Starting a Professional Corporation in Oregon 2024: Ultimate Guide

How to Start a Professional Corporation in Oregon

Licensed professional? Level up your business with Oregon professional corporation! Enjoy unique benefits like Oregon LLC, such as limited liability, tax perks, and a polished image. Our step-by-step guide unravels the essentials for smooth compliance and the right fit. LLCBase has your back with expert guidance, so make an informed decision and triumph in Oregon with your professional corporation today!

This guide will review the requirements for starting a professional corporation in Oregon, explore the advantages and disadvantages of this business structure, and help you determine if it is the right fit for your business goals.

What is a Professional Corporation

A Professional Corporation (P.C.) is a unique type of corporation designed for licensed professionals, such as doctors, dentists, lawyers, architects, and accountants. Forming a P.C. allows licensed professionals to offer their services through a corporate structure, providing them with the benefits of a traditional corporation, such as limited liability protection and tax advantages. Forming a professional corporation in Oregon is a popular choice due to the thriving professional landscape and business-friendly environment. When starting a professional corporation, choose a reliable formation service in Oregon.

The primary purpose of Oregon Professional Corporation is to protect its owners from personal liability for the corporation’s actions. The shareholders’ personal assets are protected if the professional corporation faces legal issues. Moreover, Oregon professional corporations can offer certain tax benefits, such as deducting employee benefits and operating expenses. These advantages make forming a professional corporation an attractive option for many professionals in Oregon.

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Who Can File Under Professional Corporation Laws

Under Oregon Professional Corporation laws, only certain licensed professionals are eligible to form a professional corporation. The specific professions allowed to form a P.C. may vary slightly by state, but in Oregon, the following professionals can typically form a professional corporation:

  • Physicians and Surgeons
  • Dentists
  • Chiropractors
  • Optometrists
  • Podiatrists
  • Certified Public Accountants
  • Architects
  • Engineers and Land Surveyors
  • Psychologists
  • Marriage and Family Therapists
  • Clinical Social Workers
  • Professional Clinical Counselors
  • Veterinarians
  • Attorneys
  • Speech-Language Pathologists
  • Pharmacists
  • Registered Nurses
  • Physical Therapists
  • Occupational Therapists
  • Acupuncturists

Each profession has its governing licensing board, which sets specific rules and regulations for forming and operating a professional corporation. It is essential to check with the relevant board and state laws to ensure that your profession is eligible to form a professional corporation and to understand the specific requirements associated with your profession.

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Structure of a Professional Corporation

  • Shareholders: Oregon Professional Corporation’s shareholders must be licensed professionals in the same field as the corporation’s purpose. For example, if a professional corporation is formed to offer legal services, all shareholders must be licensed attorneys. This requirement ensures that the professional corporation’s management comprises qualified individuals with relevant expertise.
  • Directors: The directors of a professional corporation in Oregon are responsible for overseeing the corporation’s operations and making high-level decisions. The directors must also be licensed professionals in the same field as the corporation’s purpose. The number of directors required depends on the specific licensing board’s regulations, but typically a minimum of one director is needed.
  • Officers: The officers of Oregon Professional Corporation manage the professional corporation. Officers typically include a President, Secretary, and Treasurer. However, additional officers can be appointed as needed. While not all officers must be licensed professionals, the President must hold a valid license in the same field as the corporation’s purpose.

Starting a Professional Corporation in Oregon: A Guide

Here is a detailed guide to starting a professional corporation in Oregon that you should follow.

Step 1: Appointment of Registered Agent

The first step in forming a Professional Corporation is appointing Registered Agent in Oregon. This individual or company will act on behalf of the corporation, receiving official notices and legal documents. The agent must have a physical address in Oregon and be available during regular business hours.

We compiled the list of the best registered agent services in Oregon to help you choose the one you can rely on.

Step 2: Choosing the Name of the Corporation

Selecting a name for your Oregon Professional Corporation is crucial. The name must be unique and appropriate, including the words “professional corporation” or the abbreviation “P.C.” It must also comply with the rules and regulations of the governing licensing board and should not be confusingly similar to an existing corporation’s name.

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Step 3: Drafting of By-laws

By-laws are the internal rules and regulations governing the management and operations of the professional corporation. These should include provisions related to the appointment of directors, issuance of shares, and any restrictions imposed by the licensing board.

Step 4: Appointment of Board of Directors

The board of directors oversees the management and operations of the Oregon Professional Corporation. Directors must be licensed professionals in the same field as the corporation’s purpose.

