How to Form a Professional Corporation in Oregon (2024 Guide)

Steve Bennett
Business Formation Expert  |   Fact Checked by Editorial Team
Last updated: 
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Forming a Professional Corporation in Oregon

If you would like to start and learn how to form a corporation in Oregon, there are a few things that you should do now. However, in a professional corporation, professionals must create a special organizational structure to establish a professional or service corporation. Among the appropriate professions to organize a professional corporation in Oregon are accountants, physicians, engineers, architects, and attorneys.

Forming a professional corporation in Oregon or any business organization needs a certain number of steps. In this article, Webinarcare Editorial Team is going to share those steps. Keep in mind that these are general procedures. Depending on local law, it may be modified. For instance, your professional corporation may be subject to city or county-based rules.

What is a Professional Corporation in Oregon?

A professional service corporation (PSC), often known as a professional corporation (abbreviated as PC), is a particular type of organization that is permitted by state law to allow owners of specifically licensed professions to practice in the Oregon. A professional corporation’s owner is answerable for their own negligence or wrongdoing but is not held personally liable for the actions of other owners. The abbreviation PC or P.C. is frequently used to denote professional corporations.

This structure allows professionals to enjoy some of the benefits and protections of a traditional corporation while maintaining their professional status and abiding by the regulations of their respective licensing boards.

LegalZoom is the recommended corporation formation if you are thinking of forming a professional corporation from scratch. However, you can always start an LLC in Oregon, if you changed your mind.

WEBINARCARE EDITORIAL TEAM

How to Form a Professional Corporation in Oregon

To form a Professional Corporation in Oregon 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-

To provide your service, you must be qualified and have a license. In most cases, you can now form a professional corporation after finishing your studies, passing the exam, and receiving your license. If you work in an industry that does not provide a license or professional certification, you should consider starting an LLC or corporation.

Step 2: Name your Professional Corporation in Oregon

After you have decided to form a professional corporation in Oregon, you must choose a name for your corporation. Here are some pointers to consider when 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)
  • Limit of restricted words that need a license.
  • A unique name is needed with no match
  • No confusion with a government entity name.

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. You must file a name reservation application in the Oregon Secretary of State to keep the name.

If not already present, a professional corporation, professional association, service corporation, or professional service corporation must be included in the name. You may register your business under a different legal name if your preferred legal name is unavailable. Once you’ve decided on a name, you can apply for Oregon DBA (doing business as). This way, you can run a clinic or law firm under your name.

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Step 3: Choose the Oregon Registered Agent

The next step in forming a professional corporation is hiring a Registered Agent, who accepts legal paperwork for 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 Registered Agent if you have the time. Usually, in Oregon, a Registered Agent costs is ranging from $50 – $150. To make it easier, you can hire Oregon Registered Agent Services for your professional corporation.

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Step 4: File the Articles of Incorporation in Oregon

After you hire a 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. Include the names of all co-owners as well. All owners must demonstrate that they have the necessary licenses to practice the profession in question.

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 state. 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 in Oregon is a document that contains all of your company’s organizational details. It is optional to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

Step 6: Designate the PC Board of Directors in Oregon

The next step is to form the first board of directors for your PC in Oregon. All of the initial directors must provide the owner with their contact information. The owner must keep records and submit them by the Oregon Secretary of State. As a shareholder and owner, you must ensure that a provision for appointing a new director is included in the By-laws. In Oregon, you must have Three directors in forming your Professional Corporation.

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.

Creating comprehensive corporate bylaws requires specific knowledge about the company, its structure, and operations. However, I can provide you with a general outline of what corporate bylaws usually include. It is crucial to consult with Oregon Business Attorney or a legal expert to ensure that your bylaws comply with the laws and regulations governing your jurisdiction and industry.

