Oklahoma has one of the most business-friendly climates in the US. Not only will business owners experience reasonable taxes and regulations, but there are additional benefits of having a low cost of skilled labor and a highly supportive legal climate.
The following step-by-step guide will show you how to start a corporation in Oklahoma.
1. Select a name for your corporation
Deciding on a business name for your Oklahoma corporation is the initial step in the process of forming your Oklahoma corporation. Additionally, you should note that the state has specific naming requirements that you must comply with.
General corporate name guidelines
Refer to the following guidelines when deciding on your Oklahoma corporation name:
- Your corporation name requires prior approval if you plan on using the following words: savings association, savings, and loan, building and loan, savings bank
- Your corporation name must be significantly different from other existing businesses in the state, including reserved names
Your corporation name must contain one of the following words or phrases: company, association, foundation, corporation, club, Inc., fund, society, institute, syndicate, or union. Additionally, you may include words that have a similar meaning in a different language
The Oklahoma State statute provides additional direction for choosing a business name for your Oklahoma corporation.
If you plan on going national, it’s a good idea to protect your business name with a trademark. Trademarking a business name involves registering your business name and logo with the Oklahoma Secretary of State.
A trademark could be a word, symbol, or picture that you use to market or identify your business. Additionally, a trademark ensures that your customers are never confused about who they are doing business with.
The trademark process includes submitting the Trademark Application Form to the Secretary of State. There is no vetting process; however, you must make sure that another business entity in the state hasn’t already trademarked the business name.
Your company’s entity name is registered with the state where business is conducted. Essentially, your entity name is your company’s legal name and is also the name that must be stated in all formation documents and documentation submitted to the state or federal government.
DBA (Doing-business-as) name
In the event that you would like to trade or do business under a different name from your legal business name, then a DBA is in order. A DBA is short for “doing business as” name. In some states, it’s referred to as an assumed, fictitious, or trade name.
However, it’s important to understand that registering a DBA or trade name doesn’t mean you are starting a brand new business but that you are simply trading under a different name.
The benefits of a DBA are that it allows you to market your business under a different name and potentially reach different target markets. If your DBA is registered, you’ll be able to open up a corporate bank account on the DBA name. DBAs also protect business owners’ personal identities, and by filing an assumed name, you’ll ensure that no other business can claim that name as a DBA after you.
The process of filing an assumed name in Oklahoma is quite straightforward. To register a fictitious name in Oklahoma, you must file the name with the Oklahoma Secretary of State. The Trade Name Report Application Form is available on the Secretary of State’s website.
Simply complete the application by specifying the DBA name, location of your business, and a short explanation of your business. You also need to include your corporation’s entity name, the state where your business was formed, and your entity type.
2. Nominate a registered agent
As per state law, every formal business in Oklahoma will need an Oklahoma registered agent. The registered agent is responsible for accepting all official paperwork from the state in addition to receiving service of process in the event your corporation is served with a lawsuit.
You may nominate yourself to be your corporation’s registered agent as long as you are over the age of 18 and have a physical address in the state of Oklahoma. Alternatively, you may choose to elect any member of your Oklahoma corporation to serve as the company’s registered agent.
The purpose of the registered agent is to keep your business compliant by reminding you about annual report filings and other documentation that needs to be submitted timeously to the state.
Additionally, the registered agent receives service of process, which is quite a sensitive situation, and if you had to serve as your business’s own registered agent, then you may have to accept sensitive paperwork in front of clients and employees, which is not good. Simply appoint someone as your corporation’s registered agent to avoid the hassle.
Additionally, appointing a member of your corporation as a registered agent ensures flexibility. Since registered agents need to be available during normal business hours, all other appointments will need to be put off to ensure that the agent is at the physical office in the event that any paperwork needs to be served.
3. Appoint initial directors at the organizational meeting
The next step in forming your Oklahoma corporation involves calling an organizational meeting where a few formalities are concluded.
Some of the tasks that will need to be carried out include creating and approving bylaws, selecting a Board of Directors, determining your corporation’s share structure, and executing an incorporator’s statement.
When it comes to appointing initial directors, you need to choose at least one director to oversee your corporation’s activities until the first shareholder meeting is called.
The individual is known as a corporate director and will be responsible for adopting, amending, and repealing the corporate bylaws. Additionally, they may also elect, supervise and remove corporate officers.
4. File Articles of Incorporation
Your Oklahoma corporation is not officially or legally formed until the Certificate of Incorporation, also known as the Articles of Incorporation have been submitted to the Secretary of State. The articles will need to cover some basics, including:
- Your Oklahoma corporation’s name
- Your Oklahoma corporation’s statement of purpose
- The duration of your Oklahoma corporation
- The number of authorized shares your corporation is authorized to issue
- The physical address and name of the Oklahoma corporation’s registered agent
- The physical address and names of the Oklahoma corporation’s incorporators
- The physical addresses and names of corporate directors
Additionally, you should note that the Articles of Incorporation Form provided by the secretary of state require you to indicate whether your corporation will be issuing more than one authorized shares series or class. Thereafter, you must state whether the classes are preferred or common.
Additionally, it’s important to note that the more shares you authorize, the higher the filing fee will be. The difference between common or preferred classes is that preferred stock does not give shareholders voting rights, whereas, with common stock, shareholders have voting rights.
After compiling the relevant information, you may go ahead and file the Articles of Incorporation online. Alternatively, download the form and post the form to the below address:
Oklahoma Secretary of State
421 NW 13th St, Suite #210
Oklahoma City, OK 73103
5. Create and approve bylaws
A corporation’s bylaws also referred to as corporate bylaws, is simply a legal document laying down the rules and regulations overseeing the company’s day-to-day activities and operations.
