Are you unsure about how to form an LLC in Oklahoma? You’ve arrived at the ideal location! You will be guided through the LLC creation process step-by-step by this guide, which also offers valuable information to ensure the long-term viability of your Oklahoma LLC.
Table of contents
- Pros and Cons of Forming an LLC in Oklahoma
- Step 1. Pick A Name for Your Business
- Step 2: Pick a Registered Agent
- Step 3: File the Articles of Organization
- Step 4: Create an Operating Agreement
- Step 5: Get Your EIN
- The Cost of Forming an LLC in Oklahoma
- LLCs vs. Other Business Entities
- Sole Proprietorship
- General Partnership
- Corporation
- Limited Liability Company
- The Bottom Line: Forming an LLC in Oklahoma
The following actions must be taken in order to form an LLC in Oklahoma:
- #1: Choose a Name for Your Company
- #2: Select a Registered Agent
- #3: Submit the Organizational Articles
- #4: Draft an agreement for operations
- #5: Obtain an EIN
Pros and Cons of Forming an LLC in Oklahoma
| Pros 1: Oklahoma has minimal legal compliance requirements compared to other states. 2: Oklahoma has lower taxes for LLCs than most states, including no personal income tax. 3: Members have flexibility in structuring the operations and management of an Oklahoma LLC. | Cons 1: The liability protections for OK LLC members are unproven and untested in courts |
Step 1. Pick A Name for Your Business
The first and most crucial step in starting a business is deciding on an LLC name. The name must be easily recognizable and understood, and it must adhere to all naming specifications set forth in Oklahoma LLC rules.
Either “limited liability company” or one of its acronyms (LLC or L.L.C.) must appear in your name. Adding this line clarifies to those doing business with you the extent of your company’s liability restrictions.
Words that might misidentify your Oklahoma LLC as a government organization are prohibited. Assume Frank Bonnie Inkle want to call his business FBI, LLC after his initials. Frank cannot use his initials “FBI” as people would likely mistake them for the Federal Bureau of Investigations if they saw the name of his firm.
Additionally, you are not allowed to use a name that is already registered to or reserved for an Oklahoman business. You can use the LLC Oklahoma search feature on the Secretary of State’s website to see if the name you’ve chosen is still available. Don’t worry if the name you want is already taken; there are methods to modify your name to make it stand out without altering it entirely.
For instance, Sally truly intended to call her business “Sally’s Hot Dogs, LLC,” but that domain is already registered. To make it distinct, she may attempt a different spelling of the name or add another word. She has two options: “Sally’s Best Hot Dogs, LLC” or “Hot Dogs by Sally, LLC.”
Inside Scoop: You should see if your company’s name is accessible as a domain name in addition to scanning the entity name database. You may require a website in the future even if you don’t need one right now. When the time comes to launch your own website, you may always buy the domain name.
Step 2: Pick a Registered Agent
When deciding how to form an LLC in Oklahoma, there are several things to take into account, such as who will be in charge of receiving crucial correspondence meant for your business. In Oklahoma, in order to conduct business as an LLC, you need to choose an agent who will act as a liaison between the state and your company and receive process if you are sued.
The agent may be, but is required to have a physical address in Oklahoma.
- An Oklahoman citizen
- Yet another Oklahoma LLC
- An organization, either local or international, that is permitted to conduct business in Oklahoma
You may even designate an LLC member or yourself as the agent. Depending on your company structure, assigning a third party might be a good idea. Some LLCs elect to designate their attorney as the agent, which eliminates one step in the process of obtaining legal representation in the event of an LLC lawsuit.
Inside Scoop: A number of organizations concentrate only on offering registered agent services to LLCs and other businesses in Oklahoma. Choose a provider that meets your budget and has a good rating after doing some research.
Step 3: File the Articles of Organization
The articles of organization for your Oklahoma limited liability company must be filed in order for you to formally incorporate your business, which is the next step in establishing an LLC in Oklahoma. This record has to contain:
- The LLC’s name
- The actual location of the LLC’s headquarters
- The email address of the LLC
- The period of the LLC (perpetual, fixed number of years, specified date of dissolution, etc.)
- The signature of an LLC representative, manager, or member
Oklahoma has an entity filing webpage or you may mail the articles of organization to the Oklahoma Secretary of State if you would like to file them electronically.