  • Name and Purpose of the Corporation
  • Registered Office and Agent
  • Shareholders
  • Board of Directors
  • Officers
  • Committees
  • Indemnification and Insurance
  • Conflict of Interest
  • Records and Reports
  • Amendments
  • Miscellaneous

Step 8: Hold the First Board of Directors’ Meeting

Gather the board of directors for the first meeting after drafting the corporate bylaws. This meeting will conclude with the appointment of directors to manage the company’s daily operations, approval of the bylaws, selection of the corporation’s financial reporting year, and approval of the stock issue. Minutes should be taken at all board meetings and kept with the company’s records.

Step 9: Request an EIN in Oregon.

After the operating agreement’s documentation, you should get or request an Employer Identification Number (EIN) in Oregon. The tax ID for your professional corporation will be an EIN. The Internal Revenue Service can provide an EIN (IRS). It has nine digits and is comparable to a social security number. Nevertheless, EIN is different from SSN. Only business-related tasks, primarily filing general taxes, are performed using it. The form needs to be filled out and submitted online to the IRS.

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 four 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 several ways. It will give your professional corporation the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Step 10: Open a Bank Account and Prepare for Taxes.

You should open a business bank account as soon as you have applied for and received your Employer Identity Number because you will use this account for yourself, your clients, and your staff. Check out the Best Banks in Oregon for you to decide on which bank you are going to open an account.

Due to your organization’s increased legality and liquidity, having a US business bank account may make conducting business in Oregon easier. Most banks require an EIN for businesses other than sole proprietorships to open a business bank account. Also, keeping your accounts separate will prevent you from merging your personal and business finances. Also, filing taxes is simpler when you have an EIN. You can expect to pay employee and corporate taxes when you form a professional corporation.

Step 11: Get a Business License in Oregon

Before your professional corporation operates in Oregon, you must have Oregon Business License first. A business license is a formal document issued by a state government agency that allows you to conduct business in the geographic area governed by that agency. The cost of business licenses and permits in Oregon ranges from $50 – $300. You must check with the local authorities to see if any special licenses or permits are required.

Step 12: File Your Taxes in Oregon

Finally, you’ve arrived at the final process. Remember to file your taxes when you have obtained a business license and are ready to begin operations. To avoid a large tax bill, you should begin paying taxes quarterly as soon as possible. Each state has different tax requirements. Start examining the Oregon tax classification for the taxes that an LLC in Oregon must pay.

Main Characteristics of a Professional Corporation

In forming a Professional Corporation, the main characteristics must be distinguished before forming it. These are the general characteristics of forming a Professional Corporation in Oregon.

  • Limited Liability Protection: A professional corporation provides its owners, shareholders, or members limited liability protection like a regular corporation. This means the shareholders’ personal assets are generally protected from business debts, obligations, and lawsuits, except in malpractice or professional negligence cases.
  • Oregon Licensing Requirements: All shareholders must typically be licensed professionals in the same field in a professional corporation. The corporation must also comply with specific state regulations and licensing requirements that govern the profession.
  • Governance and Management: A professional corporation is governed by a board of directors, who the shareholders elect. The board appoints officers to manage the day-to-day operations of the corporation. All directors and officers must be licensed professionals in the same field as the corporation.
  • Taxation: Professional corporations are taxed as C corporations, where the corporation pays taxes on its income, and shareholders pay taxes on dividends received from the corporation. However, some professional corporations may be eligible for S corporation status, allowing pass-through taxation. Income, losses, deductions, and credits flow to the shareholders, who report this information on their income tax returns.
  • Restrictions on Ownership and Transfer of Shares: Professional corporations often restrict the ownership and transfer of shares to ensure that only licensed professionals in the same field can become shareholders. This helps maintain the professional nature of the corporation and adheres to state licensing requirements.
  • Malpractice Liability: While a professional corporation provides limited liability protection for general business debts and obligations, it does not shield shareholders from liability for their own malpractice or professional negligence. Shareholders can still be personally liable for their actions in providing professional services.

In summary, a professional corporation is a specialized corporate structure designed for licensed professionals, offering limited liability protection and a formal governance structure while adhering to state licensing requirements and regulations.