Step 5: Conduction of Board Meetings

Regular board meetings are essential for maintaining the proper functioning and compliance of the professional corporation. The by-laws should specify the frequency, notice requirements, and procedures for conducting these meetings.

Step 6: Issuance of Corporate Shares

Shares represent ownership in the corporation. The professional corporation must issue shares to its shareholders, who must be licensed professionals in the same field. Share issuance should comply with the by-laws and any restrictions imposed by the licensing board.

Step 7: Comply with State Requirements

Forming Oregon Professional Corporation requires compliance with specific state requirements, such as obtaining necessary permits and licenses, paying fees, and adhering to rules and regulations the governing licensing board sets forth.

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Step 8: Filing of Statement of Information

Oregon professional corporations must file an annual report with the Oregon Secretary of State. This document includes essential information about the corporation, including its name, address, Registered Agent, and directors.

Step 9: Getting Tax Permits from the State

The professional corporation must obtain the necessary tax permits from the Oregon Department of Revenue, such as an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

Step 10: Opening of a Bank Account

Finally, open a separate bank account for the Oregon Professional Corporation to maintain proper accounting and financial records.

Fees Associated with Professional Corporation in Oregon

Here are some of the most common fees when starting a professional corporation in Oregon.

  • State Laws and Regulations: To form a professional corporation in Oregon, it is crucial to comply with the state laws and regulations governing professional corporations. The Oregon Revised Statutes Chapter 58 and the specific licensing board’s regulations for each profession outline the requirements and restrictions for professional corporation formation. Before starting the process, professionals should consult with their licensing board to ensure they meet the necessary qualifications.
  • Incorporation Process: Once the licensing requirements are met, the next step to form a professional corporation in Oregon is to draft and file the Articles of Incorporation with the Oregon Secretary of State. This document includes essential information about the corporation, such as its name, address, purpose, and number of authorized shares. Filing the Articles of Incorporation requires a filing fee currently $100 for most professions. However, it is essential to check with the Oregon Secretary of State for the specific fee associated with your profession.
  • Naming Requirements: You must follow specific rules when choosing a name for a Professional Corporation in Oregon. The name must include the words “Professional Corporation,” “P.C.,” or “Prof. Corp.” Additionally, the name cannot be misleading or too similar to an existing corporation’s name. Conducting a name search with the Oregon Secretary of State is recommended to ensure the chosen name is available. This search is free, but reserving a name before filing the Articles of Incorporation requires a reservation fee of $100 online and $100 mail.
  • Articles of Incorporation: The Articles of Incorporation is a critical document for forming a professional corporation in Oregon. It outlines the corporation’s essential information, such as the name, address, purpose, and number of authorized shares. The Articles must also include a statement that the corporation is a professional corporation and the specific profession it practices. Once completed, the Articles of Incorporation must be filed with the Oregon Secretary of State, accompanied by the appropriate filing fee.
  • Additional Fees and Costs: In addition to the filing fees mentioned above, forming Professional Corporation in Oregon may involve other costs, such as:
    • Annual Report: professional corporations must file an initial Statement of Information with the Oregon Secretary of State every Anniversary month of the corporation of filing the Articles of Incorporation. The filing fee for this form is $100.
    • Licensing and Permit Fees: Depending on the specific profession, the governing licensing board may require additional licensing and permit fees.
    • Registered Agent Fee: Hiring of Registered Agent service will likely involve an annual fee of $50 – $150, which can vary depending on the service provider.
    • Legal and Accounting Fees: Forming a professional corporation may involve consulting with attorneys and accountants, which can result in additional professional fees.

Advantages of a Professional Corporation

  • Limited Liability Protection: One of the main benefits of a professional corporation is its limited liability protection to its shareholders. This means the shareholders’ assets are protected from the corporation’s debts and liabilities.
  • Tax Benefits: Professional Corporations enjoy specific tax benefits, such as deductions for business expenses and the ability to retain earnings within the corporation.
  • Business Credibility: Operating as a professional corporation can enhance the credibility and reputation of the professional services, demonstrating a commitment to compliance and professionalism.
  • Continuity of Operations: A professional corporation has a perpetual existence, ensuring the continuity of operations even if the shareholders or directors change.

Disadvantages of a Professional Corporation

  • Complexity and Cost of Formation: Forming a professional corporation can be more complex and costly than other business structures, such as sole proprietorships or partnerships.
  • Ongoing Compliance Requirements: professional corporations must adhere to ongoing compliance requirements, including regular board meetings, filing annual reports, and maintaining proper records.
  • Limited Flexibility in Management: professional corporations may need more flexibility in management, as the board of directors must consist of licensed professionals in the same field.

