Forming an Oklahoma LLC takes a lot of planning. Between the Articles of Organization, Annual Reports, tax registration, and more, there’s a lot to consider. And paperwork and startup costs aren’t the only necessary tasks. You’ll also want to set up your LLC to run smoothly and avoid legal troubles after it’s been registered with the state.
That’s where the LLC operating agreement comes in.
What is an LLC Operating Agreement?
An operating agreement gives your business structure and official procedures. It designates ownership, establishes operations, defines member responsibilities, and provides legal protection. Essentially, it lays out everything someone might need to know about your LLC. And it’s an internal document, so there’s no filing or fees involved.
Whether you’re starting a multi-member or single-member LLC, we strongly recommend completing an operating agreement. It’ll benefit and protect you for as long as you’re in business.
Am I Required to Have an Operating Agreement in Oklahoma?
No. The Oklahoma Secretary of State does not require LLCs to maintain operating agreements. Even so, they provide valuable stability and security for your company, so it’s in your best interest to create one.
Ask yourself this: would I like my LLC to run smoothly? Would I like to have protection in potential legal disputes? Do I want every new member or employee to understand how the business functions?
It’s highly likely you answered “yes” to at least one of those questions, so you’ll definitely want to draft an operating agreement.
Benefits of Creating an Operating Agreement
You want what’s best for your business. Months or years in the future, you want it to be a profitable and thriving endeavor. Having an operating agreement in place will set up your LLC for sustained success.
It requires some legwork, but it’s well worth it. Just look at some of the benefits:
- Officially designates how the ownership is split up (the percentage each member/manager owns), so there are no disputes.
- Standardizes office and company operations to improve efficiency
- Outlines the procedures for member additions and resignations, registered agent changes, dissolutions, and more, so there is no confusion.
- Avoids Oklahoma’s “default rules,” which define baseline procedures for any LLC without an operating agreement and aren’t necessarily the best for your business.
- Grants you greater respect from Oklahoma courts.
Free Oklahoma LLC Operating Agreement
You’ve made the decision: you’re going to write an operating agreement. Now, you’re sitting at your desk, wondering where to begin. While it seems like a logical starting place, the Secretary of State website doesn’t offer any official forms or instructions regarding the agreement. But this doesn’t mean that resources are completely non-existent.
There are a lot of great resources and free templates available online to help you structure and organize your document. While most of these templates are good options, we recommend this one, created by Northwest Registered Agent. It’s an ideal jumping off point to get you started.
Whether you’re using a template or starting from scratch, here’s a quick and easy guide for what to include:
Owner or Member Information: Names and mailing addresses.
Company Information: Your LLC’s name, registered office, and principal office.
Registered Agent Information: The name of your registered agent, their address, and contact information.
LLC Formation: The date you filed or will file your Articles of Organization with the Secretary of State.
Business Purpose: The type(s) of business your LLC will be doing in Oklahoma.
Term: How long your LLC in Oklahoma will be valid, typically until you file for termination.
Capital Contributions: The amount of money each member has invested in the LLC.
Profits, Losses, and Distributions: How income and debts are allocated among members and methods for distributing funds.
Ownership Percentage: How much of the company each member owns.
Management and Roles: The managerial structure and decision-making processes, naming who is in charge or certain operations.
Compensation: How members/managers are compensated and reimbursed.
Bookkeeping: Accounting procedures and member account policies.
Tax Treatment: Whether your LLC will be taxed as a Sole Proprietorship, Partnership, S-Corporation, or C-Corporation.
Member Additions: The procedure for bringing on new members – how they will be admitted, if they’re entitled to income, any expenses they will owe, their roles, etc.
Member Withdrawal: Procedures for the resignation, expulsion, retirement, or death of an existing member.
Amendment Procedures: How your LLC will approve changes to the operating agreement. Usually, it’s through a majority vote by the members.
Dissolution: What happens when you terminate your LLC. How your members will split up the remaining assets or debts.
You don’t always need to include all of the above. If any don’t apply to your LLC, feel free to leave them out. Still, it’s a good idea to cover as many bases as possible. Even if you’re a single-member LLC, you should consider including as many sections as possible to accommodate future changes. Otherwise, years into the life of your business, you may run into a dispute over something you didn’t include, and you won’t be able to fall back on the operating agreement.
When you’ve completed a draft of the operating agreement, give a copy to each of your LLC’s members. They will each need to approve it before it takes effect. After that, file it away in a safe place because you’ll likely need to revise it later. It’s strictly an internal document, so there’s no need to file it with the Secretary of State.
Making Changes to Your Operating Agreement
For better or worse, your business is going to change. As you begin doing business in Oklahoma and, hopefully, raking in profits, the LLC will grow and evolve. It will develop different needs and more complicated processes. Keep everything running smoothly but updating your operating agreement as changes occur.
First, all LLC managers/members must approve the change. To seek approval, follow the guidelines you already outlined in your operating agreement for ratifying amendments.
Because it isn’t recorded with the state, modifying your agreement is as simple as making changes to the Word document or PDF you keep in your own files.
For example: your registered agent resigns and, following Oklahoma law, you appoint a registered agent service to take their place. Simply pull up your electronic file, enter the new agent information, save it, and print a copy. Make sure you keep a draft of the previous document as well so you can track the changes you’ve made, just in case the state ever has any questions.
Hiring an Attorney
Worried that you might miss a critical detail? Uncomfortable with legal minutiae? If you want to ensure your operating agreement provides for all possible outcomes and disputes, you might consider hiring an attorney to review it or write it entirely.
Some attorneys have a flat rate for drafting an operating agreement; others bill by the hour. Either way, you’ll only need their assistance for a limited period of time. Use a site like Avvo to find the right fit for your business. Avvo’s database lets you sort by location, rate, and more – it even shows Oklahoma lawyers that specialize in LLCs.
Hiring an LLC Formation Service
The LLC formation process, with its forms and fees, might make you want to throw up your hands and surrender. Don’t do that! Instead, consider hiring an LLC formation service.
A company like IncFile or LegalZoom can quickly take care of all your necessary filings. Plus, they’ll create a customized operating agreement for you!
Given the amount of time you would spend drafting an agreement from scratch, a formation service is worth it. Not only will you receive a meticulously researched and crafted operating agreement, but you’ll also be able to spend more time growing your business, planning your next move, or just relaxing.
Want more information on the services that can help you through this process? Check out our Best LLC Services guide.
There might not be any resources on the Secretary of State website, but Oklahoma’s LLC Act provides specific guidelines on the operating agreement’s powers and limitations.
According to Oklahoma Statutes §18-2012.2, the operating agreement governs:
- Relations among members and between members and the LLC
- Manager rights and duties
- The company’s activities and conduct
- The means for amending the operating agreement
These four points give the operating agreement authority over most aspects of your LLC. But this doesn’t mean that it’s all-powerful. The same statute states that “the operating agreement may not vary the rights, privileges, duties, and obligations imposed specifically under this act.” While it can dictate LLC and member conduct and activities, it cannot change state-ordained standards, nor can it protect your LLC from state punishments. For example, say you fail to file an Annual Report or maintain a valid registered agent; the operating agreement cannot prevent the state from administratively dissolving your company.
Anything not covered in your agreement, however, will be governed by Oklahoma’s default laws. So be sure to include plenty of details while staying within the state’s boundaries and you’ll be good to go!