Deciding between an LLC and a corporation can be a difficult decision for small business owners. In Oklahoma, two popular business structures are the Limited Liability Company (LLC) and the Corporation (Inc.). Both offer liability protection and credibility, but they differ in management, taxation, and flexibility.

What Is an LLC?

An LLC is a legal entity that combines elements of both a corporation and a partnership. It offers limited liability protection, which means the owners (also known as members) are not personally responsible for the company’s debts or legal obligations. LLCs are popular with small business owners because they are easy to form and manage.

What Is a Corporation?

A corporation is a more formal business structure that is legally separate from its owners (shareholders). Like LLCs, corporations provide limited liability protection, but they follow stricter rules for management and governance.

Corporations are typically governed by a board of directors, which oversees corporate policy, and officers, who run day-to-day operations. In Oklahoma, you can form a C corporation or an S corporation, depending on your tax and ownership goals.

Key Differences Between LLCs and Corporations in Oklahoma

There are several key differences between the two structures, such as:

1. Formation and Paperwork

LLCs are simpler to form and maintain. In Oklahoma, forming an LLC requires filing Articles of Organization with the Secretary of State and paying a small fee. Corporations require Articles of Incorporation and must also follow additional steps like issuing stock, adopting bylaws, and holding annual meetings.

2. Management Structure

LLCs offer flexibility, because members can run the business directly or appoint managers. On the other hand, corporations require a more rigid structure, including directors, officers, and formal procedures.

3. Taxation

LLCs benefit from pass-through taxation, meaning profits pass directly to members’ personal tax returns, avoiding corporate tax. Corporations face double taxation unless they qualify for S-corp status, which allows pass-through taxation with some restrictions.

4. Ownership and Investment

Corporations may be better for raising capital. They can issue multiple classes of stock and attract investors more easily. LLCs have more limits on ownership and are less attractive to venture capital firms.

Rogers County Business Law Attorneys

Selecting the wrong business structure can have long-term tax and liability consequences. Our Rogers County business attorneys navigate the legal process to achieve the best possible outcome for you. 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.