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Starting Your Own Business in Oklahoma

Starting Your Own Business in Oklahoma. Building a Solid Legal Foundation. Presented by: Patrick R. Carlson & Josh Copeland Carlson & Copeland, PLLC 103 N. University Blvd. Norman, OK 73069. Selecting the Right Entity for Your Oklahoma Business.

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Starting Your Own Business in Oklahoma

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  1. Starting Your Own Business in Oklahoma Building a Solid Legal Foundation Presented by: Patrick R. Carlson & Josh Copeland Carlson & Copeland, PLLC 103 N. University Blvd. Norman, OK 73069

  2. Selecting the Right Entity for Your Oklahoma Business Selecting the appropriate legal structure is a critical step.

  3. Business Entities or Forms Sole Proprietorship General Partnership (GP) Limited Partnership (LP) Limited Liability Partnership (LLP) Limited Liability Company (LLC) Corporation (usually Inc. or Corp.)

  4. Sole Proprietorships Default business form when you have created no business entity Sometimes referred to as DBA or Doing Business As Advantages: Easy to set up and run Disadvantages: Exposes owner of business to unlimited tort and contract liability

  5. General Partnership Default form when you start a business with another person – always has at least two owners, called partners Advantages: Easy to set up Disadvantages: Exposes each partner to unlimited tort and contract liability

  6. LP and LLP These are created by filing documents with the Oklahoma Secretary of State. You must have at least two owners, called partners. These business forms are sometimes appropriate for certain types of real estate investment transactions and some estate planning structures. LLCs are usually more flexible, because LLCs can have a single owner, and so we will focus on them.

  7. Limited Liability Company (LLC) Created by filing Articles of Organization with the Oklahoma Secretary of State. Can have one or more owners, called members. Advantages: Can be run informally, like a sole proprietorship or general partnership or more formally, like a corporation. Disadvantages: Failure to respect business form means you can lose limited liability.

  8. Corporations Created by filing Articles of Incorporation with the Oklahoma Secretary of State. Can have one or more owners, called shareholders Advantages: A very recognized form of business Most settled of all limited liability business forms Disadvantages: Most formal of all business entities. Requires a Board of Directors, President, Secretary, and Treasurer. Requires maintenance of meeting minutes, bylaws, and other corporate records to maintain limited liability.

  9. Shared Features of Corporations & LLCs Both corporations and LLCs in Oklahoma: Can provide protection to the owners from liabilities of the business resulting from torts and contract claims against the business Allow for easy separation of management and ownership

  10. Why are LLCs recommended over corporations? LLCs can be operated more informally than a corporation. LLC owners may have their business protected from personal liabilities because creditors are limited to a charging order, whereas that limitation isn’t available for shareholders of corporations. Charging orders are not available for single member LLCs

  11. Why are LLCs recommended over corporations? LLCs can be fairly easily converted to corporations, if your business grows and a corporation becomes necessary.

  12. Which entity is right for my business? It depends! But, generally an LLC is the best choice for most small businesses because it: Allows for clear separation between business and personal affairs, Allows for limited liability, Allows flexibility of management, and Allows for multiple owners or single owners.

  13. Implementing and Maintaining Your Entity Implementing and maintaining your business entity creates the solid foundation your business needs to thrive and protect itself.

  14. Implementing Your Entity Decide Which Entity is Best Make Decisions Regarding Your Tax Strategy File appropriate documents with the Secretary of State

  15. Implementing Your Entity LLCs need an Operating Agreement – especially if you have more than one owner Corporations need Bylaws, shareholder resolutions, and Board of Directors resolutions, among other things Maintaining adequate corporate or LLC records is essential for maintaining your business form and limited liability.

  16. Recordkeeping • Business records must be maintained. • Accounting Records (banking, sales, expenses, capital equipment, etc.) • Legal Records (Operating agreement, bylaws, contracts, meeting minutes, etc.) • You should seek the advice of an accountant or bookkeeper to help you with setting up and maintaining your accounting records.

  17. Separation of Business and Personal Affairs It is fairly easy for a future plaintiff to “pierce the veil” (i.e. cause you to lose limited liability) if you commingle business and personal funds, expenses, and property. Therefore, separation on paper and in practice is necessary between your business and personal property and affairs.

  18. Separation of Business and Personal Affairs Key things to keep separate: The business should have its own bank account and financial books. When you sign contracts or other legal documents related to the business, do so as a representative for the business, not in your personal capacity Make it known that your business is a limited liability entity

  19. Questions? (405) 701-1994 (855) 538-2521 (toll free) www.carlsoncopelandlaw.com 103 N. University Blvd.Norman OK 73069

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