The process of starting an LLC in Oklahoma is a straightforward one.
There are a few steps that you need to take, but nothing too complicated. If you have been thinking about getting an LLC for your business, this article will help clarify what needs to be done.
We will cover all the relevant information that the reader should know about starting an Oklahoma LLC, including taxes that LLC owners need to pay and all the rules and regulations regarding Oklahoma LLCs.
What Is a Limited Liability Company?
A limited liability company is a limited company that is very similar to a limited partnership or an S corporation, but it has even more benefits.
The owners of the limited liability company are called members, and they have limited personal liability for any debts or liabilities incurred by the LLC.
Unlike sole proprietorships, general partnerships, C corporations, and most other company types, limited liability companies don't have to pay taxes on their profits.
Instead, the members of an LLC must report income and losses directly on their personal tax returns, just like any other business.
Because limited liability companies are legally treated as separate entities from their LLC owners, they can enter into contracts that businesses cannot do with individuals or general partnerships.
A domestic limited liability company is one formed in your home state where you also happen to do your business, unlike a foreign LLC that already operates in a different state.
Start an Oklahoma LLC in a Few Easy Steps
The first step to starting an Oklahoma LLC is making sure that you are aware of all the requirements.
There are a few things that owners need to keep in mind before they can register with the state, including how many members there will be and if your business name has already been taken.
It applies even when you're a foreign LLC.
There are a couple of steps you need to follow, but they're quite easy and straightforward. Once you've completed them all, you'll have your business.
Step 1: Choose a Name for Your Oklahoma LLC
If you're ready to move forward with registering your Oklahoma LLC, the very first step is choosing a name and then filing a trading name with the Oklahoma Secretary of State.
The first thing you should do when deciding on a name is search for it on the Business Registry website dedicated to doing just that: making sure no other companies have taken up the same moniker and it adheres to the LLC naming guidelines.
Suppose someone has already registered your chosen name or any derivation of it. In that case, you will not get very far during registration.
If the name you want to take is available, register it with the Oklahoma Secretary of State and proceed to the next step.
Read More: Looking Up an LLC in Oklahoma
Step 2: Find a Registered Agent
After coming up with a business name, you should find an Oklahoma registered agent.
A registered agent is an individual or business entity representing the company in legal matters, and they are necessary to maintain your business within state lines legally. They can file an annual report in your stead, for example.
You cannot register an Oklahoma LLC without a registered agent because it is required by law - but there's no need to worry about finding one, as they can be found in many places.
If you want to find your own registered agent, do an internet search for a registered agent service in Oklahoma.
You will have several options of companies that offer the registered agent service at different prices.
Be sure to compare each option before making a final decision about which one is best for your business - but overall, they are relatively cheap.
On average, you can find a registered agent service for $49 a year in the state of Oklahoma.
You can find an agent without the help of a service such as this one, but agent services help streamline the entire process, including filing an annual report.
Step 3: Submit Oklahoma Articles of Organization
After you've chosen a registered agent, the next step is to file articles of organization with your county clerk. You can also file online with the Secretary of State.
This can be done through their website or in person at the courthouse. There are several different options for filing articles of organization online, so do some research before submitting them.
Oklahoma LLC Articles of Organization need to contain information such as the name of your LLC, its business address in the state of Oklahoma, and a list of members.
Besides listing the name and the street address of your business, your articles of organization should also say who will act as a registered agent (a person or business that receives official legal documents on behalf of the company), their registered office address, and whether it is managed by members or managers.
You can submit articles in person or file online and pay the filing fee with the Secretary of State.
Your articles may be rejected if they do not contain all this information correctly.
Step 4: Formulate an LLC Operating Agreement
An Oklahoma LLC operating agreement is an important document that sets up the operating rules for your LLC.
Technically, operating agreements are not legally required in Oklahoma.
However, they can be extremely helpful when it comes to keeping track of important information about your company and its members.
With an operating agreement, you won't be able to set clear rules and expectations.
An Oklahoma LLC operating agreement should contain some basic information such as member names, management structure (members or managers), roles and responsibilities of all people involved, operating procedures, operating capital, and ownership percentages.
The operating agreement should also include provisions for how members will contribute to the business if they join later on after it has been established, what happens in case of death or withdrawal from company affairs by one of its members, and any other situations that may come up down the road.
While the operating agreement is not a mandatory document, it's something you shouldn't avoid or put off for later.
Step 5: Obtain an Employer Identification Number
An employer identification number serves as the business identification number for federal taxes. It is also known as EIN or federal tax ID.
EIN can be obtained from the internal revenue service (IRS). It's necessary to have an EIN if a business has employees or operations in more than one state.
A federal employer identification number allows the company to have access to federal funds and tax benefits, such as withholding allowances for its employees.
It also makes it possible to open bank accounts with ease so the company can keep track of its earnings.