Maintain Professional and Business License in Oregon

You must maintain or renew your professional license regularly now that you have established your professional corporation. Even if your company is well-established, it is only meaningful if you have a valid operating license. And it makes no difference if your professional license is still valid for a year or two, but your business license has already expired.

Make time at least once a year to check the status of your licenses. You won’t miss anything important this way. You can address any issues that arise.

Filing Annual Report in Oregon

In Oregon, you must submit a report. 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 the report every 1 year in the Oregon Secretary of State.

FAQs

What is a professional corporation in Oregon?
A professional corporation in Oregon is a legal structure that allows certain licensed professionals to incorporate their practice.
Who can form a professional corporation in Oregon?
Licensed professionals in certain fields, including architecture, engineering, law, medicine, accounting, and others, can form a professional corporation in Oregon.
How do I 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.
Do I need to have a specific license to form a professional corporation in Oregon?
Yes, you need to be licensed to practice your profession in Oregon in order to form a professional corporation.
Is there a limit to how many owners a professional corporation in Oregon can have?
No, there is no limit to the number of owners a professional corporation in Oregon can have.
Is a professional corporation required to have a board of directors in Oregon?
Yes, a professional corporation in Oregon is required to have a board of directors.
Can a professional corporation in Oregon have non-professional owners?
No, a professional corporation in Oregon can only have owners who are licensed professionals in the same field.
Is a professional corporation in Oregon liable for the actions of individual licensed professionals?
Yes, a professional corporation in Oregon can be held liable for the actions of individual licensed professionals performed on behalf of the corporation.
Can a professional corporation in Oregon be sued directly?
Yes, a professional corporation in Oregon can be sued directly.
What types of liability insurance do I need for a professional corporation in Oregon?
Professional liability insurance is required for professional corporations in Oregon.
What taxes does a professional corporation in Oregon need to pay?
A professional corporation in Oregon must pay federal and state income taxes, as well as all applicable business and employment taxes.
Can a professional corporation in Oregon have offices in different states?
Yes, a professional corporation in Oregon can have offices in other states.
What is the renewal process for a professional corporation in Oregon?
A professional corporation in Oregon must renew its registration and pay an annual fee to the Secretary of State.
Can a professional corporation in Oregon merge with another corporation?
Yes, a professional corporation in Oregon can merge with another corporation.
Are there any restrictions on advertising for a professional corporation in Oregon?
Oregon imposes certain restrictions on advertising for professional practices, so it’s important to consult state regulations.
Must a professional corporation in Oregon keep specific records and books?
Yes, a professional corporation in Oregon must keep specific records and books that document its financial transactions.
Can a licensed professional in Oregon form a sole proprietorship?
Yes, a licensed professional in Oregon can form a sole proprietorship, but this may not provide the same liability protection as a professional corporation.
Can an out-of-state professional form a corporation in Oregon?
Yes, an out-of-state professional can form a corporation in Oregon.
Does a professional corporation in Oregon need a bank account?
Yes, a professional corporation in Oregon must have a bank account.
Can a professional corporation in Oregon employ non-licensed individuals?
Yes, a professional corporation in Oregon can employ non-licensed individuals for certain administrative tasks.
Is a professional corporation in Oregon subject to the Oregon Health Insurance Marketplace?
Professional corporations in Oregon must comply with the provisions of the federal healthcare reform laws and the state insurance marketplace.
Can a professional corporation in Oregon convert to another business entity type?
Yes, a professional corporation in Oregon can convert to another business entity type.
Can a professional corporation in Oregon have multiple business purposes?
No, a professional corporation in Oregon can only have the business purpose of providing professional services in its licensed field.
Can a professional corporation in Oregon issue stock?
No, a professional corporation in Oregon cannot issue stock.
Can a professional corporation in Oregon be converted to LLC or LLP once formed?
Yes, a professional corporation in Oregon can be converted to LLC or LLP.
Does a professional corporation in Oregon need to file annual reports?
Yes, a professional corporation in Oregon must file annual reports with the Secretary of State.
Can a professional corporation in Oregon offer other services besides professional services?
No, a professional corporation in Oregon can only offer professional services within its licensed field.
Does a professional corporation in Oregon need a registered agent?
Yes, a professional corporation in Oregon must have a registered agent.
Is there a minimum number of shareholders required to form a professional corporation in Oregon?
Yes, at least one shareholder who is licensed in the professional field is required to form a professional corporation in Oregon.
Are there any restrictions on the types of professionals that can form a professional corporation in Oregon?
