Do you want to invest or start a small business in Oklahoma? If YES, here is a guide on how to start a profitable business in Oklahoma with no money.
With the 5th lowest business costs in the nation, Oklahoma is a wonderful place to start your new business. The capital of Oklahoma, aptly named Oklahoma City, was founded in a land run of 10,000 homesteaders on April 22, 1889.
Situated equidistant from both US coasts, modern Oklahoma City functions as a principal distribution centre in the state and region and was currently ranked by Forbes as America’s “Most Recession-Proof City” due to falling unemployment, one of the strongest housing markets in the country and strong growth in agriculture, energy and manufacturing.
Oklahoma houses major companies including BancFirst, Hobby Lobby, QuikTrip, Love’s Travel Stops & Country Stores and Sonic Drive-in. Oklahoma entrepreneurs benefit from low operating costs and incentives such as the Small Employer Quality Jobs Program for businesses with a maximum of 90 employees.
Though the state itself has a low-ranked business environment, Oklahoma City was recently named by WalletHub as the country’s Best Large City to Start a Business.
Steps to Starting and Running a Small Business in Oklahoma
The following information below describes key, initial steps and decisions regarding starting a small business in Oklahoma. However, two or more of the decisions and actions may occur simultaneously.
- A Written Business Plan
To efficiently start a business, a new business owner is advised to start with putting together a business plan. A well written plan can be a helpful guide when starting and managing a business. If you plan to pursue and obtain a loan or other financing to start the business, then a written plan will likely or almost certainly be required.
A key section of a written business plan will include a description of the market(s) and customers (detailed by specific segments).
Another section will include projected or pro-forma financial statements, particularly regarding the income or revenue from sales, the operating expenses to be incurred and the net income (or profit) expected to result. Another vital item is an itemization (with notes) of the total loan amount or outside financing needed.
You can seek the help of referral organizations and resources that provide direct, personal assistance in developing a business plan. However, different parts of a business plan may be ongoing, simultaneously, or completed in succession even before formal actions are taken to create and register a corporation or LLC or to obtain a license or permit.
- Name and Legal Structure
In Oklahoma, the legal structure of a business is simply defined as the structure which officially determines how taxes will be filed and reported, plus how lawsuits may be incurred. Note that when a business starts and is owned and operated by a single person without any other formalities, its legal structure is a sole proprietorship.
If a business starts and is jointly owned and operated by two or more persons without any other formalities, its legal structure is a general partnership. Sole proprietorships and general partnerships are the most common types of legal structures used by small business owners in Oklahoma.
But have it in mind that under these two structures, the business owners are more vulnerable to personal liability from lawsuits and higher taxes due to the inability to take advantage of certain favourable situations. To effectively limit the potential for personal liability and higher taxes, the business owner(s) looking to start a small business in Oklahoma are advised to create and operate under one of the formal types of legal structures.
The formal structures are more complex and require more detailed filing actions. An owner may decide to file a formal structure for the business before starting, or the owner(s) may operate as a sole proprietor or a general partnership, while in the process of changing to one of the formal structures.
Note that decisions concerning the two latter types to change, usually, occur after more advice have been obtained, which may include conferring with other owners and specific business professionals (such as a tax attorney, certified public accountant or other consultants).
- Registering a Business Name
In Oklahoma, immediately the name of a business has been chosen, the owner(s) can seek to register it for exclusive use in the state. To do this, the person(s) involved are expected to contact the office of Oklahoma’s Secretary of State (SOS) www.sos.ok.gov and complete a Trade Name Report.
Once the proposed business or trade name is available, it can be registered by paying the current $25 fee to cover the cost of the report.
Meanwhile, new or aspiring owners are encouraged to register their business name. The state also offers an alternative to registering the company name. To do this, the proposed name can simply be held for a 60 day period by paying a $10 fee, while other plans for the business are being completed, including creating and filing one of the formal legal structures.
Note that the same core name that was registered as a sole proprietorship or general partnership can be used, if the owner changes the legal structure of the business. Additionally, before allowing banking transactions and creating a bank account, many bankers will mandate sole proprietors to get a Certificate of Fictitious Name which states the person who is the sole owner of the business.
This certificate is obtained for a small fee from the county clerk’s office. In the same vein, to identify the names and addresses of all of the partners involved, a partnership may be mandated to obtain a Partnership Fictitious Name certificate. This certificate is obtained from the SOS for a minimal fee.