Taxation of Professional Corporations

Here are the taxes that your professional corporation must pay in Oregon:

Federal income tax

A professional corporation in Oregon is subject to federal income tax on its net earnings. However, a P.C. can elect to be taxed as an S corporation, which allows the corporation’s income, deductions, and credits to pass through to the shareholders. This can result in significant tax savings by avoiding double taxation.

State taxes

Oregon Professional Corporation is also subject to state taxes, such as the Oregon franchise tax, which is based on the corporation’s annual net income. Additionally, depending on the nature of its operations, the professional corporation may be subject to other state and local taxes, such as payroll and sales taxes permit in Oregon.

Tax deductions and exemptions

A professional corporation in Oregon can take advantage of various tax deductions and exemptions, such as deductions for employee benefits, operating expenses, and depreciation. These deductions can help reduce the corporation’s taxable income, ultimately leading to tax savings for the P.C. and its shareholders.

Alternatives to Professional Corporations in Oregon

If you decide that a professional corporation is not for you, then you might consider the following alternatives.

  • Sole Proprietorships: A simpler business structure is where an individual operates the business under their name without limited liability protection.
  • Partnerships: Two or more individuals join to operate a business, sharing profits, losses, and responsibilities.
  • Limited Liability Companies (LLCs): A hybrid business structure that combines the limited liability protection of a corporation with the tax benefits and flexibility of a partnership.
  • S-corporations: Starting an S Corp in Oregon avoids double taxation by allowing income, losses, and deductions to pass through to the shareholders’ personal tax returns.

