Are you looking to form a professional limited liability company (PLLC) in Oklahoma, but you’re not sure how the formation process works? There are several important steps when it comes to creating an Oklahoma PLLC that is compliant and able to do business in the state.
What is an Oklahoma Professional LLC?
The professional limited liability company (PLLC) is a specialized type of LLC that is intended for licensed professionals to offer their unique services. In Oklahoma, a PLLC is an LLC formed to render “professional services,” which are services rendered by certain licensed professionals such as physicians, surgeons, veterinarians, architects, attorneys, dentists, public accountants, physical therapists, nurses, engineers, and pharmacists.
The Oklahoma PLLC is typically more popular than a professional corporation (PC) because it’s a more flexible business type, but it still includes the personal asset protection and professional qualifications that make the PSC valuable.
PLLCs in Oklahoma have relatively simple formation and maintenance requirements, several options for how they want to be taxed, and flexible management. From one-person businesses to multi-member PLLCs with several owners, the PLLC is a popular choice for a reason.
An important detail of the PLLC that differs from a traditional LLC is that liability protection is not shared across all members of the company. For example, if you operate a PLLC for physicians, your business structure does not shield each individual member from malpractice suits. Instead, each member is liable for their own malpractice insurance, and no member is liable for another member’s malpractice.
Forming a PLLC in Oklahoma (in 6 Steps)
Step One) Choose a PLLC Name
Your PLLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
The name of an Oklahoma professional limited liability company must contain the the words “limited liability company” or “limited company” or the abbreviation “LLC,” “LC,” “L.L.C.,” or “L.C.” modified by the words “professional,” or some abbreviation of the combination, such as “P.L.L.C.” or “PLLC.” You should also be sure that the name follows any rules of the regulating board of your profession.
Another aspect to consider is including language that explains what your business does. For example, if you’re a doctor, put the word “physician” or the initials “MD” in your PLLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
Do You Like It?
At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your PLLC name both sounds good when spoken out loud, and looks good when written down.
The most important consideration for naming a PLLC is to not get too attached to any one business name until you know that it is available for use. You can check if a name is available by using the Name Availability Search tool on the Oklahoma Secretary of State’s website. You can also call the Secretary of State at (405) 522-2520 or visit the Secretary of State’s office in person. If you want to ensure that no one uses your chosen business name prior to filing the Articles of Organization as described below in Step Three, you can reserve the name for 60 days by filing an Application for Reservation of Name online or by mail. The filing fee for the Application for Reservation of Name is $10.00.
Get Your Business Domain
To fully embrace the business name, register your URL. With GoDaddy you’ll be able to quickly build a company website so that nobody else can use or take it.
Step Two) Designate a Registered Agent
Every PLLC in Oklahoma is required to designate a registered agent, which is the individual or business entity that receives government correspondence on behalf of your business, then forwards those documents to you.
In Oklahoma, your PLLC’s registered agent may be the PLLC itself, an individual resident of Oklahoma, or a domestic or qualified foreign corporation, limited liability company or limited partnership. Each registered agent must maintain a business office with a physical address in Oklahoma (not a P.O. Box) that is open during regular business hours. That address will also serve as the PLLC’s registered office.
Without a registered agent, you could lose your good standing with the state of Oklahoma, and the state also has the right to dissolve your PLLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
At the end of the day, we recommend hiring a dedicated registered agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record.
Step Three) File Formation Documents with the State
Once you are ready to form your Oklahoma professional limited liability company, you will fill out the Articles of Organization.
This is THE document that will register your PLLC with the state. You’ll want to ensure all of the following information is correct on the form:
- Name of the PLLC
- Street address of the PLLC’s principal office
- Email address of the primary contact
- Name and street address of the registered agent
- Term of existence of the PLLC
- Profession to be practiced by the PLLC
- Name and signature of the organizer
The Articles of Organization can be filed with the Oklahoma Secretary of State either by mail or in person. The Articles of Organization currently cannot be submitted online. Note that you must also file a certificate or an original letter of good standing issued by the regulating board of the PLLC’s profession stating that each of the officers and members are duly licensed to practice such profession.
