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The Business Taxes Payable by Your Oregon LLC

Business taxes are a fact of life, and your OR LLC will need to pay a variety of taxes to both the federal and Oregon governments. We’ll cover all the main taxes in Oregon including self-employment, payroll, federal, Oregon state tax and Oregon sales tax.

If you want help with your taxes, Incfile provides a complete Business Tax Filing service.

How Your Oregon LLC Will Be Taxed

The profits of an Oregon LLC are not taxed at the business level like those of C Corporations. Instead, taxes for an Oregon LLC work as follows:

  • 1

    Oregon LLC owners pay self-employment tax on business profits

  • 2

    Oregon LLC owners pay KS state tax on any profits, less state allowances or deductions

  • 3

    All LLC owners pay federal income tax on any profits less federal allowances or deductions

  • 4

    Some KS LLCs pay Oregon sales tax on products

  • 5

    Employers pay payroll tax on any salaries they pay to employees

  • 6

    Employees pay federal, state and payroll tax on their earnings

Items 1, 2 and 3 are taxed as “pass-through” income for any LLC owners, managers or members who receive profits from the business. Any profits are reported on federal and Oregon personal tax returns, and that’s where you will pay those taxes.

Oregon Taxes Payable to the OR Department of Revenue

There are two main types of tax that you will pay to the Oregon Department of Taxation: Oregon state income tax and Oregon state sales tax.

Oregon State Income Tax Payable on LLC Earnings

As an Oregon business owner, you will need to pay state tax on any money you pay to yourself. These earnings flow through to your personal tax return, which is where you will pay income tax. You will be taxed at the standard rates for Oregon state taxes, and you will also get to apply regular allowances and deductions.

Any salaried employees will also need to pay personal state taxes.

The Oregon state tax rates vary between 5 and 9.9 percent.

Get details on the Oregon state tax here.

Oregon Sales Taxes on LLC Sales

Unlike many states, Oregon does not charge a sales tax.

Federal Taxes for Your Oregon LLC: Self-Employment and Income Taxes

There are a couple different federal taxes that every LLC will need to pay, including Oregon LLCs. These are self-employment tax and federal income tax, which are taxed as “pass-through” income via your tax return forms.

Oregon LLC Federal Self-Employment Tax

All Oregon LLC business members or managers who take profits out of the LLC will need to pay self-employment tax. This tax is also known as FICA, Social Security or Medicare tax. It applies to all the earnings you withdraw from your Oregon business. The current self-employment tax rate is 15.3 percent.

You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:

  • On profits of $30,000, you would pay self-employment tax of $4,590
  • On profits of $70,000, you would pay self-employment tax of $10,710
  • On profits of $100,000, you would pay self-employment tax of $15,300
  • On profits of $140,000, you would pay self-employment tax of $21,420

Pay Less Self-Employment Tax by Treating Your Oregon LLC as an S Corporation

The Internal Revenue Service allows LLCs to ask to be treated as an S Corporation for tax purposes. This can help you reduce the amount of self-employment tax that you pay by declaring some of your income as salary and other income as distributions or withdrawals.

You can do this by making an “S Corporation Tax Election” with the IRS using a form known as Form 2553. We can file your Form 2553 with the IRS on your behalf.

Incifle Form 2553 S corporation tax election for an LLC service

Speak to your accountant for more information on reducing your Oregon LLC self-employment tax through an S Corporation tax election.

Oregon LLC Federal Income Tax

You must also pay regular federal income tax on any earnings you take out of your Oregon LLC. The amount of income tax you pay depends on your earnings, current income tax brackets, deductions and how you file.

You only pay federal income tax on your LLC profits that you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus LLC business expenses and other deductions for areas such as healthcare and some retirement plans. Speak to your accountant for more information.

Employee and Employer Taxes for Your Oregon LLC

If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your own unique situation.

FAQs on Oregon LLC Business Taxes

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