If you’re starting a business in Oklahoma that involves multiple assets or lines of business—like real estate, investment properties, or franchise operations—you may benefit from forming a Series LLC. Oklahoma is one of a growing number of states that recognizes this unique business structure. In this article, we’ll explain how to form a Series LLC in Oklahoma and why it might be a smart strategy for certain business owners.
What Is a Series LLC?
A Series LLC is a type of limited liability company that creates legally distinct internal divisions called “series.” Each series can:
- Own its own assets
- Enter into contracts
- Incur debts
- Sue and be sued
The key advantage is liability protection: if one series is sued or becomes insolvent, the other series and the parent LLC are typically shielded from liability—assuming proper record-keeping and legal formalities are followed.
How to Form a Series LLC in Oklahoma
Oklahoma law allows the creation of a Series LLC under Title 18, Section 2054.4 of the Oklahoma Statutes. Here’s how to start:
1. File Articles of Organization
You must file Articles of Organization with the Oklahoma Secretary of State and indicate that the LLC can establish one or more series. The filing fee is $100.
2. Draft an Operating Agreement
Your LLC’s Operating Agreement should clearly describe the structure of the series, the purpose of each series, management rights, and asset separation. While not required by the state, a strong Operating Agreement is essential to maintain legal separation between series.
3. Create and Maintain Separate Records
Each series must maintain its own books, records, bank accounts, and asset lists. Commingling funds or failing to separate records could risk the liability protection of the series structure.
4. Obtain an EIN for Each Series (If Needed)
If a series will hire employees, open a bank account, or pay taxes independently, it will likely need its own Employer Identification Number (EIN) from the IRS.
5. Register for Taxes
Each series may need to register with the Oklahoma Tax Commission for sales tax, use tax, or withholding tax depending on its activities.
Why Would You Form a Series LLC?
A Series LLC isn’t for every business, but it offers specific advantages for the right types of operations:
Real Estate Investors
Each property can be in its own series, separating liabilities and shielding assets from risks of other properties.
Franchise or Multi-Unit Businesses
Each unit or location can operate under a separate series, simplifying accounting and liability management.
E-Commerce Sellers
If you sell multiple brands or product lines, each can be held in its own series to help protect intellectual property and separate risk.
Startups with Multiple Projects
Different product lines, apps, or R&D projects can be placed in distinct series for better organization and risk mitigation.
Are There Any Downsides?
While the Series LLC is flexible, it comes with certain challenges:
- Not universally recognized: Some states do not recognize the Series LLC structure, which can create complications if your business operates in multiple states or if you attempt to sell the business.
- Record-keeping burden: Each series must maintain completely separate financial and legal records.
- IRS treatment is evolving: Tax reporting can be complex depending on how each series is structured and how the IRS views each entity.
Claremore Business Law Attorneys
If you’re considering a Series LLC, it’s crucial to get it right from the start. Improper formation or sloppy maintenance can destroy the liability protection that makes this structure valuable. For a free consultation with an attorney at Kania Law – Claremore attorneys’ law office, call 918-379-4872. Or you can click here to ask a free online legal question.
