Limited Liability Company (LLC)
Oregon is the 33rd state of the union of the United States of America. Its capital is Salem with a population of approximately 137,000 while the entire state and all its 36 counties have a population of approximately 3.5 million (2002 estimate).
The state of Oregon is nick-named the Beaver State and is located just north of California and its western border is on the Pacific Ocean. With a land mass of 96,000 square miles, Oregon possess a high acreages of forested land, which has contributed to both its natural beauty and its economic viability.
Spanish and English sailors are believed to have spotted Oregon’s west coast in the 16th and 17th centuries. Captain James Cook, in search of the Northwest Passage, charted some of the coastline in 1778. In 1792, Captain Robert Gray in his ship The Columbia discovered the river which he named after his ship and claimed the area for the United States.
Disputes for control over Oregon ensued between American settlers and the Hudson Bay Company. These disputes were resolved in 1846, with the signing of the Oregon Treaty, in which Britain gave up any claims to the region.
There were many tensions in the 1850′s, with the nation on course to the Civil War, and diversions between slave owners and abolitionists. The Republican Party was born. Abraham Lincoln was appointed as the 16th President of the USA. The Republicans had decided that there was to be no further expansion of slavery.
Oregonians voted in 1857 to hold a constitutional convention at which a constitution was drafted based on Iowa, Indiana and Michigan States models. By referendum, voters faced three questions. Did they approve the constitution? Did they want slavery? Did they want freed African-Americans to live in Oregon? To the first two questions they voted overwhelmingly yes. To the final questions, they voted 8 to 1 against having the freed slaves live in Oregon. They did not see freed slaves, Indians or women standing equally before the law.
In June 1858, residents of the territory elected officials as defined by their new constitution and in February 1859, Oregon joined the Federal Union and became the 33rd state.
Oregon voters elect six officials to manage the states’ Executive Branch of Government. These officials are: the Governor, the Secretary-of-State, Treasurer, Attorney General, Commissioner of Labor and Industries, and the Superintendent of Public Instruction.
The legislative branch comprises representatives from the 36 counties for the Legislative Assembly.
The Judicial Branch deliberates on civil, criminal and constitutional matters and the judges review the actions of the executive and legislative branches to ensure compliance with the constitution.
From the time of the early settlers from Europe in the 1800′s, the forestry resources became the main focus of industrial activity in Oregon. Complemented by agricultural production and exploitation of the fisheries resources, Oregon and specifically, its largest city Portland, became a center with a thriving industrial base.
Due to its timber resources and its location on the pacific coast, Oregon was relied on for its timber and shipyard facilities during World War II. After the war, the state’s natural resource industries continued to be the driving force of the economy. Factories, producing lumber and plywood were exported around the country for the construction of houses.
The presence of a vast amount of water from the Oregon Rivers presented further opportunity for the development of hydro generated electricity at a very competitive price and therefore the further diversification of its industrial bases to metal fabrication and the manufacture of paper.
The forest products industry showed strong growth till the 1980′s when there was a downturn in the natural economy and a slow down in housing construction. On the heels of this downturn in construction, restriction were introduced on the use of federal forests lands for conservation purposes and Oregon was forced to turn to other activities to sustain its employment base and its economy.
High technology industries were introduced. Semiconductor design and manufacture, as well as software development, instrumentation and computer equipment production were encouraged. With the advent of Dot.Com Industries to the Pacific Northwest states, Oregon has emerged into a highly diversified economy, with high technology, forest products, agricultural goods and processed foods, fabricated metals and transportation equipment.
With access to the Asian markets, Oregon is well placed to take advantage of the reviving Japanese market and the emerging Chinese economy.
Oregon’s rural communities continue to rely on the natural resource based industries and the state continues to struggle with strategies to assist these communities in promoting their competitive advantages.
With signs that the economic recession is over, Oregon is optimistic that its industrial out-put will outpace the national average. The economic recovery is labeled as a jobless recovery and creates anxiety on the employment front. Positive migration and population growth indicates that Oregon unemployment rate will probably stay above the national average for the foreseeable future. Among the non-manufacturing sectors which show positive growth include services and finance, insurance and real estate.
