Making the decision to start a business is an exciting move, so congrats! You’ve probably already been thinking about how to structure your business or restructure your existing business, and that’s not always an easy decision to make.
I’ll cover the basics of what an Oklahoma LLC is and why it might be the right business structure for you.
(If you want to skip to the “How to Form an LLC” section, click here.)
Table of Contents
What Is an Oklahoma LLC?
An Oklahoma LLC is a Limited Liability Company formed in the state of Oklahoma that is governed by the laws, regulations, and statutes of the state of Oklahoma.
Why Choose an LLC?
There are three main reasons to consider forming an LLC in Oklahoma instead of another business structure, such as a sole proprietorship or a corporation.
1. Limited Liability and Asset Protection
The first reason many business owners choose to form an Oklahoma Limited Liability Company (LLC) instead of a partnership or corporation is for personal liability protection.
When a business owner establishes an LLC in Oklahoma, they have what is known as limited liability and personal asset protection. Because an LLC establishes a barrier between your business liability and your personal liability and debts, LLC owners will not have their personal assets or finances listed as a source of financial compensation in the case of bankruptcy or lawsuit.
Considering that the last few years have proven that even the most well-prepared and profitable business can be crippled by unforeseen events, it’s easy to see why many business owners appreciate the personal asset protection that comes with forming an LLC in Oklahoma.
2. Privacy
The next big advantage of forming a Limited Liability Company is the ability to maintain your privacy and keep sensitive information off the public record.
Hackers, scammers, and other fraudsters have become incredibly crafty over the years. In today’s technology-dependent world, cyber criminals can steal your identity with even the most basic information. Many people don’t even realize this has happened until thieves have accrued thousands of dollars of debt in their name.
When you form a business such as a sole proprietorship, your personal information will be listed as part of the public record, making details like your name, address, and phone number available online without any form of protection.
When you form an LLC, however, you have other options available.
You can choose to hire an LLC formation service to help form and file all your LLC documents. They’ll register their information, instead of yours, with the Oklahoma Secretary of State, allowing your personal information to remain off the public record and secure from those who would misuse it.
My top two recommendations for an LLC formation service are Northwest Registered Agent and ZenBusiness.
3. Taxation
The final reason that many business owners choose to form LLCs in Oklahoma is the flexibility LLCs have in terms of their tax structure.
Limited Liability Companies have a default tax status of “pass-through entity” that makes them exempt from most federal taxes. Other business structures like corporations don't always have that same ability.
If you were to start a corporation, you'd also experience something known as “double taxation.”
“Double Taxation” refers to the fact that corporations typically have their profits subject to a corporate income tax before being disbursed to shareholders as dividends. Once those dividends are received, the shareholders must then pay personal income tax on their previously taxed shares of the profits.
LLCs, being pass-through entities, avoid this “double taxation” entirely. LLCs themselves aren’t subject to federal taxes nor corporate tax rates and LLC members only have to pay personal income tax on their shares of the profits.
Adding to the benefit of avoiding double taxation, the 2017 Tax Cuts and Jobs Act included a new tax benefit for Limited Liability Companies called the Qualified Business Income Deduction (QBID).
Implemented in 2018, the Qualified Business Income Deduction (QBID) was created as part of the Tax Cuts and Jobs Act of 2017. QBID is a kind of tax discount that allows Limited Liability Companies to save as much as 20% on their taxes. This discount is available only to Limited Liability Companies (LLCs), making it a great incentive to consider establishing an LLC in Oklahoma.
How to Start an LLC in Oklahoma
Now that you know the fundamentals of what an Oklahoma LLC is and why many business owners choose this structure for their business, you can make a more well-informed decision about whether an LLC is the best option for your business. If you’re still considering forming an LLC, these are the steps you’ll need to take.
*IMPORTANT* If you need help traversing the complex bureaucracy involved with forming an Oklahoma LLC, dealing with all the formation papers, and maintaining your privacy, certain types of businesses will finish the Oklahoma LLC formation process on your behalf.
They're called LLC formation services and they'll assist you with forming an Oklahoma LLC for as low as $0 plus state filing fees (though my top-rated LLC formation service is Northwest Registered Agent, which charges $49 plus state filing expenses).
If you're looking for personalized assistance to help you navigate the red tape and to protect your personal information, check out my guide to the finest LLC service.
1. Obtain Articles of Organization Form
The first step in forming an LLC in Oklahoma is to get a copy of the Oklahoma Secretary of State's Articles of Organization form.
