How to Form a Professional Corporation in Oklahoma


Steve Bennett
Steve Bennett
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Form a Professional Corporation in Oklahoma

Are you considering starting a professional corporation in Oklahoma? Congratulations! Establishing a professional corporation is an excellent choice for entrepreneurs and professionals alike who seek to benefit from a business structure that provides limited liability protection, tax advantages, and enhanced credibility. However, navigating the process of forming a professional corporation in Oklahoma can be daunting.

This article aims to provide a comprehensive guide on how to form a professional corporation in Oklahoma, covering everything from understanding the basics of this business entity to the essential steps and requirements you must comply with to launch your new venture successfully. Let’s dive in and explore the ins and outs of forming a professional corporation in Oklahoma!

What is a Professional Corporation in Oklahoma?

A professional service corporation (PSC), sometimes called a professional corporation (abbreviated as PC), is a type of organization authorized by state law to allow owners of particularly licensed professions in Oklahoma. The owner of a professional corporation is responsible for their own negligence or misconduct, but they are not held personally accountable for the actions of other owners. PC or P.C. is a regularly used abbreviation to identify professional corporations.

PCs and LLCs provide personal asset protection; that is, the personal assets are free from business debts. However, they do not have similar tax benefits. There is no secret formula as to which type of business structure is better than the other. It solely depends on the requirements of your business. However, forming an LLC is easier than setting up a PC in Oklahoma.

– LLCBuddy Editorial Team

Unlike other types of corporations, owners of Professional Corporations get two types of citizenship. One is where they incorporated the corporation, and the other is where they conduct the business. This benefit is not available for other types of corporations. You can form a free LLC in Oklahoma if you hire a professional service that provides LLC formation at $0.

How to Form a Professional Corporation in Oklahoma

To form a Professional Corporation for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Certificate of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Oklahoma, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

  • Doctors
  • Architects
  • Engineers
  • Accountants
  • Lawyers and others

You should be qualified to have a license to provide your service. In most cases, once you have graduated with your studies, passed the exam, and got your license, you may now form a professional corporation. However, if you work in an industry that doesn’t offer a license or professional certification, you should consider forming a corporation or limited liability company.

Step 2: Name your Professional Corporation in Oklahoma

After you have decided on the idea to form a professional corporation in Oklahoma, deciding the name for your corporation is significant. There is a complete guide on Oklahoma LLC name guidelines for you to have a proper business name. Here are some regulations you must follow while naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • No confusion with a government entity name.
  • A unique name is needed with no match
  • Limit of restricted words that need a license.

In Oklahoma, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 60 days. To keep the name, you must file a name reservation application with Oklahoma Secretary of State.

A professional corporation, professional association, service corporation, or professional service corporation must be present in the name if it doesn’t already. You might opt to register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for a DBA (doing business as). In this manner, you can choose any name you desire to run a clinic or law firm.

Step 3: Choose the Oklahoma Registered Agent

The next step in forming a professional corporation is hiring the Oklahoma Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Oklahoma. Forming a professional corporation for your service will be easier if you have Registered Agent in Oklahoma.

Alternatively, you can serve as your own Oklahoma Registered Agent if you have the time. However, you must stay compliant to avoid missing any important documents from Oklahoma.

Step 4: File the Certificate of Incorporation in Oklahoma

After you hire a Oklahoma Registered Agent to form a professional corporation, the next step is to file the Oklahoma Certificate of Incorporation. In writing the Certificate of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information should be written. You should also include the names of all co-owners. All owners have to prove they have the proper license to practice the specific profession they intend to.

Filing the Certificate of Incorporation in Oklahoma may be done with three methods that are online, by mail and in-person. The Certificate of Incorporation fee may vary from different states. However, in Oklahoma, it costs $25 for online, by mail filing or in person filing.. Create an account/Log in to the SOS site, get the online form, fill it, and submit online. For offline filing, Send the form by mail or drop it off in person at Oklahoma Secretary of State, 421 N.W. 13th Suite 210, Oklahoma City, OK 73103.

Step 5: Write an Operating Agreement in Oklahoma

An operating agreement is a document that contains all of your company’s organizational details. It is not required to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The Oklahoma operating agreement includes information like-

  1. About Business
  2. Members and management
  3. Capital contribution
  4. Profit Distribution
  5. Change of membership
  6. Dissolution

Step 6: Designate the PC Board of Directors in Oklahoma

The next step is to appoint the initial board of directors in your PC in Oklahoma. All the initial directors must submit their details to the owner. The owner must keep the records and submit them in accordance with the Oklahoma SOS. When writing the By-laws, as a shareholder and owner, you must make sure there is a point mentioned about appointing a new director later.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

In creating corporate bylaws, you should include the following on how the decisions will be made.

