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Registering a limited liability company (LLC) in Oklahoma allows you to enjoy protections offered by incorporation and an advantageous tax structure. In general, a corporation provides limited liability for the owners and protects them from being personally responsible or liable for business obligations and debts. An LLC may also protect your personal assets from attachment by business creditors.
Oklahoma offers flexibility in how an LLC decides to be taxed. You can form an LLC as a sole proprietor, partnership, S-corp, or C-corp and be taxed under the corporate structure you choose. One option is to form a partnership with a pass-through taxation structure. This allows you to distribute the profits through the LLC, but they are not taxed at the corporate level. Instead, the distributions are taxed at the personal level, avoiding double taxation. More advantages to starting an LLC in Oklahoma include that the filing is easy to complete and submit, has easy tax filing requirements every year, and has a low initial filing fee.
To form your Oklahoma LLC, you have to take the following 6 steps:
The following is a detailed explanation that helps you go through each step of the process.
Now that you’ve decided to file an LLC, you must name your business as part of the process. You can pick any name you like as long as it’s not already in use by another corporation in Oklahoma. You can call the Oklahoma Secretary of State’s office for a name search at (405) 522-2520 or go online to www.sos.ok.gov for the Secretary of State’s website and navigate to the company name search page.
You can reserve a business name for up to 60 days before you organize and file for your LLC, as long as you file a Name Reservation application and pay a $10 fee.
You’re not required to file for a DBA but doing so secures your right to use the name exclusively in the state of Oklahoma. Your LLC is required to have a unique name directly attributable to you.
If you want to register your business name as a trademark, you can do it through the Oklahoma Secretary of State’s office. Taking this action secures your right to use the name as a trademark in the state of Oklahoma only. If you want nationwide enforceability of your name, you should register your name with the United States Patent and Trademark Office (USPTO).
Articles of organization for forming an LLC in Oklahoma are straightforward. You need to supply the following information in your articles of organization.
The filing fee for the initial articles of organization is $100, and there is a $25 fee for papers filed in person for same-day processing.
The principal place of business has to be a physical location. P.O. box addresses are not accepted. An email address for the company’s primary contact (not the registered agent) must be included. Every domestic and foreign LLC registered to do business in Oklahoma is required to file an annual certificate on the company’s anniversary date. This confirms it’s an active business still located at the same physical address, and the email hasn’t changed.
After you’ve prepared your articles of incorporation, you must mail the documents accompanied by a filing fee of $100. You can write out a check, cashier’s check, or money order and make it payable to the Oklahoma Secretary of State. The articles and payment can be mailed to:
Secretary of State
421 N.W. 13th Suite 210
Oklahoma City, Oklahoma 73103
Articles of incorporation can be filed in person at the Secretary of State’s office, online, or by mail. Filing in person is the fastest way to get your LLC formed, followed by filing online. If you need an expedited filing, you’ll have to pay an additional fee for the service. After you’ve filed online without expedited service, you can expect to receive confirmation of your articles of incorporation within 2 days. It will take 7 to 10 business days for filings submitted by mail.
The articles can be filed online, and the forms of payment accepted include Visa, Mastercard, Discover, and American Express. A 4% service charge is added to the filing fee for using a credit card.
Oklahoma offers multiple options for who you may choose to be your registered agent. You can list yourself as the registered agent as long as you’re 18 or older and have a physical address in the state, or you can use a registered business entity in Oklahoma. The registered agent needs to be available during regular business hours to sign for and receive documents on behalf of the LLC.
It’s usually preferable to use a registered business entity to provide registered agent services for receiving documents. Another advantage of using our registered agent services is that it allows you to relocate your business to another address in Oklahoma without needing to file a change of address with the state and pay fees.
The Oklahoma Secretary of State does not require an LLC to create and submit an operating agreement as part of the articles of incorporation. However, if you’re forming an LLC with partners, you should seriously consider creating an operating agreement for all partners to abide by. Having one in place from when the LLC is formed will help avoid disagreements and arguments between partners. The operating agreement also lays out goals for the business, which gives everyone involved a framework to reference and build from as the business grows.
An operating agreement should be considered a must in that it firms up everyone’s intentions for the business and makes its contents enforceable in civil court if needed. The state of Oklahoma does not require the submission of an operating agreement during the formation of the LLC and has no opinion about its necessity.
