How to start a business in Oklahoma in 8 steps
So, you’re fixin’ to start a business in Oklahoma to get a taste of profits that are more mouth-watering than a chicken-fried steak.
You’re in luck because Oklahoma’s well on its way to boiling back up to the $203.3 billion economy and accompanying 1.4% growth rate it had before all the craziness of the COVID crisis. It wasn’t long ago that Oklahoma City and Tulsa were ranked in the top 50 cities for starting a business by Inc. Magazine.
No matter what part of the state you call home, there’s room to take advantage of all the changes in the post-pandemic world. So read on to discover how to avoid common pitfalls and get your business going ASAP because Sooner is always better than later in Oklahoma.
1) Think about the type of business you want to start
Any entrepreneur who wishes to create a brand must first choose whether they desire to build a small or large business. Some factors may be simple, such as if an online or physical store is best, while others may present more significant challenges. As a result, savvy entrepreneurs study their competitors to learn from their successes while dodging their mistakes.
Aside from the daily grind, it would help if you determine whether being a business owner is the right choice for you at this moment in your life. Unfortunately, some businesses require several years before becoming successful, and you’ll face many obstacles along the journey.
Are you prepared to deal with the stress and hardships that the cliched “be your own boss” gurus never mention? (By the way, you’ll still have bosses. They go by “client” or “customer,” and when they’re upset, they give your paycheck to your competitors.)
If you’re still passionate about pursuing your business idea, your determination already has you closer to making your startup a reality. Then, you’re on to breaking down the big steps into bite-size tasks. And your speed to market, or how fast you get up and running, is just one more way to differentiate yourself from rival companies.
2) Set up your legal structure
Your legal structure, also known as a legal entity, business structure, or business entity, refers to how your business is legally organized. Here are the most common ways you can structure your Oklahoma business:
- Sole proprietorship: One of the simplest methods to start a new business is as a sole proprietorship. Profits are given directly to you, the business owner, but all business debt is your personal responsibility. Sole proprietorships involve the least amount of paperwork because there’s no incorporation. Additionally, business owners may use their Social Security Number when reporting income on their personal tax returns since there are no employees.
- Partnership: A general partnership can be the best option for opening a company with another person. Partners, like sole proprietors, are personally responsible for business debt and have no liability protection for their personal assets.
- C Corporation: The C corporation is owned by its shareholders. This structure is frequently a more appealing option for businesses seeking funding. C corporations are legally distinct from the people who own and work in them. They are typically set up for large enterprises. This structure requires entrepreneurs to file a Certificate of Incorporation, annual reports, and related business formation paperwork with the Oklahoma Secretary of State.
- S Corporation: A business with 100 or fewer shareholders may opt to form an S corporation, also known as a small business corporation, to benefit from specific Internal Revenue Service (IRS) guidelines and avoid federal business taxes. Furthermore, the government may require you to fill out additional documentation, such as IRS Form 2553.
- Limited Liability Company (LLC): This structure unites the simplicity of sole proprietorships and partnerships with the financial protection offered to corporations. You must file your Articles of Organization with the Oklahoma Secretary of State to establish an Oklahoma LLC.
- Nonprofit: If your company wants to focus on social change or charitable issues with the ability to raise funds through donations, establishing a nonprofit could be an ideal solution. Nonprofit organizations are usually exempt from paying income taxes.
Except for sole proprietorships and partnerships, every Oklahoma company must appoint a registered agent. Moreover, registered agents must be open during regular business and receive all legal documents, including service of process. Also, they must maintain a physical address, and they may be an owner, employee, or third-party company.
Furthermore, Oklahoma nonprofits and corporations should develop bylaws that explain how they will function daily. Bylaws give added legal protection in the event of a lawsuit or audit. Similarly, LLCs should draft an operating agreement, a helpful tool when there are multiple owners. Your agreement will specify your ownership percentages, duties, profit shares, and what happens if an owner leaves the company.
After picking the most effective structure for your company, the next step of business formation is to write a business plan. Market research, financial forecasts, and your business model fit in your business plan.
3) Name and register your business
Most entrepreneurs find it a tad bit tedious to pick a business structure. Therefore, you’ve earned the right to have some fun. Choosing a name for your business is one of the most joyful and creative parts of starting a business. However, there are a few factors to keep in mind.
First, check out the Oklahoma Business Name Availability page to ensure you choose a unique name. Sole proprietorships and partnerships doing business under a name other than their legal name must submit a “dba” or trade name with the Secretary of State. Once you’ve locked down a name, you may want to register a domain name for your website. Also, you may visit the Secretary of State’s website for step-by-step instructions on every stage of business registration.
