Oklahoma LLC Operating Agreement is a legally binding contract that offers directions to the member(s) of a company, based explicitly in Oklahoma, regarding their company’s policies, operations, procedures, relations, and even management.
Therefore, this document is not a requirement in the state of Oklahoma. However, companies in Oklahoma state need to have an LLC operating agreement as it helps protect the personal assets of members and owners of the company.
That means, in case of any legal issues against the company, members of the company will not face any financial losses as their private assets will have been legally separated from the business assets, according to this contract.
Also, the document offers an outline of all the rules and procedures that the company members must uphold. This is usually in the best interest of the company. With the operating agreement, the company is bound to flow smoothly and avoid internal and external disputes.
Members of the company can handle any issues they have among themselves and also between them and third parties based on the guidelines in the contract.
Note: Oklahoma State facilitates the preparation and use of the Oklahoma LLS operating agreement according to the Oklahoma Limited Liability Company Act – § 18-2001 to § 18-2060, Operating Agreement Laws – § 18-2012.2 and State Definition – § 18-2001(16) statutes in their database.
In Oklahoma State, the preparation of the LLC operating agreement comes at a small price. For the Limited Liability Company (LLC) formation, the cost is $100. This is a fee that is paid only once. For the annual certificate required when forming the agreement, the fee is $25 and is paid every year.
Operating Agreement Template
For company owner(s) in Oklahoma State, there is an easier way of creating and preparing an LLC operating agreement. You can use freely downloadable LLC operating agreement templates given here. Download the appropriate template that suits your requirements and prepare your LLC operating agreement to benefit your company in Oklahoma.
Reasons to Create Agreement
Oklahoma LLC operating agreement offers legal protection to company members and owners alongside providing an outline of the company’s operations. Apart from that, here are some reasons why business owner(s) or company member(s) in Oklahoma state should create and use the Oklahoma LLC operating agreement.
Protect LL status
As a Limited Liability Company, company members are bound to receive a certain level of protection. However, creating an LLC operating agreement helps to protect your LL status. This means that this document will help to highlight different company operations and policies, which will guarantee the protection of personal assets.
Verbal agreements
Deciding on each member’s responsibilities and roles orally might result in future disagreements with no clear solutions. However, creating the Oklahoma LLC operating agreement will help clarify any verbal agreements made among the company members. Everything these members agree upon can be well written in the contract for future reference.
Protection of agreements
Companies in Oklahoma state do not have to deal with the default state laws regarding companies with this legally binding document. Instead, companies can use the well-written and specific instructions made in the agreement to make their decisions, which leads to better outcomes than using generalized state laws.
Flexibility
With the LL status, companies can operate their businesses with more freedom than those without this status. However, having an operating agreement means that the company members’ decisions and ways regarding its operations are clearly indicated; hence, there is no room for any management conflicts.
Operation styles
Companies can review their preferred operation styles; hence, they have ideas of how to operate their businesses successfully and appropriately.
This document provides company owner(s) and member(s) the right mindset to run their business.
Business account
Whether it is a bank or any other form of a lender, such parties will require the company to have an operating agreement to open bank accounts or ask for loans. These parties can verify its legality and review its policies, procedures, and operations from the operating agreement.
Information to be Included
Since it is beneficial to have the Oklahoma LLC operating agreement, the following details should be included in the document.
LLC name
Your LLC name should be well written in the operating agreement. The company’s name should appear as it was written in the Article of Organizations. This means that if the LLC’s name has punctuation marks, capital letters, or any other abbreviations, then they should be present when you write the name in the agreement.
Ownership
For companies with a sole owner, the specification of ownership information is not as detailed. Companies with several owners should decide how to divide ownership, which can be equal or based on their investments. The document should have a list of names of every owner member alongside their ownership percentage.
Management structure
The agreement should highlight whether the company will be managed by its members or hire a manager. This will help determine each member’s roles and responsibilities and how the decisions will be made. With the company’s authority determined, you can have a proper management structure in the agreement.
Duties of members
Each owner and manager must have their duties and roles included in the agreement. The management structure will determine the responsibilities of each member of the company to avoid conflicts and any future disagreements. The agreement should specify how the different members are responsible for daily operations.
Voting rights and responsibilities
The agreement should also include precise details regarding voting. This may be based on the member’s roles, investments, and even ownership statutes. In other cases, voting rights might be equal among the members, which should also be mentioned.
Distributions
The agreement should also include information about how the company’s profits will be distributed. This may depend on the percentage of investment made by each member. It may also be distributed equally. The person responsible for making these distributions should also be mentioned.