A physical copy of the form is available here: Oklahoma Articles of Organization (PDF)
This is a PDF document that you may complete on your computer. It is the main form that you must send to the Oklahoma Secretary of State in order to establish your LLC. You also have the option to file online via the Oklahoma Secretary of State Entity Filing website here.
The following steps correspond to the fields on the Oklahoma LLC Articles of Organization form.
2. Choose Your Business Name
After acquiring the Articles of Organization form for your Oklahoma LLC, the next step is to select an LLC name.
Sadly, you can't just register the first business name that comes to mind.
According to Oklahoma law, Oklahoma LLCs must include the terms “Limited Liability Company” or “Limited Company,” or the acronyms “LLC,” “LC,” L.L.C.,” or L.C.” in their name. The term “Limited” may be shortened as “Ltd.” and “Company” as “Co.” Your LLC is also unable to use words that refer to a government agency and may require additional paperwork if you want to include terms like “Lawyer” or “Credit Union” in the LLC name.
In addition, the name of your LLC must be different from the names of any other business organizations that are presently registered with the Oklahoma Secretary of State's office. If you are unsure whether a given name is available, you may check the Oklahoma Secretary of State's company name database.
By submitting an Application for Reservation of Name with the Oklahoma Secretary of State, you may reserve a business name for 60 days. Reservations may be filed by mail or online via the Oklahoma Secretary of State's Entity Filing website. The filing fee is $10.
If you dislike the official business name you were required to file for your Oklahoma LLC, you may use a trade name, DBA (Doing Business As) name, or fictitious name to appear on signs, advertising, and websites. To register a trade name, you must submit a Trade Name Report to the Oklahoma Secretary of State, which is a document that you may file online (here) or through the mail. The filing cost is $25.
3. Choose an Oklahoma Registered Agent
The next step to business formation in Oklahoma is to appoint a registered agent. All Oklahoma LLCs are required to have a registered agent.
A registered agent is an individual or business entity who will serve as your LLC's point of contact, receive mail, legal documents, and service of process during business hours, and protect your information by registering their name and address with the Oklahoma Secretary of State rather than your own.
You have two choices when it comes to choosing an Oklahoma registered agent for your LLC. You may serve as your business's registered agent on your own or via a professional registered agent service.
If you choose to act as your company's registered agent, it's critical to realize that you will be legally obliged to accept mail and service of process during normal business hours on business days. The problem comes when you consider that the majority of Oklahoma LLCs operate during normal business hours on business days and that it is not a good idea to stretch yourself too thin by trying to run your company while also acting as registered agent/resident agent.
If you do not comply with a service of process, your Oklahoma Limited Liability Company may be sued, leaving you defenseless against a default judgment. Additionally, failing to respond to a service of process on time may result in your LLC losing its “good standing” status with the Oklahoma Secretary of State, thereby prohibiting you from doing business in the state.
Using an Oklahoma registered agent service, instead of acting as your own registered agent, significantly lowers your workload and protects your information. Appointing a competent registered agent service guarantees that you receive and are notified of any mail or service of process that the registered agent service accepts on your behalf. The only drawback to using a registered agent service is that they charge between $99 and $299 each year for their company services.
Given the risks of operating as your own Oklahoma registered agent, the cost of employing a registered agent service is reasonable. To save money, I often recommend that new LLCs use a registered agent service rather than trying to perform the registered agent role on their own.
If you'd like to learn more about registered agent services, go here to read my article about the best Oklahoma registered agent.
4. Choose Your LLC Address
Your Oklahoma LLC business address is a critical piece of information that you must provide in your Oklahoma LLC Articles of Organization. The Oklahoma Secretary of State mandates that all LLCs and businesses in the state register a principal business address, which is then available on the public record.
If you do not use an LLC formation service or registered agent, your LLC must register its physical street address. If your business does not have an office location or a physical address, then you’ll be required to register your home street address as the business address for your LLC.
If you have enlisted a registered agent service, you do not need to worry about the address to provide on the Oklahoma Articles of Organization. When you hire a registered agent, they will provide their own address on the form, ensuring that your personal information is not misused.
5. Sign and File Your Articles of Organization
After collecting your LLC’s formation documents and completing your Oklahoma Articles of Organization, it's time to file them with the Oklahoma Secretary of State to create your Oklahoma Limited Liability Company. The Articles of your LLC must have the following information:
- The LLC's name
- The street address of the LLC's principal place of business
- The LLC's email address
- The LLC's term of existence (perpetual or a term of years or fixed date)
- The signature of a member, manager, or representative.
Your Oklahoma Articles of Organization may be filed by mail or online. Both options carry a filing fee of $100.
