How to Do Payroll in Oregon: What Employers Need to Know

In Oregon, employers must report employee earnings to the state. However, they are not required by law to withhold any taxes from their employees’ paychecks as long as they do not make more than $1 million in gross income per year. Employers should be aware of these reporting requirements and wage withholding rules before hiring a new worker.,

The “file oregon payroll taxes online” is a process that can be done in Oregon. The process includes filing a form and paying the tax with an online payment system.

Payroll processing in Oregon is more complicated than in other states since some towns collect local taxes, thus complicating your task. Because Oregon has its own set of state-specific paperwork, you’ll want to keep an eye on new recruits to make sure you’re handing them both the federal and state forms.

You don’t have to attempt to remember everything. Using an all-in-one payroll provider like Gusto is the easiest way to avoid excessive penalties. It allows you to onboard new workers, present them with the necessary papers, pay them directly from their first paycheck through direct deposit, and submit payroll taxes, all while guaranteeing that payroll is performed correctly every time. For a 30-day free trial, sign up now.

Gusto is a great place to visit.

How to Run Payroll in Oregon: A Step-by-Step Guide

Payroll processing in Oregon need your undivided attention to avoid missing any processes. Even minor errors might result in hefty penalties from the authorities. The following are the fundamental stages for processing payroll in Oregon.

Step 1: Register your company as an employer. You must get a Federal Employer Identification Number if your organization does not already have one (FEIN). This is a straightforward procedure that may be accomplished entirely online using the Electronic Federal Tax Payment System (EFTPS). To pay federal taxes, you’ll need your FEIN.

Step 2: Register with the state of Oregon. You must register your new business with the Oregon Secretary of State’s Oregon Business Registry. Some towns and counties also need you to register directly with them. You may look up your company’s location to check whether it requires local registration. The Oregon Department of Revenue requires every firm that pays workers in Oregon to register. Oregon offers a beginning toolkit that includes information and resources to assist you in completing the tasks.

Step 3: Set up your payroll system. It’s possible that you’ll inherit a payroll procedure from an existing company. If it does, or if your organization is spanking new, you may want to tweak the procedure to assist you simplify your processes. Overall, you have the option of doing payroll manually (which is not advised), using an Excel payroll template, or using a payroll service to assist you with your payroll.

Step 4: Have staff complete the necessary paperwork. You must gather certain federal and state paperwork from your new recruits during onboarding. On their first day on the job, every employee must undergo I-9 verification. A completed W-4 must also be on file for new workers. Employees must also complete Oregon Form OR-W-4, which is required by the state.

Step 5: Go through the timesheets and approve them. When you collect and analyze time sheets for your workers many days before your paycheck is due, your payroll processing will begin. Starting a few days early allows you to recognize and fix any concerns with staff time management. Check time sheets for accuracy whether you use paper time sheets or time and attendance software.

If you utilize paper time sheets, have your workers sign them before handing them over to you. That is confirmation that they agree to be paid for the hours specified, and you won’t have to go after them afterwards. The advantage of employing an electronic system is that it comes with a built-in feature that allows your workers to sign their time sheets digitally.

Step 6: Work out the gross compensation and taxes for each employee. If you’re utilizing pen and paper or spreadsheets to conduct payroll, here is when things become extremely tricky. A payroll software program may help you standardize the procedure and ensure that you don’t forget any processes or make any errors in your computations. You may also refer to our payroll calculator instructions.

Oregon has one of the highest Taxes on income in the US, with additional taxes imposed by municipal governments. The tax system in Oregon is progressive, which means that the greater an employee’s wage, the larger the tax burden. Making these calculations by hand will be difficult and might result in expensive errors. These errors may be avoided using payroll software.

Step 7: Reimburse employees for their salary, benefits, and taxes. Direct deposit is used by the great majority of businesses and workers, however cash (not the best alternative) and paper checks are also available. Make sure your workers are paid at least the Minimum Wage in Oregon, which rises every year on July 1 and varies depending on where they work (more detail on minimum wage further down). You may pay both your federal and state taxes online in Oregon. If you utilize a benefits provider, they should collaborate with you to make deductions as straightforward, automated, and electronic as possible.

Step 8: Make a backup of your payroll data. You should keep a copy of this document for at least many years, just like any other company record. Companies must preserve time sheets or time records for at least two years, and all other payroll records for at least three years, according to Oregon law. Because these documents may be stored online, payroll software can help you conserve room in your filing cabinet.

Step 9: Register with the federal and state governments to file payroll taxes. All Oregon state taxes must be paid on time, generally quarterly, to the appropriate state agency, which you may do online at the Oregon Department of Revenue website. You may pay your federal taxes online via the EFTPS system on one of two schedules:

• When the IRS sets you a monthly schedule, you must deposit employment taxes on payments received during that calendar month by the 15th of the next month.
• When the IRS gives you a semi-weekly schedule, you must deposit employment taxes by the following Wednesday for payments made Wednesday, Thursday, and Friday, and by the following Friday for payments made Saturday, Sunday, Monday, and Tuesday.

