Setting Up a Business Partnership in Oregon

Determine which type of partnership structure best suits your business needs in Oregon. Options include General Partnership (GP), Limited Partnership (LP), or Limited Liability Partnership (LLP). Each has different liability protections, management structures, and filing requirements. Consider consulting with a business attorney to understand the implications of each structure for your specific situation.

Create a comprehensive partnership agreement that outlines ownership percentages, capital contributions, profit and loss allocations, management responsibilities, dispute resolution procedures, and exit strategies. This document is not legally required in Oregon but is strongly recommended to prevent future disputes and establish clear operating procedures. Include provisions for adding or removing partners and how the business will continue if a partner leaves or dies.

Create a document detailing each partner's initial and ongoing capital contributions to the business. Specify the type of contributions (cash, property, services), valuation methods, timing of contributions, and how capital accounts will be maintained. This agreement should also address how additional capital calls will be handled if needed in the future.

Check name availability and register your business name with the Oregon Secretary of State. If you're operating under a name different from the partners' names (for a general partnership) or the legal partnership name, you'll need to file an Assumed Business Name registration (also known as DBA or 'doing business as').

For Limited Partnerships (LP) or Limited Liability Partnerships (LLP), file the appropriate certificate with the Oregon Secretary of State. General Partnerships are not required to file formation documents in Oregon but may choose to file a statement of partnership authority. The filing fees vary by partnership type, with LLPs and LPs having higher fees than general partnerships.

If your partnership will operate under a name different from the legal names of the partners (for general partnerships) or the registered partnership name, file an assumed business name registration with the Oregon Secretary of State. This registration is valid for two years and must be renewed before expiration.

Apply for an EIN from the Internal Revenue Service (IRS). This is required for partnerships even if you don't have employees, as partnerships file informational tax returns. The application can be completed online through the IRS website and you'll receive your EIN immediately upon successful submission.

Open a separate bank account for your partnership using your EIN and partnership documentation. Keeping business and personal finances separate is crucial for proper accounting and liability protection. Prepare a Business Bank Account Resolution signed by all partners authorizing the opening of the account and designating signatories.

Research and obtain all necessary business licenses and permits at the state, county, and city levels in Oregon. Requirements vary based on your business location and industry. Start with the Oregon Secretary of State's Office and check with your local county and city government offices. Some businesses may need professional or industry-specific licenses in addition to general business licenses.

Register with the Oregon Department of Revenue for applicable state taxes. Oregon doesn't have a sales tax, but you may need to register for other taxes depending on your business activities, such as withholding tax if you have employees or the Corporate Activity Tax (CAT) if your commercial activity exceeds $1 million annually.

If your partnership will be selling products or services to customers in states that do collect sales tax, you may need to register for sales tax permits in those states. Research your nexus (business presence) obligations in other states where you conduct business to ensure compliance with their sales tax requirements.

Document day-to-day operational procedures for your partnership, including decision-making processes, meeting schedules, record-keeping requirements, and internal controls. This document should complement your partnership agreement by providing more detailed guidance on routine business operations and management responsibilities.

Create a buy-sell agreement that establishes the process for handling a partner's departure, death, disability, or divorce. This agreement should include valuation methods for partnership interests, payment terms, and funding mechanisms (such as life insurance). A well-crafted buy-sell agreement helps prevent disputes and business disruption during ownership transitions.

Research and obtain appropriate insurance coverage for your partnership. This may include general liability insurance, professional liability insurance, property insurance, workers' compensation (if you have employees), and business interruption insurance. In Oregon, workers' compensation insurance is mandatory for all employers with one or more employees.

Set up systems for maintaining required business records, including financial transactions, meeting minutes, partnership decisions, and tax documents. Oregon partnerships must maintain certain records for legal and tax purposes. Consider using accounting software designed for partnerships to track income, expenses, and partner distributions accurately.

Create a compliance calendar that includes deadlines for annual reports, tax filings, license renewals, and other recurring compliance obligations. In Oregon, LLPs and LPs must file annual reports with the Secretary of State, while all partnerships must file annual tax returns. Set reminders well in advance of deadlines to ensure timely compliance.