Starting a new business requires choosing a form of organization best suited to the product or service involved and to the contemplated capitalization, ownership and tax structure. C-corporations, S-corporations, limited liability companies and limited partnerships are among the possibilities to be considered, and all have their advantages and drawbacks. At Long, Claypole, & Blakley Law, PLC in Enid, our attorneys give careful analysis and consideration to our clients’ plans and devise strategies for formation of the right business entity for their needs and objectives.
Similar to a corporation, a limited liability company (LLC) is a business organization that shields its owners’ personal assets from responsibility for the debts and losses of the enterprise. However, the ownership structure is more like that of a partnership, with “member” holding interests that are subject to restrictions on their transfer. An LLC is also treated like a partnership for tax purposes, meaning that all income passes through the LLC and is taxed to the members according to their shares.
In Oklahoma as elsewhere, an LLC is formed by filing articles of organization with the office of the secretary of state. There is also a need to designate a registered agent who can be served with legal process if the LLC is ever sued.
An LLC business plan usually includes creating an operating agreement. Though not required by law, the agreement is essential to defining how the entity will be managed. It may state how ownership shares are to be issued, how duties and responsibilities will be divided, how profits will be shared and how succession of ownership or management may occur. Without an operating agreement, these matters will have to be decided by general consent of the members, which can lead to disputes and stalemates.
We are adept at helping clients decide on the advisability of an LLC structure. (Certain entities, like law firms and other professional associations, are not eligible.) We are also skilled at setting up the LLC and at preparing an operating agreement and all other documents essential to the business start-up.
A business often incorporates not only as a shield against liability in business litigation but also as a way to raise capital by selling shares of ownership. Unlike LLCs or partnerships, corporations are taxable entities, so that shareholders’ tax liabilities are lower. However, corporations are subject to strict laws governing their management, record keeping, government reporting and sale of shares. S-corporations — those with 100 or fewer shareholders and which meet certain other conditions — may be treated as partnerships for purposes of taxation and reporting requirements.
Corporations are managed by officers and directors rather than by the shareholders themselves, though in smaller corporations these positions may overlap. In such a corporation, a shareholder agreement can be a vital document for dealing with business management. It can eliminate the need for formal meetings and reports for day-to-day decision-making and also provide for how profits are to be shared, how duties and responsibilities are to be divided and how transfers of ownership can take place.
As a business progresses, there may be a need to revise its corporation structure. We are experienced not only with initial corporate formation but also with analyzing changes in operations and objectives that may warrant revisiting the original business plan. We advise corporations of all sizes and types on compliance issues under Oklahoma and federal law.
At Long, Claypole & Blakley Law, PLC in Enid, we counsel businesses of all sizes and in various industries on how to plan their organizational structure and to provide for their ownership and management. To schedule a consultation to discuss your business needs, call 580-599-0191 or contact us online.