Starting a Business in Oregon

A new business in Oregon is not out of reach. So have you been wondering: how do I start a business in Oregon? And more importantly, can I do so no matter what the economic conditions are? Can I start a new business in Oregon during a recession?

New Business in Oregon: Pros and Cons

Per a 20016 article in Business Insider, Oregon is in the top twenty states to start a new business in. And this is for the whole nation. But Portland, while great for startups, is also a city where home prices are skyrocketing.

The state has an above average density of startup companies. It also ties for the tenth best business survival rate. Oregon also scores well in the availability and education level of employees.

It scores well in the business tax climate categories. And as for expenses, Inc named Eugene as one of their picks for cheapest cities to start a business in, again for the entire country.

Some Recent Slippage

Per a 2018 article in Forbes, Oregon clocks in at a respectable but slipping 22^nd place. But Fit Small Business puts Oregon at number 32. Keep in mind, all three sites have differing methodologies.

Forbes praises Oregon for its great labor supply and growth prospects. The economic climate and business costs are also good. But quality of life is below average, and the regulatory environment is 40^th in the country.

Fit Small Business says Oregon is number ten for taxes. Labor market (a measure of the desirability of an area and the number of people with bachelor’s degrees) and quality of life are in the middle of the road. And startup activity and access to capital are both below average. The worst are the cost of living and the cost of starting a business – both are an abysmal 45.

Anyone looking to start a business in Oregon should be mindful that they can likely find workers but they may not have bachelor’s degrees. Are you willing to invest in training?

New Business in Oregon: Initiatives

The Oregon Business Resource page gives small businesses valuable information on state programs aimed at helping them succeed.

For example, the “Building Opportunities for Oregon Small Business Today” (BOOST) Fund offers loans and grants to promising small businesses within the state. This program focuses on businesses with fewer than 100 employees.

They are in the manufacturing, processing, and distribution industries. It also offers grants of up to $2,500 per job created or trained.

Entrepreneurial Development Loan Fund

Oregon also offers small businesses access to funding through the Entrepreneurial Development Loan Fund. This Fund offers loans of up to $50,000. It is for businesses which may have been turned down by traditional lenders.

Standard Enterprise Zones Program

The Standard Enterprise Zones program offers businesses which locate or expand in one of the state’s enterprise zones an exemption from certain property taxes for up to 5 years.

Such exemptions can be combined with added tax breaks provided for creating jobs in rural areas, or in the e-commerce industry.

Oregon Investment Advantage

The Oregon Investment Advantage gives job creating businesses a 10 year income tax exemption. In addition, companies which locate in one of the almost 90 eligible communities can get a 10 year waiver on excise taxes.

Strategic Investment Program

Small businesses in Oregon’s manufacturing sector can benefit from the state’s Strategic Investment Program. This program provides resources benefitting firms located within targeted areas. This is via property tax exemptions on large capital investments.

These tax exemptions work as an Oregon business resource to help manufacturers add equipment, modernize production, and create new jobs.

Here is exactly how to start a new business in Oregon.

Start a New Business in Oregon – Oregon New Business Secretary of State Requirements

Register a Business Name

Filing for a fictitious name permits the creation of a business name separate from a business owner’s legal name. In Oregon, this is required for any business owners who want to conduct business under anything other than their ‘real and true name’.

The definition for this legal term of art is here. All businesses operating in Oregon as limited partnerships, registered limited liability partnerships, limited liability companies, professional corporations, nonprofit corporations, corporations, and professional associations must register with the Secretary of State. Check out a database of registered Oregon corporations.

Business Permits and Licenses

The Oregon government has a very helpful license directory.

Local Permits and Licenses

Check with your local municipality, city or county office or website. See if there may be any local licensing or permit requirements.

For example, in Eugene you will need to go to the Business Licenses page on the city of Eugene website.

Start a New Business in Oregon – Business Registration

Either register your business online or with the Oregon Secretary of State. All the necessary forms are there.

Tax Registration

The Oregon Department of Revenue will have everything you will need.

Start a New Business in Oregon – Virtual Offices

Alliance offers Oregon virtual business office space in Portland only. Go to Regus for Oregon virtual business offices in Salem.

For Oregon virtual office space in Hillsboro and Lake Oswego, go to DaVinci. For Eugene, try local business owners. Or ask computer user groups for help in this area.

More options may be virtual office space in nearby states. These are California, Idaho, Nevada, and also Washington State.

Start a New Business in Oregon – Establish Business Credit

Business credit is credit in a small business’s name. It doesn’t link to an owner’s consumer credit, not even when the owner is a sole proprietor and the solitary employee of the business.

As such, an entrepreneur’s business and individual credit scores can be very different.

The Benefits

Due to the fact that business credit is independent from individual, it helps to protect a business owner’s personal assets, in the event of legal action or business bankruptcy.

Also, with two separate credit scores, a small business owner can get two separate cards from the same vendor. This effectively doubles purchasing power.

Another advantage is that even new ventures can do this. Going to a bank for a business loan can be a formula for disappointment. But building business credit, when done right, is a plan for success.

Consumer credit scores rely on payments but also additional components like credit usage percentages.

But for business credit, the scores truly merely hinge on whether a company pays its debts promptly.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

The Process

Establishing business credit is a process, and it does not happen without effort. A company will need to actively work to establish business credit.

Nevertheless, it can be done easily and quickly, and it is much speedier than building individual credit scores.

Merchants are a big aspect of this process.