Yes, only licensed professionals such as doctors, lawyers, and dentists can form a professional corporation in Oregon.
How are profits distributed among shareholders in an Oregon professional corporation?
Profits are distributed among shareholders in an Oregon professional corporation based on the percentage of ownership each shareholder holds.
What is the process for forming a professional corporation in Oregon?
The process for forming a professional corporation in Oregon involves filing Articles of Incorporation with the Oregon Secretary of State and complying with additional state-specific requirements.
Are there any additional licensing requirements for Oregon professional corporations?
Yes, some professional services require additional licenses in Oregon and must be obtained before the professional corporation can begin operation.
Is there a minimum amount of capital required to form an Oregon professional corporation?
No, there is no minimum amount of capital required to form an Oregon professional corporation.
How long does it take to form a professional corporation in Oregon?
It usually takes around two weeks to one month to form a professional corporation in Oregon after the Articles of Incorporation have been filed with the Secretary of State.
Can a professional corporation in Oregon be owned by non-professionals?
No, a professional corporation in Oregon must be owned by licensed professionals in the professional field.
Can a professional corporation in Oregon offer services in multiple professional fields?
No, a professional corporation in Oregon can only offer services in the professional field in which the shareholder is licensed to practice.
How are professional regulations enforced for Oregon professional corporations?
The Oregon State Bar and the Oregon Medical Board are responsible for enforcing professional regulations for professional corporations in Oregon.
Can professionals from different states form a professional corporation in Oregon?
Yes, as long as the professionals meet the licensing requirements in Oregon.
Is there a fee to form a professional corporation in Oregon?
Yes, there is a fee to form a professional corporation in Oregon. The fee varies depending on the type of professional corporation and the number of shareholders.
Do all shareholders in an Oregon professional corporation have to be licensed professionals?
No, only one shareholder in an Oregon professional corporation must be a licensed professional in the professional field offered by the corporation.
What is the liability protection for shareholders of an Oregon professional corporation?
Shareholders of an Oregon professional corporation have limited liability, meaning the shareholders cannot be personally liable for the corporation’s debts and obligations.
Can an Oregon professional corporation be formed for non-medical services?
Yes, Oregon professional corporations can be formed for a variety of professional services, not just medical services.
Can a professional corporation be formed as a limited liability company (LLC) in Oregon?
No, professional corporations cannot be formed as LLCs in Oregon.
Are Oregon professional corporations taxed differently compared to regular corporations?
No, Oregon professional corporations are taxed the same as regular corporations on their income.
Do Oregon professional corporations need to file yearly reports with the Secretary of State?
Yes, Oregon professional corporations must file an Annual Report with the Secretary of State each year.
Can professional corporations in Oregon be dissolved?
Yes, professional corporations in Oregon can be dissolved if the shareholders choose to dissolve it, or if the Secretary of State dissolves the corporation due to non-compliance with state regulations.
Does Oregon allow foreign professional corporations to qualify to conduct business in the state?
Yes, foreign professional corporations can qualify to do business in Oregon as long as they meet all the licensing requirements.
Are there any annual fees to keep an Oregon professional corporation in good standing?
Yes, there is an annual fee to keep an Oregon professional corporation in good standing with the Secretary of State.
Can Oregon professional corporations convert to other types of entities?
Yes, Oregon professional corporations can convert to other types of entities, like LLCs, with approval from the state.
What happens to a professional corporation in Oregon if a shareholder loses their professional license?
If a shareholder in Oregon professional corporation loses their professional license, they must surrender their share and can no longer be a shareholder of the corporation.
Can a shareholder in an Oregon professional corporation sell their shares to anyone?
No, a shareholder in an Oregon professional corporation can only sell their shares to another licensed professional in the same professional field.
Can shareholders in an Oregon professional corporation be held personally liable if professional malpractice occurs?
Yes, shareholders of an Oregon professional corporation may be held personally liable if they are found to be personally negligent in a case of professional malpractice.
Do Oregon professional corporations need to have a registered agent in the state?
Yes, an Oregon professional corporation must have a registered agent with a valid Oregon address to receive legal notices and important paperwork.
Is there a time limit for filing the Articles of Incorporation for an Oregon professional corporation?
No, there is no set time limit for filing Articles of Incorporation for an Oregon professional corporation. However, it is best to file them as soon as possible after the professional corporation is formed.
Can an individual hold shares in multiple Oregon professional corporations that offer services in the same field?
Yes, an individual can hold shares in multiple professional corporations as long as they are licensed in the field and comply with state regulations.

