Key Takeaways:

  • Reincorporating a business from another state into Delaware requires either dissolution and reformation, a merger, or filing for foreign qualification and conversion.
  • Delaware offers business-friendly corporate laws, strong legal protections, and tax advantages, making it a preferred state for incorporation.
  • If an existing Delaware corporation wishes to operate in Oregon, it must file for a Foreign Corporation Registration with the Oregon Secretary of State.
  • Oregon requires businesses to appoint a registered agent in the state and maintain good standing with compliance regulations.
  • Businesses moving their incorporation to Delaware must consider tax implications, filing fees, and legal documentation requirements.
  • Hiring a business attorney can ensure compliance and ease the transition process.

Changing the state of incorporation to Delaware can be a good decision since Delaware has some of the most business-friendly laws in the country. To change your state of incorporation, you would need to cut ties with your original formation state and re-form your company in Delaware.

Changing Your State of Incorporation

Corporations have the same rights as "natural persons" and are considered citizens in their state of incorporation. In some cases, a corporation may decide that it wants to change its incorporation state, which is a process known as "reincorporation." The main component of reincorporation is cutting ties with the original incorporation state and starting a relationship with the new state.

To alter your business's state of incorporation, you have three options:

  1. Dissolve your company and then form a new company in another state.
  2. Form a new corporation and then merge it with your previous company.
  3. Dissolve your corporation and then file a conversion certificate to reincorporate.

You may need approval from your company's shareholders or board of directors before you can reincorporate. With small businesses, meaning companies run by one or two people, a vote to reincorporate may not be necessary. In this case, the owner's decision would be enough to change the state of incorporation. If your business has a formal corporate structure, you would need to adopt a corporate resolution before beginning the reincorporation process.

Why Incorporate in Delaware but Operate in Oregon?

Many businesses choose to incorporate in Delaware due to its pro-business legal framework, flexible corporate laws, and extensive court precedents protecting corporate interests. However, companies may need to operate in Oregon due to customer base, economic opportunities, or logistical reasons.

If your Delaware-incorporated business plans to operate, hire employees, or own property in Oregon, it must register as a foreign corporation with the Oregon Secretary of State. This process ensures compliance with state laws and enables the business to operate legally.

Key reasons to register a Delaware corporation in Oregon:

  • Delaware’s Business-Friendly Laws – Flexible corporate statutes and a sophisticated legal system for businesses.
  • Oregon Market Access – Businesses seeking to expand operations or establish a physical presence in Oregon need to register as a foreign entity.
  • Tax Considerations – Delaware corporations benefit from no sales tax, no state corporate income tax for out-of-state activities, and strong asset protections.

Methods of Reincorporation

The most common way to change your state of incorporation is to dissolve your corporation and then start a brand-new company in a different state. To dissolve your company, you should visit the website of your secretary of state. On this website, there should be information about how to end your corporation. In most states, this involves a certificate of dissolution filing. There may be other documents that you will need to file to formally end your company.

You must complete the dissolution process correctly. Failing to completely end your corporation means that you still may need to pay taxes in your original state of incorporation.

Once your original corporation has been legally dissolved, you can form a new corporation in a new state. You can start your corporation by filing articles of incorporation in your new state, and you can even use the name of your original company as long as it isn't already registered.

If you choose this reincorporation option, there are a few other steps you'll need to complete. For instance, you'll need to file one last tax return for your original corporation. You'll also need to close your old company's bank accounts and end any outstanding relationships. Finally, you'll need a new Employer Identification Number (EIN) for your new corporation. This reincorporation option is usually the best choice for small businesses.

Forming a new corporation in another state and then merging it with your current corporation is another option for changing the state of incorporation to Delaware. This option is usually the right choice if you don't want to change your EIN and your old corporation owns a large number of assets.

Refer to the Secretary of State website in your new state to learn the specific requirements for forming a new corporation. You should also be able to find the steps for drafting and filing a certificate of merger. The certificate of the merger will alert the secretary of state that two business entities plan to merge their operations. The certificate will also state which of the entities will remain after the merger, which is referred to as the surviving entity.