Holding meetings
The document should mention whether there will be regular meetings, the scheduling, and the reasons for these meetings. Additional meetings should also be mentioned. The consequences for failing to attend these meetings can also be included in the agreement.
Buyout and buy-sell rules
Rules that regulate the departure of existing members and entry of new members should be well included in the document. The decisions can be made based on voting to determine how a buy-sell will join the company and how much the buyout will be paid when leaving.
Succession planning
The agreement also contains information about the next step that should be taken in case of the death of a member. For example, succession planning may include what happens to the member’s assets and debts, which will help other updates their wills accordingly.
Dissolution
This information includes the person responsible for the paperwork and how the assets will be divided once the company is dissolved. Also, there should be information about how to deal with the business’s debts.
Possible modifications
Information regarding how the operating agreement will be updated and the reasons that might lead to such a decision should also be included. Change in the business operations should be updated in the agreement and having instructions for this process will help prevent any disputes.
Severability provision
The severability provision is a clause that states that there will be no termination of the whole agreement in case a part of the contract is found to be invalid according to the law. This protects the members and their company’s daily operations.
Types of Operating Agreement
In Oklahoma state, there could either be a member or members who wish to prepare and use the Oklahoma LLC operating agreement. This means that there are two types of operating agreements which are as follows:
Multi-Member LLC Operating Agreement
This is used by companies that have several members as owners. Unfortunately, most multiple business owners fail to prepare and complete this contract. This will mean that each business owner will have to personally deal with any liability arising from any legal actions taken against the business, putting their assets at risk.
Download: Microsoft Word (.docx)
Single-Member LLC Operating Agreement
This form is used by companies with single owners who have chosen to be under the LLC protection. With this contract, a business owner in Oklahoma state will be safe from personal liability since their assets will be protected from business debts.
Download: Microsoft Word (.docx)
How to Form Operating Agreement?
The Secretary of Oklahoma State is in charge of receiving all the files submitted for registration of an LLC. The name chosen by the LLC must be unique and different from other companies’ names. If that is not the case, the application is likely to be rejected based on the company’s name.
That is why; LLC members should conduct a name search in Oklahoma State’s database to ensure their name is unique. After this step, they can proceed to form an Oklahoma LLC operating agreement. Members of any company in Oklahoma State should follow the steps below to prepare a valid Oklahoma LLC operating agreement.
Agent
A company should first choose a registered agent who will represent them in the litigation process. This person should be a resident of Oklahoma state, or an LLC filing or have any domestic or foreign business in the state.
Type
The next step is to choose the LLC form that fits your company, either the domestic or foreign LLC. They are both filed either online or through mail as Adobe PDF. A domestic LLC must be created within while a foreign type is created outside the state of Oklahoma.
The agent should have a Certificate of Existence attached to the documents when handling the Foreign LLC application. The certificate is meant to acts as proof about the existence of the company.
Article of Organization
This document must be created and submitted to the state to make the LLC formation legal and complete. It must be present before the operating agreement is prepared.
Fee
A submission fee must be paid, with the domestic LLC fee being $100 and the foreign LLC being $300. For online submission, the payment must be made before the documents are submitted. For mail submission, evidence of the payment like a money order must be submitted alongside the documents to the following address:
Oklahoma Secretary of State, 421 NW 13th, Suite 210, Oklahoma City, Oklahoma 73103
Operating agreement
The agent can now prepare the operating agreement for the company. It can either be a single-member or a multi-member LLC operating agreement. It is considered formal once all the required members agree and signs this contract.
Regulatory requirements
The company should have the Employer Identification Number (EIN) for tax and regulatory purposes. For example, the IRS will require this identification number for tax reports, and the company will need it if it needs loans or wants to hire employees. You can get the EIN by applying for it on the IRS website for free. You can also choose to complete the SS-4 form and submit it to the IRS through the mail.
Frequently Asked Questions
Having an LLC operating agreement is not a requirement in Oklahoma. It is only advised for companies so that the members can protect their private assets.
It is not only the multi-member LLC that benefits from having an operating agreement in Oklahoma. The single-member LLC should also have this agreement as they will get extra-legal protection and other benefits.
It is possible to write your own LLC operating agreement in Oklahoma. However, you should consult an attorney to avoid forgetting any critical information.
An operating agreement is not the same as the Articles of Organization. An operating agreement is a legally binding document that outlines a company’s operations and policies, while the Articles of Organization is a document that is used when forming an LLC.
In Oklahoma State, operating agreements are not filed with the state. Instead, copies are kept in a safe place alongside other business documents.
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