What taxes apply to a new small business?

Taxes for New Small Businesses in Oregon

When starting a small business in Oregon, understanding the applicable taxes is crucial for smooth operations and compliance. Here are the key taxes to consider:

State Income Tax

Oregon imposes a state income tax on business income. Most small businesses report income through personal income tax returns if structured as sole proprietorships, partnerships, or S-corporations. Corporations file separate corporate income tax returns.

Corporate Activity Tax (CAT)

As of 2026, Oregon requires businesses with commercial activity exceeding $1 million annually to pay the Corporate Activity Tax. This is a tax on gross receipts and applies to most business types, including corporations and LLCs.

Payroll Taxes

• Unemployment Insurance Tax: Employers must register with the Oregon Employment Department and pay unemployment insurance taxes based on payroll.
• State Withholding Tax: Employers are responsible for withholding Oregon state income tax from employee wages and remitting it to the Department of Revenue.

Local Taxes

Some cities in Oregon may impose local business taxes or fees. Check with the city where your business operates to confirm any additional tax obligations.

Sales and Use Tax

Oregon does not have a state sales tax, so most sales transactions are not subject to sales tax. However, businesses should maintain proper bookkeeping and recordkeeping to document sales and purchases accurately.

Operational Considerations

• Business Registration: Register your business with the Oregon Secretary of State to ensure compliance and proper tax reporting.
• Recordkeeping: Maintain detailed financial records to simplify tax filings and support payroll and bookkeeping processes.
• Automation: Consider using accounting software to automate tax calculations and reporting deadlines.