There are a lot of considerations to take into account when deciding what type of business to start. Here are some key points I recommend checking into when doing your research:

Identify your passion and strengths: Choose a business idea that aligns with your interests, skills, and expertise. Running a business that you’re passionate about increases your motivation, and leveraging your strengths will contribute to its success.

Research the market: Conduct thorough market research to understand the demand for your product or service in Oklahoma. Identify your target audience, their preferences, and the existing competition. Look for opportunities, niches, or gaps in the market that your business can fill.

Assess the feasibility: Evaluate the financial viability of your business idea by estimating startup costs, operating expenses, potential revenue, and profit margins. Consider the legal and regulatory requirements specific to Oklahoma and your industry, such as permits, licenses, and taxes.

Consider scalability and adaptability: Opt for a business idea with the potential to grow and expand over time. Also, ensure that your business can adapt to changing market conditions and customer preferences.

Network and seek mentorship: Connect with local business owners, industry experts, and other entrepreneurs in Oklahoma to get their reactions to your idea. Their insights and experiences can help you make informed decisions and avoid common pitfalls.

Test your idea: Validate your business idea by creating a minimum viable product (MVP) or conducting a small-scale pilot. Gather feedback from potential customers and make necessary adjustments to improve your product or service.

Research the idea: Be sure to check out our business library, which offers a wide range of resources to help entrepreneurs like you research your business idea further. With detailed information on over 300 industries, trends, costs to start, and more, our library can help you learn more about the various opportunities and make informed decisions about your venture.

The next step in starting a business is to start writing a business plan. A well-crafted business plan serves multiple purposes, one of which is acting as a roadmap for your business, outlining your goals, strategies, and projections. It helps you identify potential challenges, risks, and opportunities while mapping out the steps you need to take to achieve success.

Having a well-structured business plan will also provide your lenders, investors, or partners with a clear understanding of your business model, financial projections, and marketing strategies, which can help establish credibility and trust.

Related: How to write a business plan

A business entity is a legal structure that defines how a business is organized, operated, and taxed. Selecting the appropriate entity type is crucial because it impacts your personal liability, tax obligations, and administrative requirements. In Oklahoma, the four common types of business entities are sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

Sole Proprietorship: This is the simplest and most common form of business entity. A sole proprietorship is owned and operated by a single individual who controls the business. The owner is personally responsible for all business debts and liabilities. The pros of a sole proprietorship include ease of formation, minimal administrative and reporting requirements, and pass-through taxation, where profits are taxed only at the individual level. The cons are unlimited personal liability and limited growth potential due to the reliance on the owner’s personal credit and assets.

General Partnership: A general partnership consists of two or more individuals who share the ownership, management, and profits of a business. Each partner is personally liable for the business’s debts and liabilities. The pros include ease of formation, shared management and financial responsibilities, and pass-through taxation. The cons involve unlimited personal liability for all partners, potential disputes over decision-making, and the lack of continuity if a partner leaves or dies.

Corporation: A corporation is a separate legal entity owned by shareholders, which provides limited liability protection to its owners. The pros of a corporation include limited personal liability, easier access to capital through the issuance of stock, and the potential for perpetual existence. The cons include complex formation, administrative requirements, and potentially double taxation (profits are taxed at both the corporate and individual levels).

Related: How to form an Oklahoma corporation

Limited Liability Company (LLC): An LLC is a hybrid business entity that combines the limited liability of a corporation with the pass-through taxation of a sole proprietorship or partnership. In Oklahoma, LLCs are popular for their flexibility and simplicity. The pros of an LLC include limited personal liability for members, pass-through taxation, and flexible management structures. The cons involve more complex formation and higher formation fees than sole proprietorships and general partnerships.

Related: How to form an Oklahoma LLC

There are several federal, state, and local regulations and operating requirements Oklahoma businesses need to register for and comply with. Some common business registrations include:

Business Licenses: The state of Oklahoma doesn’t require a general business license. Depending on your business’s location in the state, you may also need to obtain local permits and licenses, such as zoning permits, building permits, or occupational licenses.

Federal Employer Identification Number (FEIN): An FEIN, also known as a Federal Tax Identification Number, is required for many businesses in the United States, with the exception of sole proprietorships and single-member LLCs without employees. It’s used by the Internal Revenue Service (IRS) to identify your business for tax purposes. You can obtain an EIN for free by applying online through the IRS website.

Sales Tax Permit: If you plan to sell goods or provide taxable services in Oklahoma, you must obtain a sales tax permit from the Oklahoma Tax Commission.

Business Name Registration (only for Sole Proprietorships & General Partnerships):
Businesses are not required to register a fictitious business name in Oklahoma, but many banks will require the name to be registered before allowing the business to open a business bank account.

Fictitious business names can be registered with the County Clerk’s office in the county where the business is located.  The county fee for filing a Certificate of Fictitious Name with the County varies slightly but is typically around $25.

Alternatively, a Trade Name Report can be filed with the Oklahoma Secretary of State.   Unlike the county filing, if the name is available, the fee is $25 to use it and gives protection from anyone else in the state from using that name.

Related: How to Register a Trade Name in Oklahoma

Professional Licensing: Some services, such as contractors, personal trainers, and barbers, require licensing in Oklahoma.  While this isn’t a license on the business, licensing is required in order to operate.

