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Oklahoma has nearly 70,000 square miles of prairies, farmland, mountains, oak savannas, marshes, mesas, and forests. Historically, it’s known for its agricultural sector, and while the famous song named after the state by Rodgers and Hammerstein notes “wavin’ wheat can sure smell sweet,” there’s so much more: aviation, aerospace, manufacturing, food processing, natural gas, and wind power businesses operate there. Directly north of Texas, Oklahoma touches five other US states, and its central location makes it an ideal hub for the transportation sector and headquarters for national businesses like Sonic Drive-Ins and regionally well-known Devon Energy and Love’s Travel Stops & Country Stores.
Oklahoma is ranked among the easiest cities to do business, and its low cost of living and high poverty rate is ripe for a business owner who wants to stimulate economic development and create positive change by starting an Oklahoma LLC.
What is an LLC?
A limited liability company, or LLC, is one of four popular business structures that owners generally choose when forming a business. The other three types of business structures are sole proprietorships, partnerships, and corporations.
A benefit of forming an LLC is that it’s treated as a separate legal business entity from the owner or owners (LLCs can be owned by multiple people). A business owner is not personally held responsible for company debt or liability if the company is sued or faces an unpaid debt. Since business finances are detached from the owner’s personal banking, assets like homes and cars are untouchable. In Oklahoma, two types of businesses are not allowed to operate using the LLC structure: banking and insurance.
Is an LLC right for you?
Business owners can change the structures of their businesses after launching, so choosing a structure is not a “now or never” proposition. However, forming a suitable business structure from the start can save time, money, and headaches. To assess whether an LLC structure is the right fit for your Oklahoma business, keep in mind these considerations:
- Is there a need for personal asset protection? Liability protection is an advantage of LLCs. If an LLC business owner gets sued, their personal assets, such as a house or car, cannot be touched.
- How important is a limit on tax liability? LLCs also offer flexibility when it comes to paying business taxes. LLC owners can pay taxes similar to a sole proprietor or corporation, meaning filing personal or corporate tax returns. There are pros and cons to both, contingent on the income earned and how much money an LLC owner wants to reinvest in the business. LLC owners can also deduct startup costs—such as marketing and travel—from their taxes.
1. Choose an idea for your LLC
It’s likely one or more business ideas have already taken shape, whether it’s in the brainstorming stage or through more concrete steps. Keep in mind that passion and talent—making fanciful Oklahoma fried pies or taking friends on horseback rides—don’t always translate into a profitable business. While both traits are necessary to launch a business, so is pragmatism. Developing a business—and running one—is challenging. One way to help clarify your business idea is to pick a standout name and write a business plan, working through all the facets (and stumbling blocks) of your potential enterprise.
2. Name your Oklahoma LLC
The creative side of naming a business can be a fun—sometimes daunting—puzzle to solve. Questions to ask yourself at this step include: Does the name explain the business? Does it need to? Is it easy to remember? Will it help potential customers find your business? Is it too generic, obscure, or cute?
Still, naming an LLC in Oklahoma also includes more meticulous steps:
- Checking that there isn’t already another business with the same, or similar, name in the state. Business names must be unique and adhere to the Oklahoma LLC naming guidelines, so search the Oklahoma Secretary of State’s business entity search page for active business names.
- Confirming the chosen domain name is available. Even if the business won’t be launching immediately, it’s good to buy the domain name as soon as possible. They can be searched and purchased on platforms like Google Domains or Domain.com, among other websites. Prices vary, and can on average cost $10 to $20 or more.
- Making sure the business name includes “Limited Liability Company,” “Limited Company,” or one of the abbreviations “LLC” or “LC.” An eatery, for example, might be named, “Hot Diggity Prairie Dawg, LLC.”
However, if the chosen legal name that includes LLC is too clunky for marketing or advertising, it’s possible to change it by filing a DBA (doing business as), also called a trade name, assumed name, or fictitious name. For example, Hot Diggity Prairie Dawg, LLC, could become the more simplified, easier on the eyes and ears, Hot Diggity Prairie Dawg (omitting the LLC) by filing a DBA. In fact, the name can be changed to anything by filing a DBA, provided it doesn’t already exist in Oklahoma. The form can be completed online via the Oklahoma Secretary of State page and costs $25 to file.