Once you have an EIN, you will be informed about available tax classification options.
Most LLCs opt for the default tax status, but C corporation status is also an option.
Do You Need a Business License for Your Oklahoma LLC?
Certain types of businesses require business licenses before they can operate in Oklahoma.
Business licenses and permits are two terms used interchangeably to show that a certain business entity has permission to conduct business in the state of Oklahoma.
While Oklahoma doesn't have a general business license, it does require different types of permits and business licenses for companies depending on their business structure and the services provided.
Some of the most common types of businesses that need a business license include:
- Contractor/construction companies
- Professional offices (i.e., lawyers, accountants)
- Restaurants or bars
Retailers, resellers, and other businesses that sell tangible goods need a sales tax permit. Keep this in mind during business formation.
Separating Private and Business Assets
It's a good idea to keep your assets separate, especially when filing an annual report.
If you don't, then your personal money could be at risk if there's a lawsuit against the company for some reason.
Additionally, it will give individuals more privacy when they're doing personal transactions with their own finances rather than dealing directly with the LLC.
The biggest advantage of an LLC is the personal asset protection it provides.
This means that if someone files a lawsuit against your LLC, it can't go after any of its owners' personal assets to pay for damages or settlement agreements.
Only business-related assets and income will be used in court cases or settlements, not personal ones.
If you keep assets mixed, you're at risk of losing them all in case of a lawsuit.
Get a Bank Account
Once you get an EIN, you can get a bank account. It's a requirement even when you're a foreign LLC or an LLC offering professional services.
You can easily open business bank accounts by contacting your local financial institutions and setting up an appointment with a business banker to discuss the account options available for LLCs.
You'll need to provide all of the relevant business information such as business name, EIN number, trade name if applicable, location of business office or headquarters, etc.
The main advantage of having a separate bank account for your LLC business is that business bank accounts offer a lot of liability protection.
Having an LLC bank account can protect your personal assets from being attached in case your business fails to pay the debts it owes to others or if someone successfully sues you for damages caused by negligence on the part of your LLC business.
You can also take advantage of business credit card benefits besides enjoying complete personal liability protection.
Oklahoma LLC Tax Requirements
The federal tax requirements for LLCs are pretty straightforward.
They're taxed as a pass-through entity, meaning that there are no federal income taxes paid at the federal level, and any profits from your business get distributed to you or other members of the company according to their ownership stake in it.
Go to the IRS website for more information on taxation.
Oklahoma Employer Tax
Employer tax in Oklahoma is meant to contribute to the state's Unemployment Insurance Fund.
This fund helps workers who have been laid off from their jobs and are looking for new ones.
This is done through a percentage-based tax, which goes up or down based on how many claims were filed against this unemployment insurance pool in previous years.
Oklahoma Sales Tax
In Oklahoma, sales tax is based on a percentage of the sales price, and it's applied to many different things that people buy.
The state allows individual cities and counties to add an additional sales tax or excise tax.
For example, Tulsa County has its own sales tax rate in addition to Oklahoma's statewide sales taxes.
Similar Article: How to Close an LLC in Oklahoma
Is Forming an LLC Free?
No, forming an LLC in Oklahoma isn't free.
However, it's very affordable to form an LLC in Oklahoma compared with other states.
How Much Does It Cost to Make an LLC in Oklahoma?
The filing fee is $100. You pay the fee to the Oklahoma Secretary of State.
How Long Does It Take To Get LLC Approved in Oklahoma?
We've found that it takes approximately two to three weeks for a filing with the Oklahoma Secretary of State.
The sales tax is paid at the time you file your LLC paperwork, but sales taxes are due once per month, so be sure to account for this in your budget if selling products or services as an LLC.
Is an LLC Easy to Start?
An LLC is relatively easy to start and is an excellent option for small to medium businesses.
If you plan to hire employees in the future, we recommend checking out our article on how to form an LLC in Oklahoma: How To Form An LLC In Oklahoma - The Definitive Guide.
What Taxes Does an LLC Pay in Oklahoma?
LLCs in Oklahoma need to pay federal and state taxes, just like LLCs in all the other states.
Can I Form an LLC on My Own?
Yes, you can, but we recommend consulting with a tax attorney.
How to Dissolve an LLC in Oklahoma?
To dissolve an LLC in Oklahoma, you'll have to file Articles of Dissolution with the Oklahoma Secretary of State.
Starting an LLC in Oklahoma: Conclusion
The process of setting up an Oklahoma limited liability company is not complicated, but it does require some careful planning.
If you want to do everything by the books and minimize your risk for any potential legal challenges or complications down the line, then talk to a lawyer about what documents are necessary at each stage of this endeavor.
And remember that just because something can be done on your own doesn't mean it should be - always consult with professionals when appropriate.
Take legal and business advice only from real experts in the field, and you'll have all the information you need to start an Oklahoma LLC today.