In today's Freedom Friday blog and email newsletter, I want to talk about a topic before, and continue with some of the discussion from last week's Freedom Friday blog.  I want to talk about why you should consider an LLC for your small business.  I don't get asked this a lot, but I do see a lot of people wanting to enter partnerships and do other things, when an LLC may be better suited towards their needs.  In today's Freedom Friday blog and email newsletter, I'm answering the question, “Why should you choose an LLC for your small business?”

If you're a small business owner, choosing a limited liability company (LLC) for a business entity is probably the easiest approach.  There are many online resources available for this process, including the Oklahoma Secretary of State's website.  However, even though it's relatively easy to form an LLC in Oklahoma, I don't recommend doing so without the help of an attorney.  While the Oklahoma Secretary of State provides the required form for your Articles of Organization and charges a small filing fee of $100.00 (it's more in other states), the process really does not stop there.  So, here are five steps to form an LLC in Oklahoma:

1.  Do a Name Search

The first step to form an LLC in Oklahoma is to do a name search.  The Oklahoma Secretary of State requires you to perform a name search for your LLC.  You cannot choose a name for your LLC that is taken by another entity.  Also, if you're considering applying for a trademark for your business name, you should also conduct a basic trademark search.

2.  Complete the Articles of Organization

The second step to form an LLC in Oklahoma is to complete the Articles of Organization.  The Oklahoma Secretary of State has a required form for your Articles of Organization.  While the form is “easy” to fill out and fairly straightforward, there are several requirements.  The first requirement is the name of the LLC, and you also need to state the principal place of business, which must be a physical address and not a PO Box.  It's acceptable to use your home address if you don't have a physical office, or if you're starting a home-based business.  The next requirement is the name and address of your registered agent which is required for service of process.  You must designate a business or a person in Oklahoma to accept service if your business is ever sued.  You can be your own agent, or you can choose a company or law firm to be your agent.  Next, the Oklahoma Secretary of State will require you to choose an effective date, which is usually the date of filing, and you must select a duration, and you can select “perpetual” which means your LLC can last as long as you want it to last.

3.  Prepare an Operating Agreement

The third step to form an LLC in Oklahoma is to prepare an Operating Agreement.  Every LLC needs an Operating Agreement, even if you're a single-member LLC.  This is an internal document which is NOT filed with the Oklahoma Secretary of State, but it's essential for your LLC to succeed.  You can hire the attorney to prepare your 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 and make several other decisions for the LLC.

4.  Apply for an Employee Identification Number (EIN)

The fourth step to form an LLC in Oklahoma is to apply for an employee identification number (EIN) with the IRS.  If you plan to open a bank account for your business, your bank will require your LLC to have an EIN, which is basically the same as a social security number for your LLC.  The IRS will require you to fill out Form SS-4, which can be done online, and will provide you with an EIN letter giving you your EIN number.

5.  Decide if Your LLC Should Elect S-Corp Status

The fifth step to form an LLC in Oklahona, and this one is optional depending on the advice your CPA gives you, is to decide if your LLC should elect S-corp status with the IRS.  Generally, you only want to make this decision if you think your business will bring in $250,000 or more annually in revenue.  However, you need to consult with a CPA before making this decision, in addition to consulting with an attorney.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.

For more information about Liberty Legal Solutions, LLC, please visit our website at http://www.libertylegalok.com/