How To Start An LLC In Oklahoma [2023 Guide]
Are you thinking about starting your own small business? If so, you’ll need to decide what business structure to use. One popular option in Oklahoma is the Limited Liability Company (LLC). An LLC offers several benefits, including limited liability for its owners and flexibility in how it’s taxed. In this guide, I’ll provide an overview of the process of starting an LLC in Oklahoma and some of the key things you need to know before you get started.
Why do people choose LLCs?
An LLC is a type of business structure that offers its owners personal liability protection. This means that if your LLC is sued, the owner’s personal assets are generally safe as the assets of the LLC are at risk. While LLCs are similar to corporations in this respect, they are much easier to set up and maintain. In addition, LLCs can be taxed as either sole proprietorships or corporations, depending on the circumstances.
Unlike a sole proprietorship or partnership, where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal entity that protects the business owner’s personal assets. So, if the LLC is sued, the owner’s personal assets are usually protected.
Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.
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What are the steps to form an Oklahoma LLC?
Let’s break down the steps to complete the Oklahoma LLC formation process.
Step 1: Choose an LLC Name
The first step in forming an Oklahoma Limited Liability Company is to make sure the name you want is available.
It’s critical to do a name search before registering an LLC name, as the name of each LLC must be distinguishable from other entity names registered in the state of Oklahoma. The Oklahoma Secretary of State makes it easy to search and verify if your LLC name is available. Here is more information on how to do an Oklahoma LLC name search.
In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:
– Limited Liability Company
– Limited Company
The word limited may be abbreviated as Ltd., and the word company may be abbreviated as Co.
A comma may be used after the business name and before the designator. “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.
If there is a name you want to use, but are not ready to register the LLC, you can file the Name Reservation Application with the Secretary of State and hold a name for up to 60 days.
Before settling on a name, you may want to see if a domain name is also available to match your business name and website address.
Step 2: Appoint an Oklahoma Registered Agent
Every LLC in Oklahoma is required to have a Registered Agent. A Registered Agent will act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.
The basic requirements to be a Registered Agent in Oklahoma include:
– The agent must be an Oklahoma resident at least 18 years of age or a commercial Registered Agent service with a registered office in the state.
– The agent must have a physical address in the state (PO Boxes aren’t allowed).
– The agent must generally be available during normal business hours at the address provided to receive service of process.
Learn more about the requirements for a Registered Agent in Oklahoma.
Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed. Hiring a commercial Registered Agent service like Northwest Registered Agent will help keep the owner’s names from being publicly listed.
Step 3: File the Oklahoma LLC Articles of Organization
The paperwork to officially create an LLC in Oklahoma is called the Articles of Organization. To submit the paperwork, either file online through the Oklahoma Secretary of State’s website or download and mail the Oklahoma LLC Articles of Organization (SOS Form 0074).
When filling out the Articles of Organization, a few sections and terms can be confusing. Let’s go over a few of these sections to help get your LLC started right.
Effective Date – If you want the LLC to start immediately, choose “Filing Date.” If you want the LLC to start later, enter a date less than 90 days in the future to start. The main reason for delaying the LLC start date is when the LLC filing is being made close to the end of a calendar year, and the business isn’t going to have any activity until the start of the next year. By delaying the start date, they eliminate the need to file a partial-year business tax return.
Most people choose “Filing Date.”
Principal Office Address – In this section, enter the street address, city, state, and zip code of the initial principal place of business. This address can be the LLC’s physical address, or it can be the address where the business records are stored. You may not use a PO Box for the designated office. This address is where the annual certificate reminder will be sent.
Duration – In this section, you can indicate how long the LLC intends to remain in existence. Most LLCs will choose a Perpetual duration; however, some businesses (usually investment-related) will have a specific closure date.
What To Do After Forming An Oklahoma LLC
Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.
Prepare an Oklahoma LLC Operating Agreement
The operating agreement is a document that governs the framework of an LLC. This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.
Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:
- The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
- Member’s personal liability protection may be diminished.
- Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.
Obtain an EIN
If the LLC will hire employees or is owned by more than one member, an EIN is required.
The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file federal and state taxes, and more.
There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.
If an Employer Identification Number isn’t required, the LLC can use either the owner’s social security number or register for an EIN.
Related: How to Apply for an EIN
Open an LLC Bank Account
Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.
Several documents will be needed to open a business bank account, such as:
- A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
- Copies of the original formation paperwork from the state showing the creation of the LLC.
- Driver’s licenses of the members.
- Occasionally when registering a new LLC, the bank may require an Oklahoma Certificate of Good Standing to prove the LLC is active and in good standing with the state.
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:
- Business License – Some cities require businesses to obtain licensing before they can start.
- Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
- Sales Tax Permit – In order to sell products and certain services, registration with the Oklahoma Tax Commission will be necessary.
File the Oklahoma LLC Annual Certificate
LLCs are required to file an annual certificate with the Oklahoma Secretary of State. The annual report updates ownership information and other details.
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Oklahoma LLC FAQs
How much does it cost to start an LLC in Oklahoma?
To cost to start an LLC in Oklahoma is
$100 for the Secretary of State’s filing fee.
How long does it take to start an LLC in Oklahoma?
Approval for an Oklahoma LLC is typically under two weeks when filing by mail or 1-2 business days when filing online. Walk-in expedited filing is available, and for an additional fee, the LLC is approved in about 1 hour.
How long is an LLC good for in Oklahoma?
Oklahoma LLCs will need to be renewed each year with the Secretary of State by filing an annual report and the $25 filing fee.
Can you be your own registered agent?
Yes – anyone can act as a registered agent, provided they are at least 18 years old, reside in the state of Oklahoma, and are generally available to receive documents during normal business hours.
Does an LLC need a business license in Oklahoma?
It’s sometimes thought that the LLC and business license are the same in Oklahoma, but they aren’t. An LLC is referred to as a business entity, which is how the business is organized to conduct business. A business license is an approval from a government entity to operate legally.
Most businesses in Oklahoma will need to register with a variety of government agencies. Oklahoma business license requirements are based on what the business does or where it is located in the state, not on the type of entity.
What is a Foreign Limited Liability Company?
A foreign LLC isn’t a special type of LLC. Instead, it’s an LLC that was formed in another state (domestic LLC) but wants to operate physically in Oklahoma. Physically operating means having a presence, such as having an office or hiring an employee.
Related: What is the difference between a domestic Oklahoma LLC and a foreign LLC?
What is a Professional Limited Liability Company?
Businesses that require occupational licensing in Oklahoma, such as accountants, architects, veterinarians, etc., can form a Professional Limited Liability Company (PLLC) instead of an LLC. Filing for a PLLC is very similar to that of an LLC.