Therefore, by creating and approving corporate bylaws, you’ll ensure that your Oklahoma corporation runs smoothly, consistently, and efficiently.
Some of the information that your corporate bylaws must include are:
- How the corporation will be overseen
- How contracts will be negotiated
- How corporate records will be stored and maintained
- The date of the annual shareholder’s meeting
- How company disputes will be resolved
- How the corporate bylaws will be added or amended in the future
Make use of the following bylaws templates by customizing them to meet the requirements of your Oklahoma corporation.
6. Select a share structure
The next step involves determining the number of shares your corporation is authorized to issue. In the state of Oklahoma, you need to state the par value of the shares or, if applicable, state that the shares are no-par shares. The value assigned to each share is referred to as a “par.” It’s recommended that you opt for low par or no par shares.
Additionally, as per state law, you must identify the series or class of stock. When it comes to classes of stock, you get common and preferred stock.
Common stock is not more favorable than other classes of stock, while preferred stock is considered more favorable than common stock.
While you are required to have different classes of stock, this information must be included in the Articles of Incorporation.
7. Obtain an EIN
An EIN is short for Employer Identification Number. It’s simply a government-issued ID assigned by the federal government to identify businesses in the state. Essentially, it’s a Social Security number for your company.
The EIN is useful in many instances, such as hiring employees, submitting paperwork for tax purposes, and opening up a business bank account. You can apply to the IRS free of charge after forming your Oklahoma corporation to obtain your EIN.
The online application is the quickest way to obtain your EIN, while there’s also a downloadable form called the IRS Form SS-4 that you may complete and submit to the Internal Revenue Service at the following address:
Internal Revenue Service
Cincinnati, OH 45999
8. File Oklahoma state taxes
Depending on your business structure, or whether you’ve opted to incorporate as an S corporation or a C Corporation, your company may be liable for one or more corporate taxes:
- Corporate income tax: Oklahoma has a corporate income tax at a flat rate of 6%. The tax return is due on the 15th day of the fourth month after the end of the fiscal year.
- Corporate franchise tax: Oklahoma does also have a corporate franchise tax which is applicable to C corporations and S corporations.
- Oklahoma employer taxes: All Oklahoma corporations that have employees will need to register for employer taxes via the Oklahoma Tax Commission’s website.
- Oklahoma sales tax: All corporations selling physical products in the state of Oklahoma will need to register with the Oklahoma Tax Commission’s website for a seller’s permit. The seller’s permit is essentially a certificate allowing you to collect sales tax on applicable goods.
9. Oklahoma business licenses and permits
Your Oklahoma corporation may need to secure one or more business licenses and permits prior to operating in the state. This is applicable irrespective of whether you are starting a large or small business in the state:
- Oklahoma sales tax license: A sales tax license must be obtained if you are engaging in business in the state or selling or leasing tangible personal property. Registration for this license must be done with the Oklahoma Tax Access Point website.
- Professional license: Every profession in Oklahoma is subject to some form of regulation in the state. When it comes to offering professional services such as physicians, lawyers, nurses, etc., then you’ll need to obtain a professional license to legally offer your services in the state. You may visit the state’s office website to obtain your professional license.
10. Annual report requirements in Oklahoma
Oklahoma corporations don’t need to file an annual report with the Oklahoma Secretary of State. That said, they do need to pay an annual franchise tax. The rate of the tax is $1.25 for every $1000 of capital used in the state.
11. Costs of starting a corporation in Oklahoma
The filing fees below apply to all Oklahoma corporations:
- Name reservation: $10
- DBA name: $10
- Articles of Incorporation: $50
- Oklahoma Certificate of Good Standing: $20
Next steps after forming a corporation
Once you’ve formed the Oklahoma corporation, you’re ready to conduct business in the state. However, the Oklahoma corporation will need to be maintained effectively to ensure long-standing success. Here are a few tips to help you on your way:
Separate business and personal banking
One of the best ways to protect your personal assets and have some form of personal liability protection is to get a business bank account. This business bank account will be dedicated to your Oklahoma corporation, which is a separate legal entity. Additionally, it will help simplify accounting and business tax filing processes. To open up a business bank account, you will need to take your company’s formation documents and submit your Employer Identification Number to the bank.
Maintain Oklahoma licensing
Your Oklahoma licenses are valid for anywhere between one to eight years. This depends on the applicable regulations laid down by the professional licensing board. However, it is essential that you ensure that your business is always in compliance with federal and state laws. This will avoid unnecessary penalties, fees as well as legal consequences.
A sole proprietorship is one of the simplest legal structures to set up simply because there’s a minimum amount of paperwork and filing that needs to be done. It’s recommended if you plan to be the only one running and owning your business.
Double taxation is a term used when income taxes are paid twice on the same source of income. Consequently, the C Corp. is the only type of corporation that’s liable for double taxation.
A nonprofit corporation is a business type that allows you to use your experience, education, and business talent for the good of humanity. Consequently, nonprofit organizations generate profits that are cycled back to further the organization’s cause.
One of the main advantages of a limited liability company or LLC is limited liability protection. This simply means that the business’s debts and lawsuits against an LLC will not come out of the owner’s personal assets.
When it comes to issuing stock, you need to decide on the number of shares to be issued, set the value for each share, choose the type of stock and also prepare a shareholder agreement or issue stock certificates.