How to Start an LLC in Oklahoma
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Once you’ve chosen an LLC as a business structure, as opposed to a sole proprietorship or a corporation, you need to select a name for your startup. We’ve created this step-by-step guide to offer information, advice, and links to help you set up a business entity in Oklahoma.
Those looking to start a limited liability company in Oklahoma have many routes to take to make some money. However, the first thing that needs to happen before you start a business is to understand all the rules, state taxes, and nuances of starting an LLC in Oklahoma.
Name your LLC
Do you have the perfect name for your LLC? Find out if it’s available by researching the state’s business directory. Names that show up are unavailable. If your chosen name doesn’t appear, it’s yours to claim.
The first thing the state will ask you during LLC formation is what’s the company’s name?
Check name availability
All states require a business name to be distinctive from all other businesses in the state and Oklahoma is no different. You don’t want your name to sound or look like anyone else’s anyway. The best place to see if your preferred business name is unique is to use the free business name search tool found on the Oklahoma Secretary of State’s website.
All you have to do is insert your preferred name into the search bar to see if any other business has the same or similar name. This tool is free but you can also pay officials in the Secretary of State’s office to do a more thorough search for you with a written request at $5 per search. There are also public computers in the Secretary of State’s office where you can do free searches.
Consider what makes a name memorable
Picking a good business name can be challenging if you keep finding that the names you like are already in use. You want a creative name but it still must clearly define what the LLC does. Names need to be innovative enough to use for marketing too.
Those who are having challenges finding a good name for their LLC should consider using a business name generator. Several are found online. Some are free while others offer paid services.
Once you find the perfect name for your LLC, consider filing a name reservation so no one else can use it while it’s on reserve. In Oklahoma, business names can be reserved for 60 days and the fee to reserve is $10. You can do it online or by mail.
Select a registered agent
Oklahoma is similar to other states in that it requires you to appoint a registered agent for your business when you file for registration. A registered agent is someone who can accept legal documents for the business, like service of process. This becomes important if the business is ever sued or involved in a legal proceeding.
Oklahoma has three general rules about who can be a registered agent. They include:
- The registered agent must be a resident of Oklahoma or works at a company allowed to provide registered agent services in the state.
- Any registered agent must maintain a physical address in the state, not a P.O. box.
- Must be able to accept legal documents during normal business hours.
While it is legal for LLC owners to be their own registered agents, it might not be practical.
A couple of options are to ask a family member or friend to do it but they may not always be available during normal business hours. Some business owners list their attorneys as their registered agents. A third option is to hire a professional business service to take on the task. That is acceptable as long as the business is registered to provide such services in Oklahoma and has a physical address in the state.
Using a professional business service can have some advantages. Many offer a full range of services from business name generators to registering your business with the state and getting your federal EIN. These services can make forming an LLC easier and you’ll know it’s in full compliance and good standing with state and federal laws.
File Articles of Organization
When you are ready to start your LLC, you will need to file Articles of Organization with the state. The state will need to approve your application before you can be a formal business.
The form for filing Articles of Organization includes listing your business name, which must include the term LLC, the mailing address of the business, and primary email contact. You must also list your registered agent’s name and street address.
You can find out more about filing formation documents in Oklahoma here.
The filing fee for filing an Articles of Organization in Oklahoma for an LLC is $100.
Oklahoma processing time
Oklahoma processes business registrations quickly. You can get a certificate in an hour if you file online or go in person. Mailed applications take two or three days to process, plus additional time for mailing.
Create an LLC operating agreement
The State of Oklahoma doesn’t require an operating agreement for this type of business, but it does define it under state law, which is unique from other states that don’t address it at all. Oklahoma 18 OK Stat § 18-2001.16 (2019) states an operating agreement can be any type of agreement between LLC members and that includes oral and implied agreements as well as written documents.
While you can have a legal oral operating agreement in Oklahoma, business experts will tell you it’s best to have a written agreement as people may not remember correct details in an oral agreement and implied agreements can get hazy.
Drafting an operating agreement forces LLC members to discuss how the business will be managed from bookkeeping methods to member compensation. It also provides a procedure for unexpected events like the death of a member or manager.
An operating agreement should include things like:
- Outlining LLC activities
- Identifying decision-makers
- Listing voter rights
- Member interest transfers
- Listing initial contributions
- Profit and loss management
- Management structure (like member-managed, manager-managed)
- LLC member compensation
- Bookkeeping methods
- Dissolution procedures
It takes a lot of time and effort to stay on top of all parts of your business. The first things to tackle are taxes.
Get your EIN
The IRS requires most businesses to get an employer identification number (EIN). Any business that plans on hiring employees, filing business taxes, opening a bank account, or getting a loan is going to need an EIN. It’s like a social security number for your business.
The great thing about online services today is that you can easily take care of things like getting an EIN by going to the Internal Revenue Service (IRS) website and applying. The site will assign your Oklahoma business and EIN in just a few minutes after you answer some basic questions.
All new businesses in Oklahoma will also need to register for state tax filings with the Oklahoma Department of Revenue. The DOR site will also allow you to update other things such as adding a new professional license, an additional business site, and registering for withholding tax.
You can get your EIN by visiting the IRS website.
Get Oklahoma business licenses
There isn’t a state license to create a startup but local governments require business licenses. The requirements and cost of those vary. Some professions also require state certifications or professional licenses to operate a business. These regulations may include professionals like accountants and hair stylists. Look here for a full list of license requirements and information.
Open business bank accounts
Your new LLC will need ways to move money and do banking so the next thing to do after you’ve registered with the state, gotten your EIN, and have your state DOR number is to open a business checking account.