Please keep in mind that the reporting and depositing of employment taxes are two separate things. You must submit taxes quarterly on Form 941 or yearly on Form 944, regardless of your payment schedule.

Step 10: Finish your payroll reports for the year. You’ll need to file payroll reports every year, including all W-2 and 1099 forms. Employees and contractors must have these forms in their possession by January 31 of the following year.

In this tutorial on how to conduct payroll, you may learn more about how to do payroll yourself. You may obtain a free checklist to ensure you don’t miss any tasks.

Payroll Laws, Taxes, and Regulations in Oregon

Oregon’s rules are identical to those of the federal government. It’s a good idea to consult with an employment law specialist in your region to ensure that your firm complies with all rules and regulations. Review the ins and outs of making payroll in Oregon below to help you stay in compliance with payroll requirements.

Taxes in Oregon

Most employers in the United States are required to pay Federal Insurance Contributions Act (FICA) taxes, with a few exceptions. FICA tax rates for Social Security and Medicare are now 6.2 percent and 1.45 percent, respectively. Oregon imposes state taxes on enterprises and workers in addition to federal taxes. Taxes are also levied by certain municipalities.

Unemployment Taxes for Employers

In Oregon, all companies are required to pay taxes under the State Unemployment Tax Act (SUTA). The current pay base is $43,800, with interest rates ranging from 1.2 to 5.4 percent. The usual rate for new employers is 2.6 percent. Businesses who pay SUTA in full and on time may be eligible for a tax credit of up to 5.4 percent on their FUTA taxes.

Compensation for Employees

Oregon businesses with one or more employees must carry Compensation for Employees insurance. Workers’ comp premiums will vary depending on the industry in which your company operates. Exceptions to this requirement include:

• Those that work for themselves
• Casual work (payroll of less than $500 per month)
• Workers at the home
• Employees who reside outside of the state

Taxes on income

Employees from Oregon who work out of state may be eligible for a tax credit for taxes paid outside of the state. If an employee resides in Oregon but works in another state, they may be eligible for a tax credit in Oregon for taxes paid on their earnings in that state, but only if the other state does not provide its own credit.

Employees who live in Multnomah County or who work in the county and live abroad are liable to a 1.5 percent tax if they earn more than $125,000 alone or $200,000 as a pair. This rate will rise to 2.3 percent on Jan. 1, 2026, for workers earning more than $250,000 as an individual or $400,000 as a pair. Multnomah County preschool programs are funded by this tax.

Oregon likewise has a statewide transportation tax. The tax is 0.001% of earnings, or $1, and it applies to both Oregon citizens and non-residents who work in the state.

Another tax in Oregon serves to support TriMet, the Portland area’s public transportation system. The current tax rate is 0.7837 percent of an employer’s salaries paid for labor conducted inside the TriMet boundary. To discover whether your company is inside the boundaries, use TriMet’s interactive map.

Minimum Wage in Oregon

The minimum wage in Oregon is tricky. Not only does the minimum wage increase each year on July 1 in accordance with the Consumer Price Index inflation rate, but it also varies by region of the state.

To further complicate things, if an employee works in numerous minimum wage zones, the employer is required to pay the minimum wage rate in the zone where the person does the bulk of their labor.

Important note for tipped employees: Because Oregon law prohibits tip credits, employers of tipped employees are unable to deduct the employee’s tips from the minimum wage. More information is available on Oregon’s minimum wage webpage.

Overtime Calculation

Unlike some other states, Oregon has a pretty basic overtime policy. If you have workers who are qualified for overtime compensation, you must multiply their usual rate by 1.5 to compute their overtime pay. If an employee works more than 40 hours in a week, they are entitled to overtime pay.

Employee Remuneration

When it comes to pay frequency, Oregon legislation is less stringent than most other states. Employers must pay workers on a regular manner at least once every 35 days, according to the law. Cash, paper check, and direct deposit are all choices for paying your workers in Oregon.

Pay Stub Regulations

According to Oregon law, you must present workers with an itemized pay stub that shows the wages received, deductions made, and the reason of the deductions. The pay stub may be part of the paycheck or a distinct document, and it can be given by hand, email, or payroll software.

Paycheck Deductions in Oregon

Aside from the deductions specified above, Oregon law requires workers to agree to any additional deductions in writing. Employers may only withhold further funds for the following reasons:

• Agreements on collective bargaining
• The employee’s debt is being repaid.
• Any additional deduction approved by the employee, as long as the firm is not the intended receiver.

Final Paychecks of Terminated Employees

Based on the sort of departure from your organization and the notice provided, Oregon has varied laws for giving last pay to an employee.

Use one of our suggested methods to generate a free payroll check if you need to pay an employee right away and aren’t presently utilizing a service.

HR Laws in Oregon That Affect Payroll

Many of Oregon’s HR rules go above the federal minimums, so pay attention to the differences to keep your company out of trouble.