3. Create a business plan
A thorough business plan outlines the basics of your LLC. During the writing process, you’ll likely clarify and identify what your business needs, such as financing or a method to reach the desired customer base. Writing and editing the business plan will reveal where your business ideas are solid and falling into place, as well as the overlooked gaps. Working these issues out prior to launch will likely reduce (although not entirely eliminate) the stress and anxiety of opening a business, and maximize the celebratory enjoyment.
An LLC business plan shouldn’t be a massive, multi-volume tome, but rather a document that’s concise and easily read by potential investors or bank loan officers, for example. There are templates available to use as the foundation for first drafts. Reviewing examples can help clarify the essential elements of a business plan:
- Summary of business. A brief statement describing the LLC.
- Business structure. A section identifying the LLC structure.
- Description. Getting more granular on the specifics of the business: Is it a physical or virtual shop? Will offerings include products, services, or both?
- Market analysis. This section explains why the products or services are needed, and why customers would purchase from your business.
- Sales plan. A plan describing how your business plans to sell its goods or services, and the marketing strategy.
- Operations plan. A brief outline of the operational aspects of the LLC, like staffing or fulfillment.
- Financial outlook. A recent financial history, how the launch will be funded, and financial projections.
4. Get a federal employer identification number (EIN)
If the owner of an Oklahoma LLC is planning to have one or more employees, they are required to get an federal employer identification number, also called a federal EIN or IRS employer identification number. Even if an LLC isn’t planning to hire any employees, it can still be beneficial to have an EIN, as banks often require it to open a business account. An EIN is free and can be obtained through the Internal Revenue Service.
5. File your Oklahoma articles of organization
Forming an LLC in Oklahoma requires an Oklahoma articles of organization form (sometimes called a certificate of formation) to be filled out and then registered with the Secretary of State. Filing the articles of organization requires:
- Business name. The business’s name, including whether “Limited Liability Company” or “Limited Company” will be spelled out or used as an abbreviation (either with or without periods between the letters).
- Address. The street address of the company’s primary location (you cannot use a PO box).
- Email. The email address of the business’s primary contact person.
- Registered agent. The name and address of the business’s designated registered agent—someone with an Oklahoma street address.
- Payment. The filing fee is $100 (each subsequent year costs $25).
6. Choose a registered agent in Oklahoma
A registered agent is someone with a physical Oklahoma street address reachable during most business hours to address any LLC related legal activity. The LLC owner can be the registered agent if they have an Oklahoma address. A friend or relative with an Oklahoma street address who is available during normal business hours can also be appointed the registered agent. However, their personal address could potentially be made public. Another option is choosing from various registered agent services, which typically cost about $50 to $125 a year.
7. Obtain business licenses and permits
In order to operate certain LLCs in Oklahoma, licenses and/or permits may be required, depending on the sector, type of business, and location. Some licenses and permits are issued by the state of Oklahoma; others are issued by local municipalities.
For example, restaurants and bars in Oklahoma must get food establishment licenses and food handlers’ permits for some employees at their local county health departments. Various other businesses—from lawn services to IT consulting—might also be required to get licenses and/or permits depending on policies of the local county and municipality. Other businesses like trucking and transport within Oklahoma, for example, require various state-issued licenses through the government agency Oklahoma Corporation Commission. A list of licensing and operating requirements in Oklahoma can be found on the Oklahoma Commerce page.
Additionally, any retailer in Oklahoma—including shop owners, resellers, and real estate sellers, among other types of businesses—must obtain a sales tax permit through the Oklahoma Taxpayer Access Point (OkTAP).
8. Understand Oklahoma state tax requirements
In Oklahoma, on a federal level, an LLC business owner can choose to get taxed as a sole proprietorship or a partnership if there is more than one business owner, or as a corporation. But there are state tax considerations as well.
- Corporate tax rate. If the LLC owners want to get taxed as a corporation, they can file similar to a C corp; Oklahoma’s corporate tax rate is 4% of taxable income. LLCs can also opt to file as an S corp if eligible, which is another pass-through structure.
- State sales taxes. In Oklahoma, the state sales tax is 4.5%, which applies to most physical goods sold like home appliances, property, and groceries, with a few exceptions such as medications. Most services, such as cleaning or yard work, are not taxable. Businesses collecting state sales tax must first register at OkTAP. Oklahoma business owners purchasing certain machinery or medical equipment, among other work-related supplies, can be exempt from paying sales tax.