Cost to Form a PLLC
The filing fee for the Articles of Organization is $100. In person filings can be processed in an hour for an additional $25.
Mailed failings take 7-10 business days. As noted above, in person filings can be processed in an hour for an additional fee.
Step Four) Create an Operating Agreement
After you register a PLLC in Oklahoma, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for a copy of this document. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your operating agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your operating agreement, or you can create one from a free template online. You can read more about operating agreements here, but some of the basic information you’ll want to have includes:
- Individual members' ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the PLLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Step Five) Handle Taxation Requirements
The vast majority of PLLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important PLLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
In Oklahoma, PLLCs are generally treated as “pass-through entities,” meaning that the members are taxed on its income and not the entity itself. Your PLLC may still be responsible for other Oklahoma state business taxes, however, such as sales tax or use tax, depending on its business activities. You can find more information about the different types of business taxes in Oklahoma on the Oklahoma Tax Commissioner’s website. Business taxpayers can file and pay many of these taxes through the OkTAP website.
Depending on where in Oklahoma your business is located, you may also need to pay some local taxes. You should check with the city and county in which your PLLC does business to confirm whether it will have any local tax obligations. You can find local resources for businesses in the four largest cities in Oklahoma at the following links: Oklahoma City, Tulsa, Norman, and Broken Arrow.
Step Six) Obtain Business Licenses and Permits
A general state business license is not required to operate a business in Oklahoma. However, certain types of business and occupations require special licenses, permits, or registrations. You can find more information about business licensing in Oklahoma on the Oklahoma Department of Commerce’s website. The State of Oklahoma also maintains a directory of professional licensing online.
Given the nature of a PLLC, you will need to have at least one of these licenses. You should be sure to check with your city and county as well, as your PLLC may also be subject to local licensing requirements.
Would You Prefer a Professional Form Your PLLC?
If you would prefer to have a professional handle the paperwork for you, consider hiring an online business formation service.
Because of the often-complex nature of professional limited liability companies, some of our favorite service providers don’t offer PLLC formations, but there are still plenty of quality companies that do provide this service. A couple of our favorites for PLLC formation are LegalZoom and MyCorporation.
Another option would be to hire a business attorney to handle your PLLC formation. While this is certainly a more expensive route than using an online formation service, a lawyer’s expertise could come in handy when you’re forming a specialized business structure like this.
Next Steps: What to Do After Creating a PLLC in Oklahoma
Open a business bank account
We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
Like most states, employers in Oklahoma generally must provide workers’ compensation coverage for their employees. If you plan to hire employees for your PLLC, you can fulfill this requirement by buying insurance from a private insurance company, by obtaining approval from the Oklahoma Workers’ Compensation Commission to self-insure individually or as part of a group, or by becoming a “qualified employer” with the approval of the Oklahoma Insurance Department. Becoming a “qualified employer” allows you to opt out of the workers’ compensation system by establishing an Employee Benefit Plan under federal law. For more information on workers’ compensation in Oklahoma, see the Guide for Employers available on the Oklahoma Workers’ Compensation Commission’s website. Though not required, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies pertaining to the profession practiced by your PLLC.
Understand income reporting
Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year.
In Oklahoma, you will need to report your income on a state income tax return. Oklahoma has different income tax return form based on how your PLLC is treated for tax purposes. You can find the various forms and instructions on the Oklahoma Tax Commission’s website.
Understand annual reporting
LLCs in Oklahoma, including PLLCs, are required to file an annual certificate with the Secretary of State. This certificate is due by the anniversary of your PLLC’s formation date each year. A 60-day grace period after the due date is given to file the certificate, but if after 60 days the annual certificate has not been filed, your PLLC will become inactive and will no longer be in good standing with the state.
Find an accountant
We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how to best manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.