FAQs

What is a professional corporation?
A professional corporation is a type of business entity that is formed to provide professional services, such as legal, medical, or accounting services.
How do I start a professional corporation in Oregon?
To start a professional corporation in Oregon, you must file the appropriate paperwork with the Secretary of State’s Office and comply with the state’s business laws and regulations.
Can anyone form a professional corporation in Oregon?
No, only professionals who are licensed by the state can form a professional corporation in Oregon.
What professions can form a professional corporation in Oregon?
Professions that can form a professional corporation in Oregon include architects, attorneys, dentists, accountants, engineers, and chiropractors, among others.
Do I need to be licensed to start a professional corporation in Oregon?
Yes, you must be licensed by the state to provide professional services in Oregon, and you must comply with all applicable regulations and rules.
Is there a limit to the number of shareholders in a professional corporation in Oregon?
Yes, there is a limit to the number of shareholders in a professional corporation in Oregon, and it varies depending on the profession.
How many shareholders can a professional corporation have in Oregon?
For most professions, a professional corporation in Oregon can have no more than 50 shareholders.
Do shareholders in a professional corporation have personal liability for the corporation’s debts?
In most cases, shareholders in a professional corporation in Oregon have limited personal liability for the corporation’s debts and obligations.
Can a professional corporation in Oregon be taxed as an S corporation?
Yes, a professional corporation in Oregon can elect to be taxed as an S corporation if it meets certain requirements.
What are the benefits of forming a professional corporation in Oregon?
One benefit of forming a professional corporation in Oregon is that it provides limited personal liability protection to its shareholders. Another benefit is that it can help you maintain your professional image and reputation.
What is the difference between a professional corporation and a regular corporation?
A professional corporation is a type of corporation that is specifically designed for professionals who provide services that require a license. The main difference between a professional corporation and a regular corporation is that only licensed professionals can form a professional corporation.
Can I form a professional corporation in Oregon online?
Yes, you can form a professional corporation in Oregon online through the Secretary of State’s Office website.
Are there any special compliance requirements for professional corporations in Oregon?
Yes, professional corporations in Oregon are subject to special compliance requirements, including maintaining current licensed professionals on staff and complying with professional regulations and rules.
Can I form a professional corporation in Oregon by myself, or do I need a lawyer?
You can form a professional corporation in Oregon by yourself, but it’s recommended that you consult with a lawyer who specializes in business formation to ensure that the process is done correctly.
Are there any filing fees associated with forming a professional corporation in Oregon?
Yes, there are filing fees associated with forming a professional corporation in Oregon, and they vary depending on the type of profession and the number of shareholders.
How long does it take to form a professional corporation in Oregon?
The time it takes to form a professional corporation in Oregon depends on how quickly you can gather and file the necessary paperwork.
What is a Registered Agent, and do I need one for my professional corporation in Oregon?
A Registered Agent is a person or company that is designated to receive legal documents on behalf of a corporation. Yes, you need a Registered Agent for your professional corporation in Oregon.
What is a Certificate of Good Standing, and do I need one for my professional corporation in Oregon?
A Certificate of Good Standing is a document that shows your corporation is in compliance with all state laws and regulations. Yes, you should obtain a Certificate of Good Standing for your professional corporation in Oregon.
Can a professional corporation in Oregon have nonprofessional employees?
Yes, a professional corporation in Oregon can have nonprofessional employees, but they must be managed by a licensed professional.
Are shareholders in a professional corporation in Oregon personally liable for professional malpractice claims?
Shareholders in a professional corporation in Oregon are generally not personally liable for professional malpractice claims that are filed against the corporation.
Can a professional corporation in Oregon own property?
Yes, a professional corporation in Oregon can own property in its own name.
Can I dissolve a professional corporation in Oregon if I no longer want to practice as a licensed professional?
Yes, you can dissolve a professional corporation in Oregon if you are no longer practicing as a licensed professional.
What is a Professional Service Agreement?
A Professional Service Agreement is a type of legal document that sets forth the terms and conditions of the professional services that will be provided by a professional corporation.
Do all shareholders in a professional corporation in Oregon have to be licensed professionals?
No, not all shareholders in a professional corporation in Oregon have to be licensed professionals, but they must be approved by the state.
What is the purpose of a professional corporation organization meeting?
The purpose of a professional corporation organization meeting is to elect officers, adopt bylaws, and engage in other organizational tasks for the professional corporation.
Are there any annual reporting requirements for professional corporations in Oregon?
Yes, professional corporations in Oregon are required to file an annual report with the Secretary of State’s Office.
Can a professional corporation in Oregon enter into contracts?
Yes, a professional corporation in Oregon can enter into contracts and sign other legal documents.
What is a professional limited liability company (PLLC), and can I form one in Oregon?
A professional limited liability company is a type of business entity that is formed to provide professional services. Yes, you can form a PLLC in Oregon if you meet certain requirements.
What is a professional corporation in Oregon?
A professional corporation in Oregon is a legal structure used by licensed professionals to protect their personal assets from business liabilities.
What types of professionals can form a professional corporation in Oregon?
Professionals such as lawyers, accountants, architects, engineers, doctors, and dentists can form a professional corporation in Oregon.
Can a professional corporation practice any type of business?
No, a professional corporation in Oregon can only practice the profession for which it was organized.
How do I choose a name for my professional corporation in Oregon?
Your professional corporation name in Oregon must comply with the state’s naming requirements for professional corporations as well as Oregon naming regulations.
What are the naming regulations in Oregon?
In Oregon, your professional corporation name must include at least one of the professional services offered, and must comply with the Board of Professional Name Approval.
How can I check if my desired name is available for my professional corporation in Oregon?
You can search the name availability on the Oregon Secretary of State’s website.
Do I need to file any papers with the Oregon Secretary of State’s office to form my professional corporation?
Yes. You will need to file Articles of Incorporation with the Oregon Secretary of State’s office and pay a filing fee.
What information do I need to include in my Articles of Incorporation in Oregon?
Answer:The articles should include the registered agent and office, proof of name reservation, the purpose of the corporation and limitations, the number and type of authorized shares, names and addresses of all those organizing the corporation.
Do I need an attorney to file my Articles of Incorporation in Oregon?
No. While you can choose an attorney to file the paperwork, it is not required.
How much does it cost to file Articles of Incorporation in Oregon?
The current filing fee for Articles of Incorporation in Oregon is $100.
How long does it take to process my Articles of Incorporation after filing them in Oregon?
It generally takes three to five business days to process and approve the Articles along with the required filing fee.
Is a minimum number of shareholders required to form a professional corporation in Oregon?
No. Only one or more shareholders can form a professional corporation in Oregon.
What is the role of directors in a professional corporation in Oregon?
The board of directors in a professional corporation in Oregon is responsible for management decisions.
What is the role of shareholders in a professional corporation in Oregon?
The shareholders in a professional corporation in Oregon have the right to vote and share profits.
Are there any limitations to transferring shares in a professional corporation in Oregon?
Yes. Restrictions on the sale or transferability of shares may be enforced by the state or the corporation.
Does a professional corporation in Oregon issue stock certificates to shareholders?
Yes. Oregon allows professional corporations to issue stock certificates to shareholders.
Do all shareholders have the same voting rights in Oregon?
No. Oregon allows professional corporations to create different classes of stock with different voting rights.
Does a professional corporation in Oregon require a director to be an Oregon resident?
No. Professional corporations in Oregon do not require directors to be residents of Oregon.
Do I need to obtain tax identification numbers for my professional corporation in Oregon?
Yes. Your professional corporation in Oregon will need to obtain both a federal employer identification number and a state tax identification number.
Are there any tax benefits for forming a professional corporation in Oregon?
Yes. A professional corporation in Oregon may receive beneficial tax treatments under certain circumstances.
How much does it cost to apply for a state tax identification number in Oregon?
There is no fee to apply for a state tax identification number in Oregon.
Will I need to apply for any licenses or permits to operate my professional corporation in Oregon?
Yes, depending on the type of professional services provided in Oregon, you may need specialized licenses or permits to comply with state regulations.
What are the annual compliance requirements for a professional corporation in Oregon?
A professional corporation in Oregon must file an annual report each year with the Oregon Secretary of State.
How much is the annual report fee for a professional corporation in Oregon?
The current fee for filing an annual report for a professional corporation in Oregon is $100.
What is required in the annual report of a professional corporation in Oregon?
The annual report may require Business name, names of officers or directors, names of registered agents, principal business address, date the corporation was legally organized.
What happens if I fail to file and pay the annual report fee for my professional corporation in Oregon?
Failure to file and pay for the annual report in a timely manner may lead to penalties, the effect can be suspensions to business license withdrawal.
What are the guidelines for changing the address of a professional corporation in Oregon?
Address changes may require updated payroll taxes if it is out of district, or registering under the place’s new business services. You must notify the Oregon Secretary of State about any changes regarding the registered agent and the registered business address immediately.
What are the guidelines for changing the name of a professional corporation in Oregon?
Name changes require updated licensing and registration with the Oregon Secretary of State.