- Income tax withholding. If an Oklahoma LLC is going to have employees, the owner must set up an income tax withholding account with the Oklahoma Tax Commission and file quarterly or monthly. An employee unemployment tax account is also required, which can be done through the Oklahoma Employment Security Commission.
9. Prepare an operating agreement
If an LLC is owned by two or more people, consider creating an LLC operating agreement. This internal, legal document serves as the framework for how a business operates and its ownership structure. While not required, it helps with disagreeing parties within the company and lays out crisis management protocols to follow should disaster strike and the company shuts down. You can use the template as a starting point to craft a thorough operating agreement, which likely will include the following details:
- LLC name and address. Name and place of business for the company.
- LLC owners’ names. The name of each owner with an ownership stake in the company.
- Registered agent. Name and address of registered agent.
- Voting. Outline of owner/member voting rights.
- Management. How the business is run.
- Compensation. Payment structure for owner/members and possibly employees.
- Rules of operation. A company overview, including how profits and losses are handled.
An operating agreement stays within the company and does not need to be filed with the state. However, it can be used to help establish LLC status or open business bank accounts.
10. Examine business insurance options in Oklahoma
Oklahoma business owners need various types of insurance policies depending on their businesses. For example, an LLC operating in a physical space might need fire insurance while another business using cars needs auto insurance. Some other types of insurance coverage for Oklahoma LLCs are:
- Liability insurance. All businesses should have liability insurance—coverage that helps protect a business against lawsuits. Generally, a small business might pay $300 to $5,000 a year for liability insurance. Policies can be purchased through private insurance brokers or agencies like Progressive or Allstate.
- Workers’ compensation insurance. When a business owner has employees in Oklahoma, workers’ compensation is required. Nearly all employees are covered, but there are a few exceptions.
- Employer liability. This insurance is also required if a business has employees. It covers the owner if an employee sues for a work-related injury or illness.
- Health insurance. This is optional insurance coverage for businesses in the state; Insure Oklahoma provides a few options for employers.
- Auto insurance. Commercial auto insurance is required. Prices and types of insurance vary depending on the type of service—delivery or taxi service, for example—and type of vehicle, from car to truck.
11. Understand financial considerations
Most business owners need capital before launching, as well as in the early stages of the business. There are multiple ways to finance a business, including:
Oklahoma also offers multiple incentives for new and seasoned business owners, from tax credits to training.
To help prepare for the financial realities of launching a business, LLC owners can calculate the dollar amount needed to stay afloat—taking rent, insurance payments, utilities, and possibly wages into consideration. Then, budget accordingly.
12. Market your LLC
Marketing is often an enjoyable aspect of business ownership as it combines artistic creativity with a dash of social psychology: Why are some customers drawn to loud, sassy marketing with neon pink lettering and others are not? Why do some customers feel their self-worth temporarily elevated when purchasing a certain brand while others don’t?
It’s time well spent to think about what makes your business more appealing to customers over similar businesses. This stage includes addressing the messaging your business aims to project to potential customers—whether that’s high-quality and luxurious or budget-friendly finds. A marketing plan can help with that.
A comprehensive marketing plan requires several key components:
- Defining ideal consumer base. Identify potential customers by asking key questions: Are they other businesses or the general consumer? Both male and female? Families? What is their income level? Age range? Are they struggling to survive on a daily basis, have an overflow of disposable income, or somewhere in the middle? Do they shop based on their personal values?
- Market research. Focus on how to reach the target audience—through social media? Local Chamber of Commerce? Word of mouth? Advertisement? Partnerships?
- Market strategy. Create a marketing strategy with a visual brand identity, including a logo, found on all collateral. Explore how to best use social media campaigns, advertising, strategic partnerships, and events (virtual and/or physical) to reach customers.
- Customer retention strategy. Bravo, you have a slew of customers shopping at your new business, but don’t take it for granted. Attentive customer service, a pleasant shopping experience, and special discounts and offers keeps customers returning.
Starting an LLC in Oklahoma FAQ
How much does it cost to start and maintain an LLC in Oklahoma?
It costs $100 to file online to register an LLC with the Secretary of State, with an annual renewal cost of $25.
Do you need an Oklahoma registered agent for your LLC in-state?
Yes. A registered agent is someone with an Oklahoma street address, and could be the LLC’s owner, the owner’s friend or relative, or even a professional registered agent service in Oklahoma.
How do state taxes work for an Oklahoma limited liability company?
An LLC can be taxed as a sole proprietorship, partnership, or corporation.