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 and Oregon state 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:
Oregon LLC owners pay self-employment tax on business profits
Oregon LLC owners pay OR state tax on any profits, less state allowances or deductions
All LLC owners pay federal income tax on any profits less federal allowances or deductions
Employers pay payroll tax on any salaries they pay to employees
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’s one main type of tax that you will pay to the Oregon Department of Revenue: Oregon state income tax.
Oregon State Income Tax Payable on LLC Earnings
As an Oregon business owner, you will need to pay OR state tax on any money you pay to yourself. These earnings flow through to your personal tax return, which is where you will pay Oregon 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 Oregon state taxes.
The Oregon state tax rate varies between 5 and 9.9 percent, depending on income. Get details on the Oregon state tax online here.
Oregon Sales Taxes on LLC Sales
Unlike many states, Oregon does not charge a sales tax.
Federal Self-Employment and Income Taxes for Your Oregon LLC
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 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.
Incfile 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 Oregon 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.
Employer and Employee 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.
Employer Payroll Tax Withholding for Your Oregon LLC
All employers must collect and withhold payroll tax from their employees when they receive their salaries. You would normally withhold 7.65 percent of the taxable salary you pay to your employees.
Employer Federal and State Tax Withholding for Your Oregon LLC
You may also choose to withhold federal and Oregon state income tax on the wages you pay to employees. Speak to your accountant for more information.
Employees May Need to File Tax Returns
Regardless of whether you withhold federal and Oregon state income tax, your employees may need to file their own tax returns.
Oregon LLC Employee Insurance and Other Requirements
You may also need to pay insurance for any employees, like worker’s compensation insurance or unemployment tax. There will also be other requirements you have for employees.
Get more requirements from the Oregon Bureau of Labor and Industries website.
Other Taxes and Duties for Your Oregon LLC
Depending on the industry you are in, your Oregon LLC may be liable for certain other taxes and duties. For example, if you sell gasoline you may need to pay a tax on any fuel you sell. Likewise, if you import or export goods, you may need to pay certain duties. Speak to your accountant about any other taxes you may need to withhold or pay.
Estimated Taxes for Your Oregon LLC
Most Oregon LLCs will need to pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:
Most Oregon LLCs will pay estimated taxes four times a year. Speak to your accountant for more information.
FAQs on Oregon LLC Business Taxes
Does Oregon Have Sales Tax?
No, Oregon does not charge a sales tax.
Does Oregon Have a State Tax?
Yes. Oregon does have a general state income tax. You can find more information above.
Do I Need to Pay Estimated Taxes?
Yes. In most cases you must pay estimated taxes on your Oregon tax, federal income tax and self-employment tax. Speak to your accountant for more information.