If appropriate, after settling on a business name, register with the IRS and obtain your federal Employer Identification Number. This ID number will be required when submitting your federal taxes.
4) Apply for licenses and permits
Although Oklahoma does not require all companies to get a state business license, some must receive specialized permits or licenses to operate lawfully. Consequently, several licenses, including occupational licensing, may be required for some businesses. The Oklahoma Department of Commerce has created a page with Business Licensing and Operating Requirements to help you navigate the guidelines.
For more information about licenses, permits, and filing fees related to your industry, visit the U.S. Small Business Administration (SBA) website or field office in Oklahoma City. For example, starting a cleaning business has different guidelines than opening a restaurant, and Tulsa’s laws may vary from Norman’s and vice versa.
As a result, all your research is only getting you closer to your first dollar of profit. Speaking of profit, if your business sells goods, you’ll need a sales tax permit from the Oklahoma Tax Commission.
5) Choose a location
Many new business owners start at this step because they saw a decent bargain at a retail location. While it is crucial to analyze potential business locations, proceed carefully before signing a lease.
By now, you’ve likely thought about what type of company you’ll be running, and your business plan outlines your vision of an appropriate physical location. You’ve also probably decided if you’ll launch with a small staff, how rapidly you’d like to expand, and what your competitors are up to.
These factors will affect where you locate your business, so it’s best to decide after this article’s first 4 steps. Furthermore, certain buildings may be subject to zoning restrictions, so launching your store or office could take some time.
6) Open a bank account and prepare for future taxes
Personal banking is permitted for business transactions in sole proprietorships and partnerships. On the other hand, other legal structures do best with business bank accounts. For example, corporations or limited liability companies should keep their revenue and debt separate from the owner. Opening a business account is a first step before funding your company using business loans, credit cards, or even investors.
At this point, you’ve already got your IRS tax ID number and paid your license and permit filing fees. Before figuring out your grand opening date, you can prep for Uncle Sam’s cut, also known as taxes, at the federal and state levels. If the idea of cash flow statements and balance sheets prompts an instant migraine, you can hire a bookkeeper or lean on accounting software.
7) Purchase business insurance
Far too often, aspiring Oklahoma business owners forget to complete one of the most crucial administrative tasks of starting a company. Small business insurance is equally essential as any other type of coverage. You’d never drive without insurance. Likewise, you should not attempt to drive business growth without adequate protection.
Additionally, state law may require insurance for your venture, particularly if you intend to hire people. Because each industry has its unique set of demands, below is a breakdown of possible coverages for your startup:
- Workers’ compensation insurance is required by law if your business has 1 or more employees. This coverage helps cover your employee’s medical care and missed earnings due to work-related injury or sickness.
- General liability insurance could protect you if someone sues your business for property damage or bodily injury. Also, if your employees travel to a customer’s property, for instance, a landscaping company, this coverage can be helpful.
- Business interruption insurance is another component to consider. It could help you pay for expenses if your venture is forced to close its doors temporarily for a covered reason.
- Business property insurance and business personal property insurance are also wise protections to think about. For example, the former may cover your building if it’s damaged or destroyed, and the latter may cover damages to the possessions inside your building.
Except for workers’ compensation insurance, you may bundle all the above insurance possibilities into a single policy known as a Business Owner’s Policy. It gives you peace of mind when the unexpected occurs and significant savings over the à-la-carte price of the coverages. In addition, if you want to hire people, you must provide unemployment insurance, which involves registering with the Oklahoma Employment Security Commission.
8) Create a marketing plan, hire employees, and more
“Bless your heart” if you were going to skip the marketing plan. Doing business without one is like eating biscuits without gravy. Sure, it’ll feed you, but don’t you want to smother your company in profit?
Unlike mama’s recipes, an effective marketing plan isn’t a secret. Start with building a website, printing some business cards, setting up your social media accounts, and you should be well on your way. Then check your business plan to make sure you’re not wasting cash or time on advertising that makes little sense for your fledgling operation.
With a plan to get people in the door, you’ll need some help with your clients and customers. So after you make that first hire, go ahead and secure your workers’ compensation insurance. In addition, if you still have questions, you can lean on resources like the Small Business Administration, Oklahoma Department of Commerce, and Oklahoma Small Business Development Centers.
Starting a business can be a rodeo, but you can end up riding the benefits for life if you can hang on. So, since you’ve already spurred yourself to action, wrap up one more thing: small business insurance.
Huckleberry can help you get a policy in about the time it takes a cowboy to make cornbread disappear—most small business owners can easily get a policy in minutes.