If you’re researching how to start an LLC in Oklahoma, there are basically seven steps. However, there is considerably more to operating an LLC than simply setting one up. The general nature of forming an LLC falls into more or less 7 categories:
1. Talk To An Oklahoma Lawyer Who Knows LLC Law
Sure, the first step sounds like a sales pitch to come see us. And we hope that you may consider us for your Oklahoma legal needs, but speaking to an attorney who knows about setting up an LLC is really important! (You don’t have to use us; there are a lot of competent attorneys available in Oklahoma.)
The emphasis is on speaking to a law firm that works with LLC set up and formation. Business law and litigation pose issues that some attorneys may not handle. A good illustration is a divorce lawyer. He or she may be really skilled at working through all the details of dividing property, child support, alimony, etc. However, a divorce lawyer probably isn’t used to giving legal advice about starting up or properly maintaining an LLC.
Why talk to an Oklahoma lawyer? The protection that comes from an LLC is legal in nature. Of course, you can use the guy in the gym, but he may not really know what he’s talking about. An Oklahoma attorney went to law school and hopefully has firsthand experience in the courtroom. We say it all the time — any challenge or attack to get past your LLC to you is going to take place in the courthouse!
We like accountants, but some of our clients made the mistake of getting legal advice from an accountant. Not trained in the law (except for taxes), a clever accountant or C.P.A. is still not a seasoned trial lawyer. Experience in the law and how it works matters!
2. Find A Name For Your LLC That You Can Use
The name of your LLC should be decided with some thought and attention as to what you want to accomplish. If the name of your LLC is part of your marketing plan, then it needs to communicate what your business does. For others, the name of the LLC isn’t part of marketing and the desire for confidentiality is the key factor. Bubba Jones’ LLC pretty well lets everyone know that Bubba is the man! Confidentiality went right out the door!
The Oklahoma Secretary of State will have to approve the LLC name before startup. You can’t take a name already reserved by someone (or a name that will likely be confused with another LLC or corporation already using a substantially similar name).
If you want to reserve a name that you like before you actually set up your LLC (while you keep searching for the perfect name), you can reserve names with the Secretary of State for a fee.
3. Choose A Registered Service Agent
A registered service agent is required in Oklahoma at the time you start up your LLC. Without a registered agent, you will by default wind up with the Oklahoma Secretary of State. We like to see your LLC with a registered agent – don’t rely on the government.
The registered agent can be you or someone you designate. Before you pick someone, make sure they are willing to do the job. You shouldn’t choose the registered agent unless they agree and can perform the task.
It’s common for an LLC especially at start-up to appoint a law firm or a specific attorney to act as the agent and receive notices and official documents.
4. File For The LLC Certificate With The State of Oklahoma
A valid LLC has to be authorized by the State. In Oklahoma, the agency that grants the certificate is the Secretary of State. You pay a fee, roughly $100, and receive a certificate that indicates the LLC entity has been registered with the State.
This certificate is NOT an LLC. If you read much on this website, you’re going to find that we spend a great deal of time trying to educate people. The greatest misconception among people who didn’t use a lawyer to set up their LLC is that the certificate and the LLC are one and the same.
Once the certificate arrives, hang onto the document. Although the certificate standing alone is not an LLC, it represents the right to do business as an LLC and it’s an important and valuable legal document.
5. Prepare The Operating Agreement
The operating agreement is the LLC manual or the rules of the road for your LLC. If you played many board games like Monopoly, Risk, etc., then you readily understand these games all come with rules. You probably have played these games with others who made their own rules.
They may not have liked a specific rule in the gamebook and decided the rule wasn’t going to apply when they played. They may have made some special rules for when the younger players participated. All the same, whether you followed the exact rules from the game company or you used a modified version, the game had rules.
Your LLC will have rules that you set up. These rules are the ones you decide to use (subject to being trumped by law). Like most things, you have a lot of freedom and flexibility, but you can’t get around the law by saying your LLC doesn’t have to follow it. You can’t create a legal loophole in setting up your LLC by having an operating agreement that’s contrary to the law. For example, you set up the LLC operating agreement to say your LLC doesn’t pay taxes! Hooray, no taxes! Well, not exactly. . . . you probably don’t need a tax lawyer to tell you that’s not going to work!
The operating agreement should define the rules and spell out how things will work. Just like a board game, if the LLC members and managers can’t read the rules, then the game doesn’t go well. Likewise, if there is a challenge that the LLC isn’t a real one, the lack of an operating agreement may be used against you in court. Therefore, you want the operating agreement to be one that you are really going to use at the time the LLC is set up.
6. Consult a C.P.A. or Accountant for Tax Elections and EIN Number
One thing you will notice about our advice is that we recommend using a qualified tax advisor for taxes and accounting. We recognize that taxes and accounting are not what we do best. Therefore, we suggest getting tax and accounting advice directly from your accountant.
In a similar manner, we strongly recommend against using your tax advisor for legal advice about your LLC. They aren’t trained to give legal advice and really shouldn’t.
Your LLC will need to make some elections about how it will be taxed. It also needs its own tax number or EIN. A simple way to think of an EIN is a Social Security number for your business. And no your LLC can’t claim Social Security when you decide to retire! Believe it or not, that’s a question sometimes asked.
7. Finish Your Initial Minutes and Subscription Requirements
Once you have your initial meeting finished and your subscription requirements complete, you have an LLC set up and ready to go.
Don’t forget that the initial LLC set up process doesn’t end just because you formed one! LLCs have to be run like an LLC and follow the laws for LLCs. It’s like a duck! If it doesn’t walk like a duck, quack like a duck, and act like a duck, then it’s probably not a duck! If your LLC doesn’t act like an LLC from start up, then in a legal challenge the judge may say that it’s not an LLC.
Hey, we don’t know a whole lot about ducks, but you want your LLC to shed liability like water rolls off a duck’s back!
Our Oklahoma law firm is ready to assist with setting up your LLC, questions, and legal issues as to proper maintenance. Schedule a time to come meet us now.