This type of merger is called an F reorganization for the purposes of federal taxation. These mergers are formalities, which means that your new corporation can continue doing business using the old business's EIN. To change your state of incorporation, you could also apply for foreign entity status and a conversion certificate in your new state if the laws allow.

Delaware is one state that allows this reincorporation method. If you want to change your state of incorporation to Delaware, you can apply for foreign corporation status in the state. Once you have permission to do business in Delaware as a foreign corporation, you can file a certificate of conversion to change your business to a domestic corporation.

Steps to Register a Delaware Corporation as a Foreign Entity in Oregon

To legally conduct business in Oregon, a Delaware-incorporated company must register as a foreign corporation. Here’s how:

  1. Verify Name Availability
    • Check if your Delaware corporation’s name is available in Oregon. If the name is already in use, you may need to file a DBA (Doing Business As).
  2. Appoint a Registered Agent in Oregon
    • Oregon requires all businesses to designate a registered agent within the state. The agent must be a resident of Oregon or a registered business authorized to accept legal documents on behalf of your corporation.
  3. File a Foreign Business Registration
    • Submit an Application for Authority to Transact Business with the Oregon Secretary of State.
    • Required details include:
      • Business name and principal address
      • Date and state of original incorporation
      • Name and address of Oregon’s registered agent
      • A Certificate of Existence (Good Standing) from Delaware, issued within the last 60 days.
  4. Pay Filing Fees
    • Oregon charges a $275 filing fee for foreign business registrations.
    • Fees may vary over time, so check the Oregon Secretary of State’s website for the latest updates.
  5. Obtain an Oregon Business License (If Required)
    • Certain industries may require additional permits or licenses to operate in Oregon.
    • Examples include retail businesses, professional services, and food establishments.
  6. Register for Oregon Taxes (If Applicable)
    • Even though Delaware corporations have favorable tax benefits, your business may still need to register for Oregon’s corporate activity tax (CAT), employment tax, or sales tax, depending on operations.
  7. Maintain Compliance & Renew Annually
    • File an Annual Report with the Oregon Secretary of State, along with a $275 renewal fee.
    • Keep your registered agent information up to date.

Tax Considerations When Operating in Oregon as a Delaware Corporation

Understanding tax obligations is crucial when a Delaware corporation registers to operate in Oregon. While Delaware offers significant tax advantages, businesses must also comply with Oregon tax laws.

Key tax factors include:

  • Oregon Corporate Activity Tax (CAT) – Businesses generating more than $1 million in Oregon revenue must pay this tax.
  • Franchise Taxes – Delaware corporations must still pay an annual franchise tax to Delaware, even if they register in Oregon.
  • Income Tax – Oregon taxes corporate income generated within the state. Delaware does not tax out-of-state income, making it beneficial for businesses with multi-state operations.
  • Sales Tax Advantage – Oregon has no state sales tax, which can benefit businesses selling products in the state.

Consulting with a tax professional can help determine the best structure for minimizing tax liability.

FAQs

1. Do I need a new EIN when registering a Delaware company in Oregon?

No, your Employer Identification Number (EIN) issued by the IRS remains the same. However, you may need to register with the Oregon Department of Revenue for tax purposes.

2. What happens if I don’t register my Delaware company in Oregon?

Operating an unregistered foreign corporation in Oregon may lead to penalties, fines, and restrictions on legal enforcement of contracts.

3. How long does it take to register a Delaware company in Oregon?

The processing time varies, but Oregon generally processes foreign business registrations within 7-10 business days.

4. Can I keep my Delaware business structure while operating in Oregon?

Yes, a Delaware corporation can maintain its legal status in Delaware while operating as a foreign entity in Oregon.

5. How much does it cost to register a foreign corporation in Oregon?

The standard filing fee for registering a foreign corporation in Oregon is $275, plus annual renewal fees.

If you need help with changing the state of incorporation to Delaware, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.