  • The responsibilities are given to each officer.
  • How will judgments in business be made?
  • Where and when are the annual shareholder meetings?
  • The minimum number of shareholders required for decision-making.
  • Location and timing of dividend payments.

Step 8: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 9: Request an EIN in Oklahoma

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Oklahoma can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in a number of ways. It will give your professional corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 10: Open a Bank Account and Prepare for Taxes

Once you have filed and received your Employer Identification Number, you should open a bank account since you will use this account for yourself, your clients, and your employees.

Your business dealings in Oklahoma might be simpler by having a US business bank account because it boosts your company’s legitimacy and liquidity. For firms other than sole proprietorships, most banks demand an EIN to create a business bank account. Also, keeping separate finances helps you avoid combining personal and professional finances. Also, having an EIN makes tax preparation easier. With a professional corporation, you can anticipate paying employment and corporate taxes.

Step 11: Get a Business License in Oklahoma

Before your professional corporation operates in Oklahoma, you need to have a business license first. A business license is a formal document issued by the state government agency that allows you to operate your business in the geographic region that that agency governs. In Oklahoma, business license and permit costs depend on the business’s nature and type. You must check with the local authorities if any special licenses or city-based permits are needed.

Step 12: File Your Taxes in Oklahoma

Finally, you are down to the last step. After getting a business license and being ready to operate, do not forget to file your taxes first. You should start paying taxes quarterly as soon as possible to avoid a large tax bill. Each state has different tax requirements. Go through the Oklahoma classification of taxes for the taxes an LLC in Oklahoma has to pay.

Important Information

Maintaining Professional and Business License in Oklahoma

Now that you have established your professional corporation, you must maintain or renew your professional license every now and then. Even if your business is established but you don’t have a valid license to operate, your business is irrelevant. And, even if your professional license is still valid for a year or two, but your business license is already expired, it is still irrelevant.

Make time to check the status of your licenses at least once per year. Then, you can keep from missing anything significant. If there are any issues, you can address them.

Filing an Annual Report in Oklahoma

In Oklahoma, you will be required to submit a report each year. The owners’ and Registered Agent’s names and contact details are listed in the annual report. Also, it should include all of your yearly financial activity. You must submit one yearly in Oklahoma, and you can do it yourself or hire someone else to handle it. Everything must be precise and up to date.

Advantages of Forming a Professional Corporation in Oklahoma

A professional corporation takes a lot of time to process and pursue. However, with the help of the Oklahoma Registered Agent, everything will become easier. In fact, there are advantages that will help you form a professional corporation in Oklahoma.

  1. Limited Liability: The biggest advantage of setting up a professional corporation is that the owners are not held personally responsible for the debts and obligations of the company. This indicates that only the company’s assets will be confiscated to settle claims and creditors if the business is sued or declares bankruptcy. Additionally, this protection exempts corporate owners from being held accountable for other owners’ reckless or criminally negligent acts.
  1. Tax Deductions: Similar company expenses, such as employee fringe benefits, startup and operating costs, and equipment purchases, can be written off by professional companies in the same ways they can be for other kinds of firms. However, there are several tax deductions professional corporations can take advantage of that other types of businesses can’t. For example, the salaries and bonuses paid to owners and employees are tax-deductible.
  1. Retained Earnings: Professional corporations can keep a portion of their profits under the corporate tax system to grow their companies.