Also Read

How to Save Money While Forming Oregon Professional Corporation

First and foremost, it is wise to educate oneself about the legal requirements and necessary procedures for establishing a PC in Oregon. Familiarizing oneself with the state’s corporate laws, licensing requirements, and regulations can prevent potential legal setbacks and additional costs down the road. Although professional advice from attorneys and accountants may seem costly, engaging with them early on can save significant sums of money by avoiding mistakes or unnecessary expenses.

Another avenue to explore for cost-savings is do-it-yourself solutions. There are numerous resources available, both online and offline, that provide step-by-step guidance on incorporating a professional corporation in Oregon. Utilizing these resources can help reduce the dependency on professional advisors and thus, minimize associated costs. However, caution must be exercised since bureaucratic nuances can be perplexing for outsiders. Careful research should be complemented by verifying the authenticity and accuracy of any information found to ensure correct compliance with legal requirements.

Considering shared resources, such as co-working spaces and virtual office services, is a practical option to save on upfront costs. Startups or small PC’s working on a tight budget can avoid expensive long-term leases or office purchases by leveraging shared office spaces, which come equipped with modern infrastructure and professional amenities. These collaborative environments not only save money but also provide an opportunity to network with like-minded professionals and establish fruitful partnerships. Virtual office services can be employed to have a prestigious company address and phone number, while doing business remotely or from home, further reducing expenses.

An area where many entrepreneurs incur overspending is in marketing and advertising. One way to circumvent this is by utilizing social media platforms and digital marketing techniques to build an online presence. The burgeoning online advertising ecosystem offers cost-effective avenues to promote a newly-formed professional corporation without making a sizable dent in the budget. Leveraging free or inexpensive website builders and exploring search engine optimization (SEO) can enhance visibility and attract potential clients, replacing the need for pricey traditional marketing campaigns.

Lastly, one should consider hiring employees and independent contractors judiciously. Coffering flexible work arrangements, such as hiring freelancers or part-time professionals, can ensure critical tasks are accomplished without committing to long-term overhead costs. Additionally, staying well-informed about affordable employee benefit packages can provide access to meaningful perks while reducing the financial burden on the PC.

Forming an Oregon professional corporation demands meticulous attention to financial details. By taking a methodical approach, educating oneself about legal requirements, seeking professional advice when necessary, embracing shared resources, leveraging online marketing platforms, and hiring smartly, entrepreneurs can successfully establish a professional corporation while efficiently managing costs. Saving money during this process can be a vital stepping stone towards a sustainable, profitable future for Oregon-based professionals.

Conclusion

In conclusion, forming a professional corporation in Oregon is a strategic decision for licensed professionals who seek to combine their expertise and services under a single corporate entity. This business structure offers limited liability protection, a formal governance structure, and compliance with state licensing requirements. However, it also comes with certain restrictions on ownership, transfer of shares, and personal liability for professional malpractice. By carefully considering the advantages and disadvantages of a professional corporation, professionals can determine whether this structure aligns with their business goals, regulatory requirements, and risk management needs, ultimately contributing to a more organized, secure, and compliant professional practice.

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