It’s difficult to resist the siren song of becoming your own boss. We get it. Maybe you’re fresh out of school, ready to push forth into adulthood, but don’t want to report to a boss every day. Maybe you’ve been working a 9-to-5 for years and just want to find something new, but in such a tight job market, you have to make that “something new” on your own. Or maybe you’re ready to make your side hustle legit while keeping your regular job.

No matter what your situation — congratulations! This is big. You are brave. And we believe in you.

You’ve likely spent countless hours thinking about what your business will look like. Where you will operate, how you’ll support yourself as things get off the ground. Maybe you’ve even worked up a business plan to solidify all this. 

So what’s next?

Choose your structure

The first thing you need to do is choose a business structure — most commonly a limited liability company (LLC) or sole proprietorship.

Simply put, an LLC is a business structure that separates the owners from their business, limiting their personal liability for the company’s debts. As the name suggests, it provides legal protection against personal liability. The business acts as its own legal entity, so if an LLC files for bankruptcy, the owners’ personal assets may be protected. An LLC can be owned by an individual (called an owner) or multiple people (then referred to as “members”).

A sole proprietorship is an unincorporated business owned by one person. In a sole proprietorship, the owner is personally responsible for the business’s debts, but all profits also flow through the owner.  It can be a good option for low-risk businesses and owners who want to test the waters before forging ahead. 

There are other structures — partnerships and corporations ­— that are less common for startups. You can read about them here. 

Set up your business

If you conduct business but don’t register as any kind of organization, you are automatically considered a sole proprietorship. If you’re interested in an LLC, the next steps may vary depending on what state you’re in, but in Oregon you’ll need to:

1. Pick a name. OK, you should probably do this either way, but you’ll need to make it official with an LLC and ensure that your name is different from any other businesses on file with the Oregon secretary of state. You can search names here.
2. Register your business. You’ll need to complete a form called the Articles of Organization and pay a fee. When you do this, you’ll need to name a registered agent. This is someone (yourself, someone else, a business entity) who will receive any legal documents, notices or updates from the Oregon secretary of state on your LLC’s behalf.
3. Get your ID number. While you can operate your business under your Social Security number, it’s a good idea to apply to the IRS to obtain an employer identification number (EIN) or a business identification number (BIN) if you’re hiring employees. It's free and will be helpful to have as your business grows. Talk to a trusted certified public accountant for tax advice about which option is best for you.

Next steps

What’s next will largely depend on the type of business you’re operating. Consider whether you’ll need any business licenses. Talk with a tax expert about what the IRS will require from you and how often.

You’ll also need a financial institution you can trust for your burgeoning business. Our Member Business Services team is composed of local experts who deliver innovative business solutions for commercial, municipal and nonprofit entities. Additional resources for startup businesses include your local Small Business Development Center (SBDC), Community LendingWorks, and Oregon Small Business Development Center Network. You can also consult Oregon.gov for a Quick Start Guide to starting a business.