FAQs

What is a Professional Corporation in Oklahoma?
A Professional Corporation in Oklahoma is a type of business entity that is formed by a group of professional individuals or companies, such as doctors, lawyers, accountants, or architects. It is similar to a regular corporation, but is regulated by Oklahoma’s professional licensing boards.
How do I form a Professional Corporation in Oklahoma?
To form a Professional Corporation in Oklahoma, you must first file a Certificate of Incorporation with the Oklahoma Secretary of State. This document will include the name of the corporation, its purpose, the type of professional services that it will offer, and the names and addresses of the directors and officers. You will also need to obtain any required professional licenses and complete any other requirements set by the State of Oklahoma.
What is required to maintain a Professional Corporation in Oklahoma?
To maintain a Professional Corporation in Oklahoma, the corporation must keep up with any changes to the state’s professional licensing and regulations, as well as file annual reports and pay taxes. The corporation must also maintain a corporate bank account, keep records of all business transactions, and hold annual meetings of the directors and shareholders.
What are the benefits of forming a Professional Corporation in Oklahoma?
Forming a Professional Corporation in Oklahoma offers a number of benefits, including limited personal liability, flexibility in the management of the corporation, and tax advantages. Additionally, it provides a recognized legal structure for a group of professionals to work together.
What is the difference between a Professional Corporation and a regular Corporation in Oklahoma?
The main difference between a Professional Corporation and a regular Corporation in Oklahoma is that a Professional Corporation is regulated by the state’s professional licensing boards, while a regular Corporation is regulated by the Oklahoma Secretary of State. Additionally, a Professional Corporation is only allowed to offer services that are within the scope of its professional license.
What information do I need to include in my Certificate of Incorporation?
The Certificate of Incorporation must contain the name of the professional corporation, the address of the initial registered office, the professional corporation’s purpose, and the names and addresses of the incorporators.
Is there a fee to file the Certificate of Incorporation?
Yes, there is a filing fee to file the Certificate of Incorporation with the Oklahoma Secretary of State. The filing fee is $75.
Do I need to publish a notice of the formation of the Professional Corporation in Oklahoma?
Yes, you must publish a notice of the formation of the Professional Corporation in Oklahoma in two newspapers of general circulation in the county where the Professional Corporation’s initial registered office is located.
Do I need to obtain a business license in Oklahoma to form a Professional Corporation?
Yes, you must obtain a business license in Oklahoma in order to form a Professional Corporation. The business license must be obtained from the county clerk’s office in the county where the Professional Corporation is located.
Do I need to obtain a federal tax ID number in order to form a Professional Corporation in Oklahoma?
Yes, you must obtain a federal tax ID number in order to form a Professional Corporation in Oklahoma. The federal tax ID number is also known as an employer identification number (EIN).
Do I need to register with the Oklahoma Tax Commission in order to form a Professional Corporation?
Yes, you must register with the Oklahoma Tax Commission in order to form a Professional Corporation.
Do I need to register with the Oklahoma Employment Security Commission (OESC) in order to form a Professional Corporation?
Yes, you must register with the Oklahoma Employment Security Commission (OESC) in order to form a Professional Corporation.
Do I need to obtain workers’ compensation insurance in order to form a Professional Corporation in Oklahoma?
Yes, you must obtain workers’ compensation insurance in order to form a Professional Corporation in Oklahoma.
Do I need to obtain liability insurance in order to form a Professional Corporation in Oklahoma?
Yes, you must obtain liability insurance in order to form a Professional Corporation in Oklahoma.
What are the disadvantages of forming a Professional Corporation in Oklahoma?
The disadvantages of forming a Professional Corporation in Oklahoma include the extra paperwork that is required to form and maintain the corporation, the potential for additional taxes, and the cost of liability and workers’ compensation insurance.
What are the rules and regulations associated with forming a Professional Corporation in Oklahoma?
The rules and regulations associated with forming a Professional Corporation in Oklahoma vary depending on the type of professional service being provided. Generally, the rules and regulations require that the Professional Corporation file a Certificate of Incorporation with the Oklahoma Secretary of State, publish a notice of the formation of the Professional Corporation in Oklahoma, obtain a business license, register with the Oklahoma Tax Commission and the Oklahoma Employment Security Commission (OESC), obtain workers’ compensation insurance and liability insurance, and comply with all other applicable state and federal laws.
Is it possible to form a Professional Corporation in one state and operate in another state?
No, it is not possible to form a Professional Corporation in one state and operate in another state. A Professional Corporation must be formed in the state where it will conduct business.
Is there an annual filing requirement for Professional Corporations in Oklahoma?
Yes, Professional Corporations in Oklahoma are required to file an annual report with the Oklahoma Secretary of State by April 1 of each year.
How long does it take to form a Professional Corporation in Oklahoma?
It typically takes 2-3 weeks to form a Professional Corporation in Oklahoma.
How much does it cost to form a Professional Corporation in Oklahoma?
The total cost to form a Professional Corporation in Oklahoma can vary depending on the type of professional service being provided, the number of incorporators, and other factors. Generally, the cost to form a Professional Corporation in Oklahoma can range from $500 to $1,500.
How often do I need to hold meetings of the board of directors and shareholders of the Professional Corporation in Oklahoma?
The board of directors and shareholders of the Professional Corporation must meet at least annually. Additional meetings may be required depending on the needs of the Professional Corporation.
What documents do I need to keep for my Professional Corporation in Oklahoma?
The Professional Corporation must keep records of all meetings of the board of directors and shareholders of the Professional Corporation, minutes of all meetings, and all other documents related to the formation and operation of the Professional Corporation.
What are the tax implications of forming a Professional Corporation in Oklahoma?
The tax implications of forming a Professional Corporation in Oklahoma depend on the type of professional services provided and the tax structure of the Professional Corporation. Generally, Professional Corporations in Oklahoma are subject to federal income tax, state and local taxes, and self-employment taxes.
What types of professional services can be provided by a Professional Corporation in Oklahoma?
Professional Corporations in Oklahoma can provide any type of professional service that requires a license in the state of Oklahoma. Examples include the services of lawyers, doctors, dentists, accountants, and engineers.
Do I need to have a corporate resolution in order to form a Professional Corporation in Oklahoma?
Yes, you must have a corporate resolution in order to form a Professional Corporation in Oklahoma. The corporate resolution must include the name of the professional corporation, the purpose of the corporation, and the names and addresses of the incorporators.
Do I need to file an annual report with the Oklahoma Secretary of State?
Yes, all Professional Corporations in Oklahoma must file an annual report with the Oklahoma Secretary of State by April 1 of each year.
What is a registered agent in Oklahoma?
A registered agent in Oklahoma is a person or business entity that has been designated as the legal contact for the Professional Corporation in Oklahoma. The registered agent must be a resident of Oklahoma, or a business entity that is authorized to do business in Oklahoma.
Does a Professional Corporation in Oklahoma need to have a Board of Directors?
Yes, a Professional Corporation in Oklahoma must have a Board of Directors that is responsible for making major decisions for the Corporation. The Board of Directors must include at least one director who is a licensed professional in the field in which the Corporation provides services.
What is the filing fee for forming a Professional Corporation in Oklahoma?
The filing fee for forming a Professional Corporation in Oklahoma is $100.
Are there any annual filing requirements for Professional Corporations in Oklahoma?
Yes, Professional Corporations in Oklahoma are required to file an Annual Report with the Oklahoma Secretary of State. The Annual Report must include the name and address of the Corporation, the name and address of its registered agent, and the names of its current directors and officers.
Does a Professional Corporation in Oklahoma need to have bylaws?
Yes, a Professional Corporation in Oklahoma must have bylaws that specify the roles and responsibilities of its officers and directors, and govern the internal operations of the Corporation.
Does a Professional Corporation in Oklahoma need to have a seal?
No, a Professional Corporation in Oklahoma does not need to have a seal.