A checking account in the business name keeps your LLC’s money separate from personal money. You can disburse shares through the account, accept checks in the business name and pay vendors.
You will also need to look at opening a savings account for future planning and getting a couple of credit cards in the business name to preserve cash flow as you stock your business or pay initial expenses.
Review LLC tax rules in Oklahoma
For tax purposes, most LLCs are set up as pass-through entities. The LLC itself isn’t taxed, instead the owner pays income tax, along with federal taxes and state taxes, on his or her personal tax return.
Oklahoma has a 4% flat tax corporate income tax rate, which is incredibly low compared to the rest of the U.S. It ranks 26th in the 2022 State Business Tax Climate Index produced by the Tax Foundation.
Sales tax in Oklahoma
The sales tax in Oklahoma is 4.5% but local municipalities can charge up to 7% in sales taxes. The average combined sales tax for most living in Oklahoma is 8.97%.
Oklahoma has a plethora of tax and economic incentives for businesses. Those include a 10-year cash incentive from the Quality Jobs Program where companies that create well-paying jobs get a cash rebate and the Small Employer Quality Jobs Program where businesses with fewer than 500 employees get the cash rebates quarterly. The rebates in that program can amount to as much as 5% of taxable payroll for up to seven years.
There is also a Quality Job plus Investment Tax Credits Program targeting manufacturers that have at least $40 million in capital investment.
Oklahoma has grants for Native Americans, rural jobs, and tourism development. The 2022 Oklahoma Business Incentives & Tax Guide has all the details of every program the state has available.
File an annual certificate
All businesses registered with the State of Oklahoma must file their annual certificates by the anniversary date of their registration.
The filing fee for an annual certificate for an LLC is $25.
The form for filing an annual certificate for an LLC can be found here.
Get insurance for your LLC
One of the most important things you can do as a new business owner is to get insurance. The three to acquire first are liability, worker’s compensation, and property insurance.
The State of Oklahoma doesn’t require businesses to carry general liability insurance but it’s a safe bet to get it. Many of the businesses you’ll do business with require it, Private clients and landlords could require it also. General liability isn’t expensive with the cost based on your expected total revenue. It will save your business if you are ever sued.
Oklahoma does require worker’s compensation insurance for every employee, whether they work part-time or full-time. Every worker who is injured or falls ill because of their job can apply for benefits under Oklahoma’s Administrative Workers’ Compensation Act.
Property insurance helps pay the cost of replacing your storefront or equipment after a fire, flood, natural disaster, theft, or vandalism. Landlords may require you to obtain this insurance as well if you are renting your commercial space.
Additional resources to help you set up a business in Oklahoma
Oklahoma has several resources to help get your LLC started. Some include:
What are some good business opportunities in Oklahoma?
There are many opportunities for entrepreneurs that want to offer B2B services like digital marketing, social media marketing, and web design. Those who are looking for something in agriculture may want to check out dairy farming as there are several opportunities for that in Oklahoma.
Do LLCs file an annual report or statement of information?
In Oklahoma, all LLCs, no matter how they’re structured, be it member-managed, manager-managed, or single-member LLC, must file an LLC annual certificate and pay a $25 fee.
What are the benefits of an LLC as a business structure?
An LLC offers personal liability protection, which can safeguard your personal asset like a home or car in the event the business fails.
Where is a good place to start a business in Oklahoma?
Oklahoma City offers a lot of opportunities for entrepreneurs with startups. It was recently ranked 12th as one of the best cities for startups among major cities across the U.S. One of the reasons it’s so good for business is that it’s a cheap place to live with lower taxes and affordable employees.
Is Oklahoma a good place to move to?
Oklahoma is considered one of the best places to raise a family. It has low crime rates, good schools, and its homes are affordable. Industries are growing and they provide a lot of opportunities for both workers and entrepreneurs.
What are some of the bigger companies in Oklahoma?
Imperial is the largest company in the state with 33,000 employees. The craft store Hobby Lobby is headquartered there with 32,000 employees and Avis Budget Group is also located in Oklahoma with 26,300 employees. QuikTrip is also headquartered in the Sooner state with 22,534 employees.
What are the major industries of Oklahoma?
Oklahoma still has agriculture and forestry as its largest industry. Resources and power industries make up the second largest sector and manufacturing comes in as the third largest industry in the state.
What is Oklahoma’s biggest export?
Non-electrical machinery is Oklahoma’s biggest export and accounts for $1.1 billion of total exports in 2018. Other Oklahoma exports include beef, veal, wheat, pork, and cotton.
How business-friendly is Oklahoma?
Oklahoma is incredibly business-friendly which is why more companies are moving there. It has a low cost of doing business and ranks well as the lowest living cost in the nation. Plus, it has many resources that help startups and entrepreneurs.
What’s a good way to find employees in Oklahoma?
Startups have several options for finding employees in Oklahoma. You can advertise through the local Chamber of Commerce or list your business with the Oklahoma Department of Labor You can also recruit candidates from local technical schools or colleges. Online ads and local ads in trade magazines and newspapers are another way to generate interest in working for your company.
What industry makes the most money in Oklahoma?
The industry that brings the most money to the state is the oil industry. The state has the fifth-largest crude oil reserve in the nation and is second in the number of active drilling rigs. Oil and energy contribute more than $35 billion to the state’s GNP. Employees in that industry earn double the amount of the median annual income for the state.
What is a living wage in Oklahoma?
A living wage for a single person in Oklahoma is $15.93 an hour and a living wage for a two-income family with two children is $35.45 an hour.
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