If you want to file the Oklahoma LLC Articles of Organization by mail, just send them to the address below:
Oklahoma Secretary of State
421 N.W. 13th, Suite 210
Oklahoma City, Oklahoma 73103
After you’ve filed your Oklahoma LLC Articles of Organization with the Secretary of State, you can expect a waiting period of two business days for online filings or 7–10 business days if you choose to file by mail.
Other LLC Activities
Following the filing of your Oklahoma LLC formation documents, there are a few more tasks to do to ensure that your Oklahoma LLC starts out on the right foot.
All LLCs in Oklahoma are required to file an annual certificate with the Oklahoma Secretary of State. The Oklahoma annual certificate is an annual report and is due on the anniversary date of your LLC’s formation each calendar year, with penalties imposed for late filings. The Oklahoma annual certificate can be filed online through the Secretary of State Entity Filing webpage or via postal mail. The filing fee for the Oklahoma annual certificate is $25.
Oklahoma doesn’t require a general business license, but depending on the location of your LLC and the kind of business you want to operate, you may need specific business licenses. Before you begin, contact the municipal or county clerk in the area where your LLC is located to see whether any local licenses are required. To learn more about Oklahoma's state business licensing requirements for Limited Liability Companies, please visit the Oklahoma Department of Commerce website.
If your LLC in Oklahoma will offer professional services, such as legal or accounting, you must follow the Professional LLC or Professional Limited Liability Company creation procedures. An Oklahoma PLLC is limited to providing a particular kind of professional service, and all members must possess the required business licenses and permits, or be registered with the state, to offer the licensed professional service for which the LLC was established. You may be required to provide a copy of each LLC member's current business license or state registration as part of the LLC formation process.
If your LLC in Oklahoma is going to sell goods, collect sales tax, or hire employees, you must register with the Oklahoma Tax Commission (OTC). Even if your LLC is not going to collect sales tax or hire anybody, you must register with the OTC for tax reasons. Online registration is available at this link on the OTC's website.
If your LLC is located outside of Oklahoma and you want to expand into the state, or if you are not a resident of the state, you must follow the foreign LLC formation process. This process is almost identical to the one used to establish a domestic Limited Liability Company. The key difference is that a foreign LLC must file an Application for Registration of a Foreign Limited Liability Company. Additionally, when you file your foreign LLC registration papers, you must provide a Certificate of Good Standing or Legal Existence from your home state that is no more than 60 days old. Additionally, you must name a registered agent in the state of Oklahoma with a physical address in the state. You can file online or by mail and each method has a filing fee of $300.
If this is your first time completing an annual certificate or applying for business licenses, expert help is available. An Oklahoma PEO service may be able to assist you with filing your annual report and other papers, and online legal services may also be able to assist you with further paperwork.
Oklahoma LLC Fee Summary
How much does Oklahoma LLC formation cost? Whether you use an LLC formation service or not, you will incur certain costs and taxes. The following is a summary of some of the fees you can anticipate when establishing an LLC in Oklahoma:
Articles of Organization: $100
Name Reservation: $10
Registered Agent Fee: $99–$299
Annual Certificate/Annual Report: $25
State Personal Income Tax: 0.5%–5.5%
State Corporate Income Tax: 6%
After Starting Your Oklahoma LLC
Congratulations! You have filed the Oklahoma LLC Articles of Organization and established your business! This is a significant step, so reward yourself with a drink or glass of champagne, a long walk, or a stroll along a nearby beach, but avoid getting too relaxed. There’s still more to do before your Oklahoma LLC is ready for launch.
Before you can establish the essential foundations, you must complete three more steps to ensure your LLC is in good standing.
Step 1. Create an Operating Agreement
While Oklahoma LLCs are not required by law to create or adopt an LLC Operating Agreement, doing so is in your company's best interest.
Without an Operating Agreement, your Oklahoma LLC will be governed exclusively by Oklahoma's business and LLC laws and regulations, which may or may not be ideal for your business operations. By establishing an Operating Agreement, you may establish operational procedures and standards that exceed what is required by state legislation, which often covers just the bare minimum.
*IMPORTANT* Before you begin writing the Operating Agreement, you must first establish your LLC's management structure. A multimember LLC by default has a member-managed voting mechanism, while single-member LLCs often vest full authority in the owner. If you or any of your LLC members lack management expertise, a manager-managed structure is the best option. Under this structure, your LLC delegates authority to make high-level decisions to managers rather than making them yourself. If this management style is selected, it is essential to guarantee the competence and trustworthiness of each manager.