After the LLC has been formed, it must file an annual certificate with the state to show that it’s still active. This certificate has to be filed one year from the date of the initial filing of the articles of incorporation. You can file the annual certificate through the mail or use the Secretary of State Entity Filing web portal. There’s a $25 filing fee for the annual certificate.
The state has no other specific requirements for operating an LLC, but there may be requirements for state and local permits, business licenses, or certifications depending on the type of business you’re operating. You can find more information about the permissions required from the local clerk’s office in the area or region where your business operates.
The EIN, or Employer Identification Number, is not explicitly required by the state of Oklahoma (it’s required by the IRS), but you should request one from the IRS regardless. Technically, you won’t need an EIN if you decide to be taxed as a sole proprietor, but it’s a good idea to obtain one in case your plans change. You’ll need an EIN if you’re opting to have the business taxed as a corporation or if you intend to hire employees.
The EIN is issued by the IRS and is a unique identifier used to track a given corporate entity’s taxes. You use the EIN for reporting and submitting payroll and corporate income taxes to the IRS. The EIN is free, and you can easily apply for one online through the IRS website or have us at Tailor Brands take care of it for you.
If you want to apply on your own, you can go directly to the webpage for the EIN application and enter the requested information. To apply, your business has to be located in the U.S. or a U.S. territory and have a valid Taxpayer Identification Number (TIN). This includes a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or EIN.
The application for the EIN has to be completed in one session as the IRS does not allow you to save and resume later. The session expires after 15 minutes of inactivity, and you’ll have to start over again. Be sure to review the information requirements before starting the form and have all the information to hand as you fill it out.
When you file for your EIN, you’ll be asked to choose your corporate status for the purposes of taxation. You can select sole proprietorship, partnership, C-corporation, or S-corporation. Each type of status comes with plusses and minuses, and you should consult with a tax professional before selecting a corporate status. Depending on your business structure, you may find that a partnership structure makes more sense than an S-corporation structure.
Getting an EIN has its advantages, even if you’re operating as a sole proprietor. The EIN can be used in place of your SSN, adding a layer of protection between your business and your personal finances. It also enables you to open corporate business accounts and gain access to the flexibility of banking at the business level. You can use your business name on your 1099s if you retain contractors, and it makes it easier to take care of FICA taxes if you hire employees at some point.
Oklahoma requires some but not all LLCs to register with the Oklahoma Tax Commission (OTC). Here’s an overview of handling your business taxes at the state and federal levels.
All income the LLC receives is taxed at the state and federal levels, and taxes are paid according to the corporate tax structure you choose. Other tax considerations include sales tax, payroll tax, and self-employment tax. The following looks at the types of taxes involved with incorporating as an LLC.
As previously mentioned, most LLCs are known as pass-through tax corporations since the principal members of the LLC pay taxes on corporate income. In other words, the LLC distributes income to its principals, and the principals pay personal income taxes on their disbursement. As a general rule, income earned by a business is not taxed by the state, but that’s only true for certain tax structures.
You and the principals may decide to use a corporate tax structure that treats the LLC as a corporation instead of a sole proprietorship or partnership. If so, the business income is taxed at a rate of 6% by the state of Oklahoma. For an LLC that decides to be taxed as a corporation, the LLC has to file a separate tax return and pay taxes accordingly. Taxation for LLCs in Oklahoma can get confusing, so it’s a good idea to consult with a tax professional about how to proceed when selecting the corporate tax structure.
LLCs planning to sell goods to customers who live in Oklahoma are required to collect and pay sales tax on all retail sales. The LLC must register with the Oklahoma Tax Commission (OTC) to collect and report sales taxes. If your LLC is not going to engage in sales of physical goods, you don’t have to register with the OTC. As a general rule, Oklahoma doesn’t tax services, and some goods are exempt from sales tax. If you’re engaging in the manufacture of a finished product, you must collect sales tax on the sale of the finished good. However, you do not have to collect sales tax if you’re providing a service.
Registering for a sales tax permit is easy. Simply go online to the OTC website and register your LLC using OTC form 4001. After registering your business, OTC will send you a sales tax permit.
An LLC with a single principal is treated the same as a sole proprietor. That is, money from the LLC passes through to the single principal member, but the income is reported on Schedule C as part of the 1040 tax return. State taxes have to be paid on profits from a single-member LLC in the same way a sole proprietor would pay their taxes without an LLC.
