Hello, my name is Spencer Pittman, and I am one of the business lawyers at Winters & King, which is a full-service business law firm. Our law firm specializes in for profit and not for profit business law services. This Podcast will help to answer common questions raised by Winters & King’s clients or others that are thinking about using our services, including creating a new business. Incorporating your vision or business, including whether or not to form a limited liability company, depends on the specific needs and goals of the prospective business owner, and consulting with an attorney prior the formation is often the best option for your particular situation.
Legally establishing a limited liability company in Oklahoma is a simple and easy process, which involves filling out and submitting forms to the Oklahoma Secretary of State and signing an agreement that defines the rights and obligations of each limited liability company owner.
Designating your company as a limited liability company in Oklahoma may have significant procedural and tax advantages over a corporation, sole proprietor, or general partnership designations. To legally establish your business as a limited liability company in Oklahoma, you will first need to fill out and submit articles of organization. This document outlines specific information about your company, such as the name, address, the registered agent, and how long you wish the business to be in existence. If you intend to offer professional services that require a license, such as doctors, psychologists, or therapists, you may elect under Oklahoma law to designate your business as a professional limited liability company, or a PLLC.
The name of a limited liability company is required to contain the words “limited liability company”, “limited company”, or abbreviations of these terms, such as “LLC, LC, or Ltd.” The name must also be different enough from other Oklahoma companies and out-of-state companies that have registered their business in Oklahoma so that the Oklahoma Secretary of State can differentiate between the businesses. The Oklahoma Secretary of State has a service available to assist in your name search. Keep in mind this service does not protect your business from trademark disputes if your business’ name is closely similar to another company. You should seek legal assistance prior to filing an articles of organization to determine if your limited liability company’s name is too closely similar to another company and could raise future legal issues.
The registered agent is another important disclosure on the articles of organization. This agent will accept service of process on behalf of the limited liability company. For instance, if your limited liability company was named as a party in a lawsuit, the lawsuit is considered properly served on the limited liability company if it is served on the registered agent. The registered agent must be an Oklahoma resident and the address listed for the registered agent cannot be a P.O. box.
The term of existence of the limited liability company refers to how long the owners of the limited liability company desire the limited liability company to stay registered with the Oklahoma Secretary of State. Generally, most limited liability companys list their term of existence as “perpetual,” meaning continuous until the limited liability company is terminated, either by the owners or another party with the power to cease the limited liability company’s business designation.
Once these determinations have been made, at least one person has to sign the articles of organization. The person signing the articles of organization does not have to be a member of the company. The articles of organization must be filed with the Oklahoma Secretary of State, and this can be done entirely online. Once the articles of organization are filed with the Oklahoma secretary of state, you have officially started a business. There are annual fees, filings, and taxes to pay for the limited liability company.
Now that you have created a business, the next step in the process should be obtaining an Employer Identification Number, or an EIN number, from the IRS. This too can be done online. The EIN number is like a social security number for a business, and permits you to open bank accounts and conduct business transactions in the name of your limited liability company.
A final piece of business to help establish the governance and internal operations of your company is the operating agreement. The operating agreement is an internal document between the members of the organization which determines the rights of the members and how the business will be operated. Operating agreements should minimally state:
The lack of an operating agreement or a poorly worded operating agreement can result in costly partnership disputes and litigation in the event of a disagreement, falling out, or one partner deciding to go their separate way. For instance, a dispute over the respective ownership interests by owners of the limited liability company can lead to an expensive court battle and may result in the court or a jury determining your and the other owners’ stake in the business, which could have easily been determined from the outset. Also, if one owner accuses another owner of wrongdoing, often called a breach of fiduciary duty, a poorly worded operating agreement or internal governing documents may lead that owner being stuck with the other accused owner, requiring litigation to have a court determine how to handle the situation, or possibly worse, needing the court to judicially dissolve the limited liability company because of no other options.
The attorneys at Winters & King have decades of experience in forming businesses and drafting strong operating agreements to protect your rights as a business owner and to avoid potential future business, ownership, or partner disputes. If you are ready to start a business, want to protect your rights, and minimize liability exposure, call Winters & King at 918-494-6868.
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