There are a lot of reasons why it’s a good idea to start a business in Oregon. Apart from the healthy economy and growing population, the state is also very supportive when it comes to smaller businesses. Oregon offers grants that provide eligible businesses up to $200,000, as well as development programs designed to help entrepreneurs succeed. Plus, there are various organizations with mentorships and financing opportunities.
Thinking of setting up shop in The Beaver State? Well, before you can think looking into the various support programs, you’ll need to consider the costs of starting a business first. Entrepreneurs can expect to spend at least $500,000 in their first year. And here’s a breakdown of the expenses this figure should cover:
Market research is vital for startups because to build an efficient business, you need to work effectively in the industry you’re in. You can choose to do research in-house, but other business owners hire market research firms to compile reports. Depending on the research you request, expect to pay between $15,000 and $35,000 for a report that covers the general state of your niche, as well as subcategories, trends, and competitors.
Licensing and Legal Fees
Another set of payments you need to worry about involves registration processes. Opening a company requires you to file documents and pay processing fees. Forming an LLC in Oregon costs $100 when paying your filing fee for your articles of organization. Meanwhile, the cost is the same when filing articles of incorporation.
Depending on what kind of business you’ll be running, you might have to acquire licenses. For example, a retail food establishment license starts at $139 and goes up when your gross annual income increases. To apply for one, call your local County Environmental Health Office.
For continuing fees, both business models require you to pay a business renewal fee every year and pass an annual report. This amounts to $200 a year. Local taxation laws also apply. Oregon does not have sales tax, but this makes income and property taxes higher here than in other states. Corporations are taxed 6.6% for their first $10 million, then 7.6% for income that goes over that. Non-corporate businesses don’t have to follow this rule, but must pay a minimum excise tax of $150.
Office Rental Fees
A basic office space in Oregon can be rented for around $20/sq. ft., while the more high-quality spaces can be rented at around $25/sq. ft. So, if you were to rent a 2,000 sq. ft office space, you can expect to pay between $40,000 and $50,000 a year. Note that these numbers may fluctuate depending on location.
It’s also important to note that during the current pandemic, the amount of available office space in Portland has increased due to companies no longer renewing their leases. Though people are still confined to their homes, rest assured that by the time the virus has gone, they’ll be plenty of office space available.
Once you’re set up, you’ll need an efficient marketing strategy to reel new clients in. Marketing has become so much more than just posting an ad in the newspaper. Nowadays, you need a great brand and an SEO-optimized website to get noticed. Website design services start at $2,500, while social media and email marketing services can cost around $1,000/month.
Compensation is essential in any company, as your employees are the backbone of your operations. Take into account each employee’s wages, as well as all potential benefits. Oregon’s minimum wage is $12/hour ($13.25/hour if you’re in the Portland Metro). And if your workers are skilled, make sure that their pay is higher than the minimum requirement to ensure their continued engagement and good work.
These are the main expenses you’ll be covering if you’re thinking of starting a business from scratch, and you’ll likely encounter more as your business grows. Make sure your accounting is accurate and utilize the benefits that Oregon has to offer. Good luck!