Also Read

How to Save Money While Forming Oregon Professional Corporation

First and foremost, it is crucial to do thorough research and understand the requirements and regulations for forming a professional corporation in Oregon. By familiarizing yourself with the process, you can avoid costly mistakes that may arise from ignorance or oversight. You can also benefit from understanding the various options available to you, such as the structure of your corporation, the types of professionals you can include, and any specific industry regulations that may apply.

Another important aspect of saving money while forming a professional corporation in Oregon is to consider whether you really need to hire legal assistance or if you can handle the process on your own. While seeking professional advice is always recommended, especially for complex legal matters, there are resources available that can help you navigate the process independently, such as online guides, templates, and forms provided by the Oregon Secretary of State’s office.

When it comes to choosing a business structure, opting for a simple structure can save you money in the long run. For example, a limited liability company (LLC) may offer more flexibility and cost-effectiveness compared to a traditional corporation. Additionally, by carefully considering the number of shareholders, the nature of your business, and the potential for growth, you can select a business structure that meets your current needs while allowing for future expansion.

Furthermore, pay attention to the fees associated with forming a professional corporation in Oregon. While some fees are unavoidable, such as the filing fee with the Secretary of State’s office, you can minimize costs by opting for electronic filing, which is typically cheaper than filing by mail. Additionally, consider whether you need expedited processing or any additional services provided by the state government, as these may come at an extra cost.

In addition to governmental fees, don’t overlook the costs associated with drafting and filing legal documents. By shopping around and comparing prices, you may be able to find a more affordable attorney or document preparation service without compromising on quality. Alternatively, if you have a solid understanding of legal requirements and business formalities, consider using online legal services to create and file the necessary documents at a lower cost.

Finally, take advantage of any tax benefits and deductions available to professional corporations in Oregon. By consulting with a tax professional, you can ensure that you are maximizing your tax savings and structuring your corporation in a way that minimizes your tax liability. Additionally, keep detailed records of your business expenses and consult with a financial advisor to develop a budget and financial plan that aligns with your business goals.

In conclusion, forming an Oregon professional corporation doesn’t have to break the bank. By conducting thorough research, choosing the right business structure, minimizing fees, and maximizing tax benefits, you can save money and set your corporation up for success. It’s important to remember that every decision you make during the formation process can have a financial impact, so be mindful of your choices and consider seeking professional advice when needed.

Conclusion

Oregon Professional Corporation can offer several benefits for licensed professionals. However, it is essential to carefully consider the proper structure and compliance requirements before proceeding. Seeking professional guidance in forming a professional corporation can help ensure a smooth process and enable professionals to focus on providing their services. Visit LLCBase for more information about starting a professional corporation in Oregon.

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