Carrying out the steps out of order will lead to repetitive denials. Nobody can start at the top with company credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a rejection 100% of the time.

Start a New Business in Oregon – Company Fundability

A company needs to be fundable to lenders and merchants.

Therefore, a small business will need a professional-looking website and email address. And it needs to have site hosting from a company such as GoDaddy.

Additionally, company phone and fax numbers must have a listing on ListYourself.net.

Also, the company telephone number should be toll-free (800 exchange or the like).

A company will also need a bank account devoted strictly to it, and it needs to have every one of the licenses necessary for operating.

Licenses

These licenses all have to be in the specific, correct name of the small business. And they need to have the same business address and phone numbers.

So keep in mind, that this means not just state licenses, but potentially also city licenses.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Working with the IRS

Visit the IRS website and get an EIN for the company. They’re free. Choose a business entity such as corporation, LLC, etc.

A company can get started as a sole proprietor. But they will more than likely wish to change to a kind of corporation or an LLC.

This is in order to decrease risk. And it will optimize tax benefits.

A business entity will matter when it comes to tax obligations and liability in the event of litigation. A sole proprietorship means the owner is it when it comes to liability and taxes. Nobody else is responsible.

Sole Proprietors Take Note

If you operate a business as a sole proprietor, then at the very least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the business name. Because of this, you can wind up being personally accountable for all small business financial obligations.

And also, according to the Internal Revenue Service, with this structure there is a 1 in 7 chance of an IRS audit. There is a 1 in 50 possibility for corporations! Prevent confusion and drastically lower the odds of an IRS audit simultaneously.

Starting the Business Credit Reporting Process

Start at the D&B web site and get a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a small business into their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s web sites for the company. You can do this at fastcs.wpengine.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

In this manner, Experian and Equifax will have activity to report on.

Vendor Credit Tier

First you should establish trade lines that report. This is also known as the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can start to get credit in the retail and cash credit tiers.

These kinds of accounts tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But to start with, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are often Net 30, rather than revolving.

Therefore, if you get approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, like within 30 days on a Net 30 account.

Details

Net 30 accounts need to be paid in full within 30 days. 60 accounts need to be paid fully within 60 days. Unlike with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you made use of.

To start your business credit profile the right way, you need to get approval for vendor accounts that report to the business credit reporting agencies. As soon as that’s done, you can then use the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Tier – It Makes Sense

Not every vendor can help in the same way true starter credit can. These are vendors that will grant an approval with hardly any effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may need to apply more than one time to these vendors. So, this is to demonstrate you are trustworthy and will pay in a timely manner.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then progress to the retail credit tier. These are companies like Office Depot and Staples.

Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the small business’s EIN on these credit applications.

One such example is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a D-U-N-S and a PAYDEX score of 78 or more.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then progress to the fleet credit tier. These are service providers such as BP and Conoco. Use this credit to purchase fuel, and to fix, and take care of vehicles. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the business’s EIN.

One such example is Shell. They report to D&B and Business Experian. They want to see a PAYDEX Score of 78 or higher and a 411 small business telephone listing.

Shell may say they want a specific amount of time in business or revenue. But if you already have enough vendor accounts, that won’t be necessary. And you can still get an approval.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Cash Credit Tier

Have you been responsibly handling the credit you’ve up to this point? Then progress to the cash credit tier. These are companies such as Visa and MasterCard. Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They want to see a PAYDEX Score of 78 or better. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Additionally, they want you to have an established small business.

These are companies like Walmart and Dell, and also Home Depot, BP, and Racetrac. These are typically MasterCard credit cards. If you have 14 trade accounts reporting, then these are doable.

Start a New Business in Oregon – Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and fix any inaccuracies as soon as possible. Get in the practice of checking credit reports and digging into the details, and not just the scores.

We can help you monitor business credit at Experian and D&B for only $24/month. See: fastcs.wpengine.com/monitoring.

Update Your Record

Update the details if there are errors or the information is incomplete.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to contest any inaccuracies in your records. Mistakes in your credit report(s) can be taken care of. But the CRAs generally want you to dispute in a particular way.

Disputes

Disputing credit report inaccuracies usually means you send a paper letter with duplicates of any evidence of payment with it. These are documents like receipts and cancelled checks. Never send the original copies. Always mail copies and retain the originals.

Fixing credit report errors also means you precisely itemize any charges you contest. Make your dispute letter as clear as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you mailed in your dispute.

Start a New Business in Oregon – A Word about Business Credit Building

Always use credit sensibly! Don’t borrow more than what you can pay back. Monitor balances and deadlines for repayments. Paying on schedule and completely will do more to raise business credit scores than just about anything else.

Building business credit pays. Excellent business credit scores help a company get loans. Your credit issuer knows the business can pay its financial obligations. They understand the company is for real.

The business’s EIN links to high scores and lending institutions won’t feel the need to demand a personal guarantee.

Business credit is an asset which can help your business in years to come.

Learn more here and get started toward opening a new business in Oregon.

Want to start a new business someplace else in America? Then check out our handy guide to starting a business in any state in the country.

Oregon’s Response to COVID-19

Here’s what Oregon is doing about COVID-19. Oregon encourages participation in its work share program, so as to minimize layoffs. The City of Portland provides support via Portland Community SOS. Businesses can offer gift certificates for sale online at this site, for free. 

See: oregon.gov/employ/Unemployment/Pages/Work-Share-Program.aspx 

And see pdxsos.com