Mailing address:
OKLAHOMA SECRETARY OF STATE
Business Filing Department
421 N.W. 13th, Suite 210
Oklahoma City, OK 73103
Inside Scoop: Whether you decide to file online, or through the mail, the filing fee is $100. Filling out the form takes about five minutes and if you file online the processing time is only about one to two business days. If you choose to mail in a paper copy, the processing time is about three to four weeks.
Step 4: Create an Operating Agreement
Although it’s not necessary to have an operating agreement in place before creating an Oklahoma LLC, having one in place can help you stay ahead of any potential problems with your company. The financial and functional decisions that the firm must make are outlined in this agreement. It arranges each member’s tasks and responsibilities and establishes procedures for regular operations and, in the unlikely event of an emergency, emergency procedures.
Since just one member is in charge of running the company, some single member LLCs may decide not to have a formal operating agreement. Operating your LLC without a written agreement creates uncertainty if it has a large membership or workforce.
As an illustration, suppose an LLC in Oklahoma has just two members who orally agree to contribute half of their annual profits to the LLC for reinvestment. One of the members disputes ever having made the deal when it comes time for them to follow through a year later. The LLC finally dissolves due to this disagreement. The disagreement would never have happened if there had been a written agreement that documented this oral decision.
Inside Scoop: You never know what the future may bring; it might even cause your LLC to disband. The Oklahoma default rules, which might not be in the best interests of your business, will be replaced by a clause in your operating agreement that specifies how your LLC can be dissolved. For instance, in order to dissolve, all members must automatically give their approval in unison. If your operating agreement specifies a majority vote, you might choose to impose that rule.
Step 5: Get Your EIN
You may be wondering what else comes with running your firm now that you know how to form an LLC in Oklahoma. An employer identification number (EIN), which you may apply for online, is necessary for every business operating in Oklahoma, even if it doesn’t employ anyone. Establishing a company checking account or credit line will also require your EIN.
The Cost of Forming an LLC in Oklahoma
Oklahoman businesses might find limited liability company formation to be a cost-effective alternative due to the comparatively cheap initial filing charges. When starting a new LLC in Oklahoma, the articles of organization filing fee is just $100. A company attorney’s fees to manage the formation procedure usually range from $300 to $500. Local business licenses, permits, and name registration typically come with very low fees.
An LLC that is already in operation in Oklahoma must pay an annual fee of $25 to each member. LLCs must still pay employment taxes, federal income taxes, and Oklahoma’s 6% corporate tax rate if they are set up as corporations, even if the state does not tax personal income. In addition, owners must set aside money for insurance, other essential operational costs, commercial leasing if they are renting office space, legal and accounting support, and license renewals. All things considered, the initial year costs of forming an LLC in Oklahoma might be as little as $500–1,000.
LLCs vs. Other Business Entities
Make sure an LLC is the appropriate type of business entity for your firm before learning how to form an LLC in Oklahoma. This is a brief overview of Oklahoma’s most prevalent business associations.
Sole Proprietorship
A sole proprietor is a person who operates a business alone, assumes all business liability, and keeps all earnings for themselves. No official filing with the secretary of state is necessary.
General Partnership
In a general partnership, two or more persons do business together and share earnings (and losses) as well as the firm’s liabilities. No official filing with the secretary of state is necessary.
Corporation
The company, which is owned by stockholders, bears full obligation. Income is “double-taxed” under a corporate structure (once at the corporate level and once when dispersed to workers or shareholders), which is a significant distinction between a corporation and an LLC. It must be filed formally with the secretary of state.
Limited Liability Company
Combining the liability advantages of a corporation with the tax advantages of a sole proprietorship led to the creation of limited liability companies (LLCs). All liability is assumed by the firm; members’ sole taxation is at the income level. It must be filed formally with the secretary of state.
For medium-to higher-risk firms, owners who need to safeguard substantial personal assets, or owners who prefer not to pay double taxes like corporations do, an LLC is a smart option.
If you’ve determined that an LLC is the ideal structure for your company, read our comprehensive guide to find out more about how to form an LLC in Oklahoma.
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The Bottom Line: Forming an LLC in Oklahoma
In Oklahoma, forming an LLC just takes a few simple steps and is a reasonably simple procedure. To make paperwork easier, the state offers a wealth of materials, including template forms and step-by-step instructions. Oklahoma is therefore among the top states in which to form an LLC. Examining top LLC formation services may also help to expedite the procedure.
