agreement includes information like-

  1. About Business
  2. Members and management
  3. Capital contribution
  4. Profit Distribution
  5. Change of membership
  6. Dissolution

Step 6: Designate the PC Board of Directors in Oregon

The next step is to appoint the initial board of directors in your PC in Oregon. All the initial directors must submit their details to the owner. The owner must keep the records and submit them in accordance with the Oregon SOS. When writing the By-laws, as a shareholder and owner, you must make sure there is a point mentioned about appointing a new director later.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

In creating corporate bylaws, you should include the following on how the decisions will be made.

  • The responsibilities are given to each officer.
  • How will judgments in business be made?
  • Where and when are the annual shareholder meetings?
  • The minimum number of shareholders required for decision-making.
  • Location and timing of dividend payments.

Step 8: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 9: Request an EIN in Oregon

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Oregon can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in a number of ways. It will give your professional corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 10: Open a Bank Account and Prepare for Taxes

Once you have filed and received your Employer Identification Number, you should open a bank account since you will use this account for yourself, your clients, and your employees.

Your business dealings in Oregon might be simpler by having a US business bank account because it boosts your company’s legitimacy and liquidity. For firms other than sole proprietorships, most banks demand an EIN to create a business bank account. Also, keeping separate finances helps you avoid combining personal and professional finances. Also, having an EIN makes tax preparation easier. With a professional corporation, you can anticipate paying employment and corporate taxes.

Step 11: Get a Business License in Oregon

Before your professional corporation operates in Oregon, you need to have a business license first. A business license is a formal document issued by the state government agency that allows you to operate your business in the geographic region that that agency governs. In Oregon, business license and permit costs depend on the business’s nature and type. You must check with the local authorities if any special licenses or city-based permits are needed.

Step 12: File Your Taxes in Oregon

Finally, you are down to the last step. After getting a business license and being ready to operate, do not forget to file your taxes first. You should start paying taxes quarterly as soon as possible to avoid a large tax bill. Each state has different tax requirements. Go through the Oregon classification of taxes for the taxes an LLC in Oregon has to pay.

Important Information

Maintaining Professional and Business License in Oregon

Now that you have established your professional corporation, you must maintain or renew your professional license every now and then. Even if your business is established but you don’t have a valid license to operate, your business is irrelevant. And, even if your professional license is still valid for a year or two, but your business license is already expired, it is still irrelevant.

Make time to check the status of your licenses at least once per year. Then, you can keep from missing anything significant. If there are any issues, you can address them.

Filing an Annual Report in Oregon

In Oregon, you will be required to submit a report each year. The owners’ and Registered Agent’s names and contact details are listed in the annual report. Also, it should include all of your yearly financial activity. You must submit one yearly in Oregon, and you can do it yourself or hire someone else to handle it. Everything must be precise and up to date.

Advantages of Forming a Professional Corporation in Oregon

A professional corporation takes a lot of time to process and pursue. However, with the help of the Oregon Registered Agent, everything will become easier. In fact, there are advantages that will help you form a professional corporation in Oregon.

  1. Limited Liability: The biggest advantage of setting up a professional corporation is that the owners are not held personally responsible for the debts and obligations of the company. This indicates that only the company’s assets will be confiscated to settle claims and creditors if the business is sued or declares bankruptcy. Additionally, this protection exempts corporate owners from being held accountable for other owners’ reckless or criminally negligent acts.
  1. Tax Deductions: Similar company expenses, such as employee fringe benefits, startup and operating costs, and equipment purchases, can be written off by professional companies in the same ways they can be for other kinds of firms. However, there are several tax deductions professional corporations can take advantage of that other types of businesses can’t. For example, the salaries and bonuses paid to owners and employees are tax-deductible.
  1. Retained Earnings: Professional corporations can keep a portion of their profits under the corporate tax system to grow their companies.

