Limited Liability Corporations in Oklahoma
A limited liability company (LLC) is a hybrid business entity that combines the limited liability attributes of a corporation with the pass-through benefits of a sole proprietorship. No matter where you set up an LLC, these are the general benefits recognized in the United States. Thus, the main difference in setting up an Oklahoma-based LLC is it is subject to local and state tax laws.
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Articles of Organization
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The main governing document for an LLC is its articles of organization, which are similar to the articles of incorporation for a corporate entity. However, unlike corporations, LLC do not issue shares to shareholders. Ownership interest in an LLC is only for individuals who sign on as members. Each member is entitled to a percentage share in the profits of the LLC, often based on his contributed capital. The LLC's operating agreement stipulates member duties, capital contribution, and decision-making. All members must approve the agreement.
Tax Advantages
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An Oklahoma LLC enjoys preferential tax treatments compared to self-employed and sole proprietorship firms. According to Companies Incorporated, LLCs are less likely to face tax audits than self-employed business owners who must file Schedule C with the IRS. Even if you are self-employed, if you own an LLC, you can avoid having to file a Schedule C. Owning an LLC also increases the number of deductions you can claim. For example, medical expenses and pension plans are some of the expenses you can deduct as an Oklahoma LLC.
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Reduced Liability
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Operating an Oklahoma LLC reduces your personal liability by separating member assets and liabilities from those of the LLC. In other words, the LLC can enter into agreements and contracts separate from individual members. This is particularly relevant for secured debts. However, on unsecured debts, lenders can ask members to sign a personal guarantee ultimately making them responsible if the LLC defaults. In general, operating as an LLC reduces your personal liability.
Oklahoma's Business Tax Climate
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According to the Tax Foundation, Oklahoma ranks 30th in its State Business Tax Climate Index. The index measures five areas of taxation that impact business. These are corporate taxes, individual taxes, unemployment insurance taxes, sales tax, and property taxes (residential and commercial). A high score signifies a business-friendly tax environment. Before registering your LLC in Oklahoma, gain a better understanding of the state's business tax environment and your individual circumstance.
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References
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