Reporting of New Hires in Oregon

Your business will need to complete an Reporting of New Hires in Oregon Form for each new employee. This is used to enforce child support orders and must include the employee’s name, address, and Social Security number.

Breaks

When an employee’s planned shift is more than eight hours, the company must give at least one 30-minute unpaid and uninterrupted meal break. If an employee is compelled to work during their meal break, they must be compensated for the full break, even if they only worked part of it.

Oregon also specifies when an employee must take a break for lunch:

• If an employee works seven hours or fewer each day, their lunch break shall begin no earlier than the second hour and finish no later than the fifth hour.
• If an employee works more than seven hours, their lunch break must begin no earlier than the third hour of work and last no later than the sixth hour of work.

If the following requirements are met, tipped workers may forego their lunch break:

• The employee is compensated for serving food and beverages, gets tips, and reports tips to their boss.
• Employee must be at least 18 years old.
• The employee has been with the company for a minimum of seven days.
• A waiver form has been signed by the employee.
• The waiver form is kept by the employer for at least six months after the employee has left the company.
• The company gives the employee a fair chance to eat at any time throughout their shift.
• Any meal breaks taken by the employee are reimbursed by the company.
• The employee is not forced to forego their entitlement to a lunch break by the company.

Employers in Oregon are required to give two paid 10-minute breaks for every eight hours worked. If an employee is under the age of 18, each four-hour shift must include a 15-minute break.

Employers should provide nursing moms appropriate pauses to express milk as required. They are also obligated to offer a non-bathroom place. These breaks are unpaid, with the exception that if a nonexempt employee takes a paid rest time during their breastfeeding break.

Child Labor Laws in Oregon

Child labor regulations in Oregon are mainly based on the Fair Labor Standards Act (FLSA). Workers under the age of 18 are subject to certain limitations under the FLSA.

People as young as 14 may work up to eight hours per day and 40 hours per week in Oregon. Children 14 and 15 may only work from 7 a.m. to 7 p.m. during the school day, and they cannot work more than three hours per day or 18 hours per week. Whether or not school is in session, children aged 16 and 17 may work up to 44 hours each week.

Requirements for time off and leave

The Family and Medical Leave Act is followed in Oregon (FMLA). Workers who need to take time off for a covered cause are protected under the Oregon Family Leave Act (OFLA). The OFLA does not require that the leave be compensated, although it may be. Oregon is set to implement paid family leave in January 2023, however that date may be moved out to later in the year.

An employee must have worked an average of 25 hours per week for 180 days before to the leave to be eligible for OFLA, and your firm must employ at least 25 people. Employees may take protected leave under OFLA for the following reasons:

• Parental leave is a period of time when a parent
• An employee’s or a family member’s serious health condition
• Maternity leave
• Leave for a sick kid
• Family leave for military personnel
• Leave of absence for bereavement

Employers in Oregon are not required to give paid vacation time to their workers. If an employer so desires, they may set a policy.

Employers with ten or more workers, or six or more in Portland, are required by the state to offer paid sick leave. Employers with less than ten workers are required to give sick leave, although it is not required to be compensated. There is no set amount of sick leave that must be taken.

Use our free PTO calculator if you need assistance calculating your PTO accumulation.

Employee voting leave is not required in Oregon.

Oregon requires any employer with 25 or more employees to give paid Leave of absence for bereavement, per the OFLA. Employers with fewer than 25 employees are not required to provide any Leave of absence for bereavement, paid or unpaid.

Payroll Forms in Oregon

Payroll forms differ by state, and some, like Oregon, have their own W-4. Thankfully, it is the only one:

• Employee withholding form OR-W-4

Forms for Federal Payroll

Here is a complete list and location of all the Forms for Federal Payroll you should need.

• W-4 Form: Provides information on employee withholdings so you can properly calculate and withhold federal and state Taxes on income
• W-2 Form: This form is used to record each employee’s total yearly pay.
• W-3 Form: This form is used to record all workers’ total yearly salaries.
• Form 940 is used to compute and submit unpaid unemployment taxes to the Internal Revenue Service (IRS).
• Form 941 is used to submit quarterly income tax returns.
• Form 944 is used to submit yearly income tax returns.
• Non-employee contract work 1099 forms: Provides information for non-employee contract work.

Payroll Tax Resources in Oregon

Conclusion

Oregon’s payroll is more complicated than other states, but it’s still easier than California’s. There is just one state-specific form, but you must pay attention to numerous taxes.

Using payroll software is one approach to guarantee you don’t make any errors or skip any tasks. Gusto assists you with making accurate and timely payments, as well as providing free direct deposit for workers and health insurance benefits. Sign up for a free 30-day trial.

Gusto is a great place to visit.

The “oregon employer payroll tax calculator” is a tool that helps employers calculate their payroll taxes in Oregon. The calculator takes the information from the employer and calculates how much to withhold for each employee.

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