- Registering or Filing a Formal Legal Structure
Just like it was stated above, to reduce the vulnerability of personal liability from lawsuits or higher taxes, small business owners in Oklahoma are advised to operate under one of the following formal legal structures: a common corporation (also termed a C-corp.), a Sub-Chapter S Corporation (or S-corp.), a Limited Liability Company (LLC), a Limited Partnership or other types.
Note that these formal structures have to be filed with the SOS, as stated under the agency’s specific procedures and forms. Once you have submitted the necessary documents and paid all related fees, the SOS will issue a certificate (or acknowledgement) that the filing for the particular structure has been accepted.
Nonetheless, in starting or changing to one of the formal legal structures, business owners may have to seek the assistance and advice of specific professionals, such as attorneys or CPAs that work with small businesses in this area. For example, if an LLC is not organized or operated properly, the owner could face the possibility of the business being taxed like a regular C-corporation.
- Registering Separate Trade Names
There are times owners of new or existing businesses (whether sole proprietorship, corporation, or LLC) in Oklahoma, may have certain products or services which they want to leverage and promote. To effectively do this, the owner may be required to file or apply for authorization to use a business name, other than the initial or official one on file.
In this scenario, the new name is referred to as “Doing Business As” or d/b/a. If available, a business can have an unlimited number of d/b/a names. To file for any d/b/a name(s), the process starts with completing a Trade Name Report form.
- Employer’s Tax ID Numbers
Have it in mind that for a business in Oklahoma to function as a sole proprietorship with no employees, the owner can choose to use his or her Social Security number as the identification number for its tax filings and financial accounting. Nonetheless, partnerships and all businesses organized under one of the formal legal structures are mandated to acquire and use a Federal Employer’s Identification Number (also called either a FEIN or EIN).
Note that this number is issued by the Internal Revenue Service (IRS) of the U.S. Treasury Department. Additionally, all businesses with employees, including sole proprietorships, are expected to acquire and use a FEIN. The number can easily be obtained from the IRS.
- Professional and Occupational Licenses or Permits
Note that in Oklahoma there are state laws that mandate different types of businesses, or their owner(s), to acquire professional or occupational licenses or permits.
Nonetheless, acquiring operational licenses or permits in Oklahoma are different from the initial steps and requirements involved with registering a business name, filing a formal legal structure, or obtaining a federal employer’s ID number.
In Oklahoma, acquiring an operating license requires the owner or certain employees to pass a qualifying examination. While to obtain a permit usually only requires submitting specific information pertaining to the business. Nonetheless, certain agencies call the authorizing document they issue a license, even though the application does not require an exam, but instead mirrors the process required for a permit.
However, while many types of businesses in Oklahoma are expected to have a state license or permit to operate, many others are not. For example, a state license is required to operate a HVAC service, an insurance agency, or a hair salon; while one is not required to operate a travel agency, a janitorial cleaning service, or a general construction company.
A license or permit is needed to operate a trucking company, a public accounting service, or a day care centre; while they are not required to operate an auto repair service, a photography studio, or a carpet cleaning service. Retail business owners in Oklahoma are not expected to acquire a traditional license.
However, they are mandated to obtain sales tax permits from the Oklahoma Tax Commission (OTC) www.tax.ok.gov and to collect and remit sales tax revenue. Additional special permits may also be required for selling specific items such as beer, cigarettes, and motor fuels, which are sold in large volumes at convenience stores.
- Employee Income Tax and Other Payroll Benefit Withholdings
It’s very important to state that new businesses in Oklahoma, with employees, are expected to set up an account with the OTC for withholding and remitting state income taxes from the wages and salaries paid to their employees. These businesses are also expected to set up an account and withhold and remit state unemployment taxes from the earnings of the employees to the Oklahoma Employment Security Commission.
Additionally, employers are expected to cover their employees in Oklahoma with Workman’s Compensation Insurance, either through a general insurance agent or through CompSource Oklahoma, a state non-profit insurance corporation.
In same vein, business owners with employees are mandated to obtain the necessary forms and set up accounts with IRS to withhold and pay federal income and Social Security taxes from the wages and salaries of their employees.
Just like it was stated earlier, many of the steps mentioned above may be ongoing simultaneously, while at other times, one action may need to be completed prior to that of another.
For instance, plans to register the name of a business can only be taken after the name has been decided. Nonetheless, plans to establish and formally file a corporation or LLC as the legal structure could still be in process, while the business has already started doing transactions as a sole proprietorship or general partnership.
An owner may also get the details, but not apply for or obtain a license or permit until the business actually starts its operations.