For a small business owner, selecting a limited liability company (LLC) for a business entity is probably the easiest approach. There are many online resources available for this process, beginning with the Oklahoma Secretary of State's website (more on that below). However, even though forming an LLC in Oklahoma is relatively easy, I do not recommend doing so without the help of an attorney. The Oklahoma Secretary of State provides their own form for your Articles of Organization, and charges a reasonable filing fee of $100, but the process ideally does not stop there. That being said, here are Five Steps to Form an LLC in Oklahoma:
Step One: Do A Name Search
The Oklahoma Secretary of State requires you to perform a name search for your LLC. You cannot name your LLC a name that is already taken. If you're considering applying for a trademark for your business name, you might also want to conduct a trademark search as well. Also, Oklahoma requires that the name of your LLC contain either “limited liability company,” “LLC,” or a similar abbreviation.
Step Two: Complete the Articles of Organization Form
The Oklahoma Secretary of State has a required Articles of Organization form. While it is straight-forward and “easy” to fill out, there are several requirements to successfully complete this step. The first item is the name of the LLC, which I discussed above in Step One. Next is the Principal Place of Business Address. This must be a physical address and cannot be a PO Box. It is acceptable to use your home address if you do not have a physical office, or you're starting a home-based business.
The next requirement is the name and address of the Registered Service Agent. Any business formed in Oklahoma (LLC or corporation) must have a registered agent for service of process. You must designate a person or company to be served if the business is ever sued. You can be your own agent, and you can register either your office address or home address. You can also choose companies (including this law firm) that will perform registered agent services for a fee, who will receive service of process on your behalf.
The Oklahoma Secretary of State will office require you to select an Effective Date, which is usually the date of filing. You may choose to select a future Effective Date, as well. You also must select a duration for your LLC, and you can select “Perpetual,” which means your LLC will last as long as you wish it to last.
You can file your Articles of Organization by mail, in person, or electronically. The Oklahoma Secretary of State will charge a small convenience fee if you choose to file electronically and pay with a credit card. However, once you file your Articles of Organization and pay the $100 filing fee, that's it. You have now legally formed your LLC. However, there are three additional, but optional steps, which are necessary for a small business owner to successfully form an LLC in Oklahoma.
Step Three (optional): Execute an Operating Agreement
Every LLC in Oklahoma needs an Operating Agreement, regardless of whether it is a single-member LLC, or a multi-member LLC. This is an internal document which is NOT filed with the Oklahoma Secretary of State, but it is essential for your LLC to succeed. You can hire an attorney to draft the Operating Agreement, or you can use an online resource (not recommended) to draft one for you. You also need to decide whether your LLC will be member-managed, or manager-managed (these are not the same thing) and make several other decisions for the Articles of Organization.
Step Four (optional): Apply for an Employee Identification Number (EIN)
If you plan on opening a bank account for your LLC, your bank will require you to have an EIN, which is basically the same as the social security number for your business. The Internal Revenue Service (IRS) will require you to fill out Form SS-4 and will provide you with an EIN letter giving you the EIN that your bank will require.
Step Five (optional): Decide If Your LLC Should Elect S-Corp Status
Lastly, you need to decide if your LLC should elect S-Corp status with the IRS. As a general rule of thumb, you should only consider making this election if you think your business will bring in at least $250,000 annually in revenue. However, it is best to consult an attorney and/or a tax professional before making this decision.
Small business owners who select an LLC entity for their business should understand that it is an on-going process requiring maintenance and record-keeping. In the long run, it is better to always have an attorney help you through the process. Most attorneys will do so for a reasonable flat fee (my fees start at $500 to form a single-member LLC in Oklahoma). The benefits of starting your business on the right foot will always outweigh the costs.
If you are interested in starting a small business anywhere in Oklahoma, or if you have a small business and you are looking to grow, please feel free to contact me at [email protected]. For more information about Liberty Legal Solutions, LLC, please visit our website http://www.libertylegalok.com.