Also Read

Why Oklahoma Professional Corporation is So Important

One of the primary reasons why professional corporations are so important is the liability protection they offer to their members. In a professional corporation, individual professionals are shielded from personal liability for debts and obligations of the corporation. This means that if the corporation faces a lawsuit or incurs significant debt, the personal assets of the individual professionals are typically protected. This liability protection gives professionals peace of mind and allows them to focus on their work without the constant fear of losing everything they have worked so hard to achieve.

Furthermore, professional corporations provide tax benefits to their members. By incorporating as a professional corporation, members can take advantage of certain tax deductions and other advantages that are not available to sole proprietorships or partnerships. This can result in significant tax savings for the professionals involved, allowing them to reinvest more of their earnings back into their businesses or personal finances.

Another crucial benefit of professional corporations is the ability to streamline operations and increase efficiency. By grouping together as a professional corporation, individual professionals can pool their resources, share expenses, and access a wider range of expertise and resources. This can lead to greater efficiency in operations, better service for clients, and increased profitability for the corporation as a whole.

Professional corporations also offer increased credibility and prestige to their members. By associating themselves with a professional corporation, individual professionals can enhance their reputation and credibility in the eyes of clients, colleagues, and the general public. This can lead to increased trust and confidence in their services, ultimately resulting in business growth and success.

Furthermore, professional corporations provide a structured and organized framework for professionals to collaborate and work together. By setting up a governing structure, establishing protocols for decision-making, and creating clear lines of communication, professional corporations can promote effective teamwork and cooperation among members. This can lead to better outcomes for clients, better opportunities for professional growth, and overall success for the corporation as a whole.

In conclusion, professional corporations play a vital role in the success and prosperity of professionals in Oklahoma. By offering liability protection, tax benefits, increased efficiency, credibility, and collaboration opportunities, professional corporations provide a valuable framework for professionals to thrive and grow. It is important for individual professionals in licensed fields to consider forming or joining a professional corporation to take advantage of these benefits and secure their future success.

Conclusion

In forming a professional corporation in Oklahoma, having someone to help you build it is not necessary but suggestible. Even though it is easy because of the listed benefits and advantages above, forming your group of professional individuals will make it somehow successful. Just make sure to be guided by the steps and ensure that every one of the details and records is accurate and precise. And if you have any questions, share them in the comment section below.

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