Related: What business licenses and permits are needed in Oklahoma?

Another important step in starting a business is opening a business bank account. Mixing personal and business finances can lead to issues, including tax complications, legal liabilities, and difficulty securing financing.

When business and personal finances are mixed, keeping track of expenses and income becomes increasingly difficult, which can cause issues during tax season. It may also lead to penalties and fines from the IRS.

Additionally, mixing finances can lead to losing protection for personal assets, especially for corporations and LLCs. If legal issues arise within the business, personal assets may be at risk if they’re not adequately separated from business assets.

Moreover, keeping a clear separation between business and personal funds is critical when it comes to obtaining business financing, as lenders want to see the financial stability of the business. Comingling funds makes it more difficult for them to assess the business.

Access to capital is essential for starting and growing your business, and finding the best funding source can be challenging. Here are some common funding options available in Oklahoma:

Personal Funds: Many entrepreneurs choose to finance their business using their personal savings or funds from friends and family. This option allows you to retain full control of your business and avoid taking on external debt. However, using personal funds can deplete your savings and may not be sufficient for all your business needs.

Conventional Bank Loans: Traditional bank loans are a common funding source for small businesses. Banks in Oklahoma offer various loan products tailored to the needs of small businesses, including term loans, lines of credit, and equipment financing. To qualify for a bank loan, you’ll typically need a strong credit history, a well-prepared business plan, collateral, and personal investment of at least 15%-25% of the total startup costs.

SBA Loan Guarantees: The U.S. Small Business Administration (SBA) offers loan guarantee programs to help small businesses in Oklahoma access financing. The SBA doesn’t provide loans directly but guarantees a portion of the loan made by approved lenders, reducing the risk for lenders and making it easier for small businesses to qualify. Some popular SBA loan programs include the 7(a) Loan Program and the 504 Loan Program.

Microloan Programs: Microloans are small loans designed for businesses with limited capital requirements or who cannot qualify for conventional lending. These loans are typically provided by nonprofit organizations, community development financial institutions (CDFIs), and specialized microlenders. Organizations such as the REI Oklahoma Business Lending Program and the Oklahoma Capital Access Program offer microloans to small businesses in Oklahoma.

Investors: Another funding option is to seek investment from angel investors or venture capitalists. Angel investors are typically high-net-worth individuals who invest in startups in exchange for equity or convertible debt. Venture capitalists are investment firms that provide funding to high-potential, high-growth companies. While these investors can provide substantial funding and valuable expertise, they often require a share of ownership and control in your business.

Small Business Grants: While there is a lot of interest in grants, it’s not common for a new business to receive one. While they are occasionally available, they tend to be for science & technology-related companies through the SBIR (Small Business Innovation Research) or STTR (Small Business Technology Transfer) federal programs. In addition, there are grants offered at the state level for a variety of initiatives like technology startups, agriculture, or tourism, but they tend to be for operating businesses.   

Related: Understanding the different types of business funding

Preparing to hire your first employee is a significant step and requires thoughtful planning to ensure a smooth transition and compliance with applicable laws and regulations. Small business owners are required to register with a number of agencies, including the Oklahoma Employment Security Commission (OESC), Oklahoma Tax Commission (OTC), and others.

Employers are responsible for reporting new hires, verifying employees are eligible to work in the U.S., income tax withholding, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.

Related: Steps to hiring your first employee in Oklahoma

As a business owner, you never know what kind of unexpected events might occur that could harm your business. That’s why having proper insurance coverage is crucial for any small business in Oklahoma. A few reasons why you may need business insurance include:

Protect Your Finances: Without insurance, you’re putting your finances at risk. If there’s an unexpected event that damages your business property or someone gets injured on your premises, you could be liable for the costs. This could potentially bankrupt your business and leave you in financial ruin. However, with proper insurance coverage, you can protect yourself and your business from these types of financial losses.

Peace of Mind: Running a small business is stressful enough without having to worry about unexpected events that might harm your business. Insurance can give you peace of mind, knowing that you’re protected against events that are beyond your control. This allows you to focus on growing your business without worrying about the “what ifs.”

It’s the Law: Some types of insurance are legally required in Oklahoma. For example, if you have employees, you’re required to have workers’ compensation insurance. Additionally, if you own a vehicle that’s used for business purposes, you may be required to have commercial auto insurance. Failing to have these required insurances can result in fines, lawsuits, and other penalties.

Related: Types of insurance your business may need

Bookkeeping is the process of recording, organizing, and maintaining a business’s financial transactions and plays an important role in a small business’s success. It is essential because it helps business owners:

Monitor financial performance: Bookkeeping provides a clear picture of your business’s financial health, enabling you to make informed decisions and identify areas for improvement or growth.

Manage cash flow: Regularly updating financial records helps you understand your cash flow situation, ensuring you have sufficient funds to cover expenses and invest in your business.

Prepare financial statements: Accurate bookkeeping enables you to create essential financial statements, such as profit and loss statements, balance sheets, and cash flow statements, which are necessary for understanding your business’s performance and obtaining financing.

Comply with tax requirements: Proper bookkeeping makes preparing and filing tax returns easier, ensuring compliance with tax regulations and minimizing the risk of penalties or audits.

Related: Setting up accounting for a business