Operating Agreements provide rules and processes for the interaction of members, managers, and departments within your LLC, as well as their respective duties and obligations. Without an Operating Agreement, an LLC’s ability to operate is severely restricted.
Additionally, an Operating Agreement serves as a contract between members, clearly outlining their respective roles and levels of authority. Poorly drafted Operating Agreements often include ambiguous or misleading language, resulting in disputes amongst LLC members and departments. A badly drafted Operating Agreement may also exclude processes for onboarding new members and allocating shares and duties in the event of a member's departure, thus restricting the development of your company.
To prevent these scenarios, ensure that your LLC Operating Agreement contains as many clear and comprehensive regulations as possible. A well-written LLC Operating Agreement should detail each LLC member, their profit and loss share, their duties and authority level, and how they should interact with your LLC's various divisions. If your LLC employs managers, the Operating Agreement should include standards and procedures outlining their power and duties. A well-written Operating Agreement with clear instructions and comprehensive operating procedures may help simplify your firm's everyday operations, allowing you to rest as your business develops.
If you are unfamiliar with the process of writing an Operating Agreement, many LLC formation services provide help with the process as part of their service package. Consider subscribing to an online legal service if you need help with the wording. Additionally, Northwest Registered Agent provides a free Operating Agreement template on their website, which may be accessed by clicking here.
Step 2. Apply For an Employer Identification Number
To perform some business operations, your Oklahoma LLC may be required to acquire a Federal Employer Identification Number (EIN) from the Internal Revenue Service (IRS). Sales tax collection and hiring employees are two examples of activities that need an EIN. Of course, you are not obliged to recruit workers to get an Employer Identification Number (EIN). If you want to apply for further licenses and permits for your business, you will need an EIN. The EIN also acts as the Federal Tax Identification Number for your Oklahoma LLC.
Obtaining an EIN also enables you to use it more often than your Social Security Number, which may help avoid future identity theft. The Internal Revenue Service (IRS) may provide an EIN, and the procedure is easier than you would think.
If you hire an LLC formation service, they’ll file for an EIN on your behalf as part of their services. However, if you're establishing your own company, you may apply for an EIN by visiting the IRS website Monday–Friday between 10 a.m. and 7 p.m. and completing and submitting the application.
Step 3. Open a Business Bank Account
To effectively establish your Oklahoma LLC, you must open a separate business bank account.
Many Oklahoma company owners skip this step due to inexperience or forgetfulness, but it is critical and you will be glad you did.
Having a single bank account for both personal and company accounts simplifies and saves time for many LLC and small business owners. There are many reasons why establishing business accounts for your firm can simplify operations.
To begin, it simplifies the process of submitting federal and state tax returns. A frequent misunderstanding among business owners who use their personal accounts for both personal and commercial reasons is that they would be able to distinguish between personal and business expenditures when filing their taxes. As a consequence, federal tax returns are often filed months after these transactions occurred, compounding the difficulty of recalling them. If this is the case, you should establish a business bank account rather than maintaining a comprehensive log of all financial transactions involving your firm for tax reasons.
If you use your personal bank account to conduct business activities for your Oklahoma LLC, you run the risk of having your personal information and bank account money used against you in court. When you use your personal bank account to manage the funds of your LLC, you effectively nullify the limited liability and asset protection afforded by an LLC by blurring the distinction between your personal assets and business assets.
To conclude, establishing a business bank account for your LLC may simplify tax preparation while safeguarding your assets and personal information.
To establish a bank account for your Oklahoma LLC, you'll need a “bank kit.” A bank kit is a collection of documents that should contain your Oklahoma LLC Articles of Organization, Operating Agreement, and EIN, among other papers. Numerous LLC formation companies provide bank kits as part of their services, which eliminates the need for you to collect all this information on your own.
In Summary
Congratulations on taking a significant step forward for your business by choosing to start an LLC in Oklahoma!
For those interested in forming an Oklahoma LLC without the help of LLC formation services, complete the following steps:
- Obtain the Articles of Organization form.
- Name your LLC.
- Choose your registered agent.
- Choose your LLC address.
- Sign and file your Articles of Organization.
Creating an Oklahoma LLC takes effort and may be intimidating at times. You’ll have many forms to complete, documents and applications to gather, prepare, and send, an unending list of filing fees to pay, and a terrifying ocean of red tape to navigate. If you do this job alone, you will be amazed at how gratifying the feeling of achievement is.
Once again, congratulations on your decision to start an LLC in Oklahoma and best wishes for your future entrepreneurial efforts!