FAQs

What is a Professional Corporation in Oregon?
A professional corporation in Oregon is a type of business entity that is formed to allow licensed professionals, such as attorneys, physicians, dentists, and other professionals, to provide services to clients as a corporation rather than as an individual.
What are the benefits of forming a Professional Corporation in Oregon?
There are several benefits to forming a professional corporation in Oregon, such as limited personal liability for the owners, ability to raise capital, and potential tax savings.
What documents are required to form a Professional Corporation in Oregon?
To form a professional corporation in Oregon, you must file Articles of Incorporation with the Oregon Secretary of State, file a Statement of Information, and obtain an Employer Identification Number (EIN) from the IRS.
How much does it cost to form a Professional Corporation in Oregon?
The filing fee for Articles of Incorporation in Oregon is $100. You may also need to pay a fee for a Statement of Information and an EIN.
What is the process for forming a Professional Corporation in Oregon?
The process for forming a professional corporation in Oregon involves filing the Articles of Incorporation with the Oregon Secretary of State, filing a Statement of Information, obtaining an EIN, and registering with the Oregon Department of Revenue.
How long does it take to form a Professional Corporation in Oregon?
It typically takes 3-5 business days to form a professional corporation in Oregon.
What happens after I form a Professional Corporation in Oregon?
After you form a professional corporation in Oregon, you will need to obtain any necessary licenses or permits, open a business bank account, and register with the Oregon Department of Revenue.
Do I need to appoint officers for my Professional Corporation in Oregon?
Yes, you must appoint officers for your professional corporation in Oregon. The officers will typically be the owners or directors of the corporation.
Do I need to publish a notice when I form a Professional Corporation in Oregon?
No, you do not need to publish a notice when you form a professional corporation in Oregon.
Do I need to have an Operating Agreement for my Professional Corporation in Oregon?
Yes, you must have an Operating Agreement for your professional corporation in Oregon. An Operating Agreement outlines the rights and responsibilities of the owners and directors of the corporation.
Do I need to register with the Oregon Department of Revenue when I form a Professional Corporation in Oregon?
Yes, you must register with the Oregon Department of Revenue when you form a professional corporation in Oregon. You must also register with the Oregon Department of Revenue to pay taxes.
Do I need to file a Statement of Information when I form a Professional Corporation in Oregon?
Yes, you must file a Statement of Information when you form a professional corporation in Oregon. The Statement of Information provides information about the owners and directors of the corporation.
Do I need a business license to form a Professional Corporation in Oregon?
Yes, you may need to obtain a business license when you form a professional corporation in Oregon. The requirements for a business license vary by city and county.
What are the taxes associated with a Professional Corporation in Oregon?
Professional corporations in Oregon are subject to income taxes, franchise taxes, and other taxes. You must register with the Oregon Department of Revenue to pay taxes.
What are the requirements for Professional Corporation in Oregon?
The requirements for professional corporations in Oregon include filing Articles of Incorporation with the Oregon Secretary of State, filing a Statement of Information, obtaining an EIN, registering with the Oregon Department of Revenue, and obtaining any necessary licenses or permits.
Are Professional Corporations in Oregon subject to double taxation?
No, professional corporations in Oregon are not subject to double taxation. The profits of the corporation are taxed once, at the corporate level.
Are there any restrictions on who can own a Professional Corporation in Oregon?
Yes, there are restrictions on who can own a professional corporation in Oregon. The owners must be professional individuals who are licensed to practice their profession in Oregon.
What is the process for dissolving a Professional Corporation in Oregon?
The process for dissolving a professional corporation in Oregon involves filing Articles of Dissolution with the Oregon Secretary of State, giving notice to creditors, paying off any debts or liabilities, and filing a final tax return.
How long does it take to dissolve a Professional Corporation in Oregon?
It typically takes 3-5 business days to dissolve a professional corporation in Oregon.
Are there any restrictions on how I can use the profits of a Professional Corporation in Oregon?
Yes, there are restrictions on how you can use the profits of a professional corporation in Oregon. The profits must be used for lawful business purposes.
Are there any reporting requirements for Professional Corporations in Oregon?
Yes, professional corporations in Oregon are required to file an annual report with the Oregon Secretary of State.
What happens if I do not file an annual report for my Professional Corporation in Oregon?
If you do not file an annual report for your professional corporation in Oregon, it may be revoked by the Oregon Secretary of State.
Can I change the structure of my Professional Corporation in Oregon?
Yes, you can change the structure of your professional corporation in Oregon. You must file the appropriate documents with the Oregon Secretary of State to make the changes.
Can I merge my Professional Corporation in Oregon with another business entity?
Yes, you can merge your professional corporation in Oregon with another business entity. You must file the appropriate documents with the Oregon Secretary of State and obtain any necessary approvals.
Can I convert my Professional Corporation in Oregon to another business entity?
Yes, you can convert your professional corporation in Oregon to another business entity. You must file the appropriate documents with the Oregon Secretary of State and obtain any necessary approvals.
Can I move my Professional Corporation in Oregon to another state?
Yes, you can move your professional corporation in Oregon to another state. You must file the appropriate documents with the Oregon Secretary of State and with the state where you are moving the corporation.
What are the advantages of forming a professional corporation in Oregon?
Forming a professional corporation in Oregon offers several advantages, including limited liability, tax savings, and a more professional business image.
What is the filing process for a professional corporation in Oregon?
To form a professional corporation in Oregon, you must first file Articles of Incorporation with the Oregon Secretary of State. Additionally, you must obtain the appropriate professional license from the State of Oregon and register for any necessary business taxes.
What is the cost to form a professional corporation in Oregon?
The cost to form a professional corporation in Oregon will vary depending on the type of business. Generally, the filing fee for Articles of Incorporation is $100 and professional licensing fees can range from $50 to $200.
How long does it take to form a professional corporation in Oregon?
Generally, it takes 7-10 business days to form a professional corporation in Oregon.
What is the minimum amount of time required to form a professional corporation in Oregon?
To form a professional corporation in Oregon, the minimum amount of time required is 7-10 business days.
Are there any special requirements for forming a professional corporation in Oregon?
Yes, in order to form a professional corporation in Oregon, all shareholders must be licensed in the profession for which the corporation is registered. Additionally, the corporation must have a minimum of two shareholders, and the shareholders must be either individuals or a professional business organization.
What information is required to form a professional corporation in Oregon?
To form a professional corporation in Oregon, you will need to provide the name of the corporation, the address of the principal office, the name and address of the registered agent, the type of professional services provided, the name and address of each incorporator, and the name and address of each shareholder.

