The limited liability company (LLC) has been an incredibly popular business structure for decades, but in the grand scheme of things, it’s still a relatively recent addition to the American business landscape.
There are actually still new variations of the LLC popping up across the country, with the most popular one being the series LLC.
The series LLC is only available in certain states, including Oklahoma. A series LLC is a collection of LLCs that are grouped under one parent LLC. This enables businesses to separate different parts of the company into separate LLCs, allowing them to isolate the liabilities of each segment from the others.
Because the series LLC is still relatively new in some states, we get a lot of questions about what exactly the series LLC is, and how you can form one. That’s why we decided to write these articles, which break down how the series LLC formation process works in each state.
If you’re interested in forming a series LLC in Oklahoma, read on to find out how it’s done.
That said, if you’re looking for a time-tested way to protect yourself and personal assets as a business owner, the traditional LLC is the way to go. You can either form it yourself or through one of the many online LLC services.
What Is a Series LLC?
Let’s start by briefly covering what a series LLC actually is. In general, a series LLC is exactly what it sounds like ― it’s a collection of LLCs that operate under the umbrella of a master LLC. While each LLC in the series is part of the larger company, this business structure also keeps each LLC financially insulated from the others. In theory, this means that a lawsuit against one of the LLCs should have no effect on the others in the series.
Each LLC in a series has the same limited liability protections that a standard LLC has, meaning that if you’re sued, creditors can only come after your business assets rather than pursuing your personal possessions. While a series LLC does still protect your personal car, house, bank accounts, etc., it also protects the other LLCs in the series from the lawsuit. In other words, creditors can only pursue the assets of one LLC, rather than the entire series.
How Can I Form a Series LLC in Oklahoma?
Choose a Name for Your Series LLC
The first step to forming any type of LLC is to first select a name for your new business. You should choose a name that is memorable, and also one that briefly describes what your business does, or what your organization stands for. You will also need to run a business name search to make sure your chosen name is available in Oklahoma, and isn’t already being used by another company.
Also, you’ll need to include either the phrase “limited liability company” or the letters “LLC” in your business name. Finally, you cannot include any terms that refer to specific business types ― like “bank” or “hospital” ― unless you actually run one of those businesses, and you also can’t use any words that refer to other business types, such as “incorporated” or “inc.”
For more info on naming an LLC ― whether that’s a series LLC or a traditional LLC ― check out our comprehensive guide to naming an LLC.
Designate a Registered Agent
Next, you’ll need to choose a registered agent for your series LLC. The registered agent must have an office located in Oklahoma, and they must be available to receive document deliveries from the state during all standard business hours.
You don’t need to worry about designating different registered agents for each segment of the LLC, as you can have the same registered agent for every LLC in the series if you want to.
Prepare and File the Articles of Organization
In some states, there are two different forms for creating traditional LLCs and series LLCs, but in Oklahoma, both types of LLCs use the same “Articles of Organization” form. The major difference in the preparation of this document is to indicate that your LLC is a series by including an addendum to this formation document that describes the role of each LLC in your series.
The Oklahoma Articles of Organization is a relatively simple form, and all you need to do is supply them with some basic information about your business. You’ll need to include your business name, along with your physical place of business and your email address. Then, you’ll inform them who your registered agent is and where in Oklahoma they’re located.
The only other steps are to indicate whether your series LLC will be a perpetual entity, or if it has a predetermined dissolution date, and for your LLC organizer to sign and date the form. Once you’ve prepared this form, you can file it with the Oklahoma Secretary of State’s office, along with your $100 filing fee.
Acquire an EIN
Next, you should obtain a federal tax ID number known as an Employer Identification Number (EIN) from the Internal Revenue Service for each LLC in your series. The EIN is essentially a Social Security Number for your business, as it is a nine-digit numerical code that you can use to identify your business on tax forms, and it also helps you open business bank accounts and hire employees.
It’s quite easy to get an EIN from the IRS. All you need to do is fill out the free form located on the IRS website, and you’re good to go. You will receive your number immediately upon filing.
Create a Series LLC Operating Agreement
There is no legal requirement dictating the creation of an operating agreement in Oklahoma, but we still strongly recommend it to all of our readers. An operating agreement describes many aspects of how your series LLC will operate. In this agreement, you’ll outline what the different segments of your series LLC are, indicate the roles of each member/owner, detail the owners’ voting rights, and explain the financial contribution and allocation plans.
You should also indicate whether you want your business to be managed by its members or by a manager, discuss how an owner can be replaced if necessary, and outline a dissolution procedure in case you ever need to close up shop.
In addition, the operating agreement is a great place to describe the purpose of each individual LLC in your series. You probably don’t need to create a separate operating agreement for each LLC, but it’s a good idea to explain in detail what each one is for in this document.
Create a Financial Infrastructure
It’s crucial for any LLC to open a business bank account, as this helps you maintain the separation of personal and business finances that is required of all formal business entities. However, there’s an extra layer to this step for series LLCs, as you’ll need to open a bank account for the series’ parent LLC, as well as for each of the separate LLC segments under its umbrella.
If you fail to open a separate bank account for each segment, you will run the risk of losing the isolated liability of each LLC in the series. You need to be able to prove that these segments are truly separate if you want to maintain the liability shields between them.
In addition, this would be a good time to either hire an accountant or purchase accounting software for your series LLC. For traditional LLCs that don’t have particularly complex accounting needs, it’s usually sufficient to use accounting software, but a series LLC is a bit more complicated, and we therefore prefer hiring an accountant to make sure everything is done correctly.
Obtain Licenses and Permits
Oklahoma does not have a general business license that applies to all businesses operating in the state, but they do have a number of professional licenses that may apply to your series LLC depending on what industry you operate in. Thankfully, Oklahoma has an excellent online resource on the Oklahoma Commerce website that breaks down these licenses and permits.
Keep in mind that you may also need to get licenses or permits from your county or municipal government agencies, so make sure to check with the relevant entities in these jurisdictions.
Understand Maintenance Requirements
Oklahoma requires all LLCs to file an annual certificate, which is the same filing most states refer to as annual reports. However, there is no need to file separate certificates for each LLC in your series, as the state allows you to simply file one annual certificate for your parent LLC.
This certificate is how you keep the state updated regarding any changes made to your business since the previous filing. In general, you’ll need to inform them of a change to your business name or address, the name or address of your registered agent, and any changes to your ownership group.
Can I Hire Someone to Form My Series LLC?
When forming a series LLC in Oklahoma, you generally have two options. You can tackle the DIY route, or you can hire an attorney. In some other states with series LLCs, you can form one by using Northwest Registered Agent’s formation service, but unfortunately they do not offer this service in Oklahoma.
Of these two options, we prefer hiring a lawyer. Yes, this can be an expensive route, but the series LLC is rather complex, especially considering Oklahoma’s requirement to include a series LLC addendum with the Articles of Organization. With this in mind, we think it’s definitely a good idea to hire a reputable business attorney to create your formation documents.
If you’re supremely confident in your abilities to form a compliant series LLC, we won’t stop you from giving it a shot. However, for the vast majority of our readers, hiring a lawyer is the smarter option.
The process of forming a series LLC in Oklahoma isn’t too terribly different from the formation process for a standard LLC. However, you do need to make sure that you file an addendum to your Articles of Organization form that indicates you’re starting a series LLC.
At the end of the day, if you want to skip the hassles and worries that come with forming your own Oklahoma series LLC, you always have the option to hire an attorney to handle it for you.
We hope this article helped you develop your understanding of how to form a series LLC in Oklahoma!