Limited Liability Company (LLC)
The Limited liability Company became an accepted and a popular form of business organization in 1988 when the Internal Revenue Service (IRS) regularized the tax treatment of an LLC and made it eligible for “pass-through” tax status while still affording the members (owners) personal protection on their assets and private wealth.
The unique nature of an Oregon registered Limited Liability company provides the benefits and advantages of other forms of US business organizations without most of the restrictions inherent in them. Most importantly for the person or group who wish a US company which provide a status very similar to a traditional Offshore Corporation (IBC) registered in an Offshore Tax Haven, the US LLC is tax free on business transactions outside the US and whose members are US non-resident aliens. It is sometimes referred to as an Oregon offshore company or Oregon offshore LLC.
It is recommended to have a minimum of two physical members who are non-residents and non-citizens of the US.
Features and Disadvantages
Of an Limited Liability Company
· The name of an Oregon LLC must not bare any similarity to an existing company registered in Oregon and must end with the words “Limited Liability Company”, “Company”, “L.L.C.” or “LLC”.
· A registered agent with a registered office, with a street in Oregon is required. You may wish to have an office with an address where mail may be directed. We will provide these services.
· The Registered Agent will prepare and file the Articles of Organization with the Oregon Secretary-of-State, at which time the Limited Liability Company will legally exist.
· An Oregon LLC is a legal business entity and treated as separate from its owners.
· The LLC does not issue shares therefore does not have shareholders. Its owners are members of the LLC.
· An Oregon LLC may be organized with a minimum of one member, however this is not recommended for a non-resident alien. An LLC with just one member may be treated like a Sole Proprietorship and the member will be tax liable for worldwide income.
· When formed by two or more physical non-resident members, the tax treatment is much more favorable.
· The members of an Oregon LLC usually manage the business. The authority of the members is normally in direct proportion to their interest in the profits of the LLC.
· A manager may be appointed if this option is found to be convenient.
· The manager may be a member.
· There is no Board of Directors. The manager is directly responsible to the members.
· An Oregon LLC is owned by its members.
· Non-resident aliens and/or companies may fully own an Oregon LLC.
· The LLC may also be owned by Corporations (companies limited by shares), other LLC’s, Partnerships, Trusts, Pension Plans, Charitable Organization and US residents.
· There are no restrictions as to the number of members and their residence or citizenship.
Liabilities and Obligations
· An Oregon LLC offers asset protection to its owners. The Limited Liability status ensures that debt and other obligations are the sole responsibility of the company
· An Oregon LLC is a tax free business entity.
· Income from the distribution of profits to the owners is taxed on the Personal income basis of the owner.
· If no income is derived from doing business or trade within the US, the non-resident alien members are not liable for United States tax and do not have to file tax returns.
· It is recommended that when organizing an LLC, non-resident members should be physical persons. IF it is formed by non-resident legal entities, such as companies or corporations, the LLC may be considered by the IRS as a branch of a foreign company in the US and the LLC will therefore be taxed on its worldwide income.
· Income is said not to have been derived from the United States, providing that:
o The LLC is not effectively connected with trade or business within the United States.
o It does not employ US residents on a permanent basis.
o It does not rely on a dedicated place of business within the United States. This does not apply to an office which is infrequently used.
Meeting and Records
· Meeting of the members of an Oregon Limited Liability Company is not a statutory requirement. The members may meet if necessary anywhere and by what means they choose.
· Accounts and other records do not have to be filed with the exception of Form 1065, which is filed with the IRS annually, to ensure US residents properly report their income.
An Oregon LLC may have a life in perpetuity. Conditions for the sale, transfer or disposition of a member’s interest should be set out in a Members’ Agreement.
Nominee members may be used in an LLC and we provide this service.
The Oregon LLC is a good vehicle for non-resident aliens to earn tax free income utilizing a US business entity, but not conducting its business in the USA.
Oregon LLC’s are not known by tax authorities outside the US, compared to Delaware LLC’s, which are often used to minimize tax liabilities.
If you require an American entity but do not want to attract additional attention, the Oregon LLC will be a wise choice.