Are you planning to hire employees? If so, you’ll have to pay taxes on their behalf to the IRS and OTC. Federal taxes include Federal Insurance Contributions Act (FICA) taxes for Medicare and Social Security programs and income tax on overall earnings. The OTC requires employers to remit state withholding taxes for employees, and you will probably be required to pay state unemployment insurance taxes.
Oklahoma has a franchise tax for franchises formed under subchapter S of the IRS code, operating or earning income from a property located in Oklahoma, and required to file federal income tax Form 1120-S. An LLC using subchapter C for its franchise operation may not have to pay franchise tax, but it’s best to consult with a tax professional to be sure the business complies with state franchise tax laws.
Now that you’ve formed your LLC, you should open a business bank account as soon as possible. You may not have income flowing from the business just yet, but you need to have a place to deposit business income that’s separate from your personal income. This allows you to maintain separation of personal assets from the business and control who has access to the business bank account. Having a business bank account also helps you establish the business’s credibility.
All income from the business needs to be deposited into the bank account and all payments for business debts need to be paid from this account. You can open more business accounts as the need arises, but you’ll be fine with an initial account to cover deposits and payments. Be sure to keep an eye on the account to track the balance, how much is going out versus coming in, and check that transfers have been completed.
Disbursements to members of the LLC are also made from the business bank account. You will have to issue 1099s to each member at the end of the year, so they can file their federal and state taxes.
Oklahoma has a straightforward renewal process for LLCs. The renewal has to be submitted by the anniversary of the initial formation of the LLC to remain operating as an LLC in Oklahoma. Fill out the limited liability company annual certificate with the required information, have a principal member or manager sign the certificate, write out a check for $25 made payable to the Oklahoma Secretary of State, and mail it to the address listed above for the Secretary of State’s office. Alternatively, you can fill out the form electronically and pay online.
You must submit the certificate one year to the day of formation, but there is a grace period of 60 days after the due date. Failure to pay the fee and file the certificate results in the LLC not being in good standing with the state.
The state of Oklahoma does not require financial reporting or meeting financial thresholds to operate an LLC in the state. However, it is wise to consult with an expert in business and tax matters at both state and federal levels. This can be a tax advisor, accountant, or lawyer who works in business tax and law. You can consult with experts and turn to them for guidance before you submit paperwork to set up the financial aspect of the business, or you can turn over this aspect of operating your business to them in its entirety.
Not everyone is cut out to handle the accounting side of an LLC, and retaining the services of someone who performs this work as a regular part of their duties can be beneficial. You free up more time to focus on running your business and have peace of mind that your financial issues are being handled by someone knowledgeable in this area. You don’t have to worry about filing deadlines, meeting and funding federal and state taxation requirements, or making disbursements to members along with creating the necessary 1099s.
Oklahoma doesn’t require a business license or permit for most businesses. However, whenever a business is engaged in an activity that can potentially harm people or the environment, there may be permits and licenses required by counties and municipalities. The Oklahoma Commerce office provides a list of business types that aren’t required to have a license on a statewide level but may be required at the local level. If you don’t find the type of business you’re engaging in on the website, you can call Business Customer Services at (405) 815-5218.
Various state departments oversee the rules and regulations for different types of businesses operating in the state of Oklahoma. For example, restaurants and bars are required to obtain a food establishment license, and food handlers have to get permits from the Oklahoma State Department of Health. Businesses that offer installment payments on credit to consumer customers must obtain a license from the Oklahoma Department of Consumer Credit.
Sometimes you have to have licenses and permits at federal, state, and local levels to handle and store certain types of materials. Obtaining permits at all levels is unusual because of redundancy issues—i.e., a federal permit signifies that you are qualified to handle or use a hazardous material. A state permit for that handling means you have the necessary knowledge of local regulations for said handling of materials. The local government may decide you have sufficient permits to satisfy the need for safe handling and not require you to carry additional licenses or permits. Always contact the relevant agencies as well as the local city hall to find out about permits and licenses.
The state requires you to carry an insurance policy for workers’ compensation and commercial auto insurance. Workers’ compensation is required for businesses with employees on their payroll. All other types of business need to check with an insurance agent, licensing body, regulatory authority, or any authority that has oversight over the business you’re engaging in. You may decide you want to carry insurance for your business even if you’re not required to by the state of Oklahoma. In these instances, getting a general liability policy for businesses to cover most contingencies is a good idea. Insurance adds an extra layer of protection to your business and helps you resolve unexpected calamities without draining your business financially.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.