Also Read

Why Oregon Professional Corporation is So Important

One of the main reasons why forming a professional corporation is so important in Oregon is the liability protection it provides. Operating as a corporation allows professionals to separate their personal and professional assets, shielding their personal wealth from any liabilities that may arise from their professional activities. This limited liability protection is especially important for licensed professionals who may face potential malpractice lawsuits or other claims that could put their personal assets at risk. By creating a professional corporation, professionals can safeguard their personal finances and protect themselves from catastrophic financial losses.

In addition to liability protection, forming a professional corporation in Oregon also offers tax advantages. Professional corporations are taxed at a lower rate than individuals, which can result in significant tax savings for professionals. Additionally, professionals can take advantage of various tax deductions and benefits that are unique to professional corporations, further reducing their tax burden and increasing their overall profitability.

Another compelling reason why professional corporations are essential in Oregon is the opportunity for business growth and expansion. By operating as a corporation, professionals can easily raise capital, attract investors, and take their practice to new heights. Professional corporations can issue stock, enter into partnerships, and engage in various business activities that are not available to individual professionals. This flexibility and scalability allow professionals to grow their practice, expand their services, and reach new markets, ultimately maximizing their business potential and achieving long-term success.

Furthermore, forming a professional corporation demonstrates professionalism and credibility to clients, colleagues, and partners. When clients see that you have taken the time and effort to establish a professional corporation, they are more likely to trust and respect your practice. This trust and credibility can go a long way in building strong client relationships, attracting new business, and maintaining a positive reputation in your industry.

Overall, the advantages of forming a professional corporation in Oregon are numerous and significant. From liability protection and tax savings to business growth and credibility, professional corporations offer licensed professionals a wealth of benefits that are essential for achieving success and longevity in today’s competitive business environment. If you are a licensed professional in Oregon, forming a professional corporation should be a top priority as you work towards building a thriving and sustainable practice.

Conclusion

In forming a professional corporation in Oregon, having someone to help you build it is not necessary but suggestible. Even though it is easy because of the listed benefits and advantages above, forming your group of professional individuals will make it somehow successful. Just make sure to be guided by the steps and ensure that every one of the details and records is accurate and precise. And if you have any questions, share them in the comment section below.

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