Businesses, particularly small businesses, are the backbone of the United States, and each year millions of people create new businesses. Quickbooks projects there will be 17 million new small businesses created this year. If you’re thinking of starting a new business too, you should ask yourself the following three questions to help your new business succeed.
Question #1: Do You Have Checks in Place to Maintain Annual Requirements?
Several types of companies have obligations that must be met every year. Oklahoma law requires a company to file an annual certificate and pay an annual fee to continue operating in Oklahoma. There are separate annual fees to maintain a limited liability company, a corporation, or a limited partnership. Corporations also require shareholders and directors to hold an annual meeting, and create meeting minutes, or sign a memorandum in lieu of the meeting every year. A company may lose its separate company status if these annual requirements are not met.
If the company loses its separate company status, (1) the owners can lose liability protections from the company or (2) the company may be unable to defend itself in litigation. The Secretary of State may administratively terminate or dissolve the company if the required annual certificate is not filed, and the applicable fee paid, timely. If the Secretary of State terminates your company, you will likely need to pay an additional fee to reinstate your company before it can continue doing business. If the company is dissolved, the company would need to be created again.
It is better to be disciplined (and set reminders if needed) in ensuring the annual requirements are met, than risk losing the company’s status even if only temporarily.
Reason #2: Will You Own The Company With Anyone Else?
Co-owing a business may invite disputes on how the company is run, even within small family-owned businesses. If there is no Operating Agreement or Bylaws, providing how the company is to be managed, applicable Oklahoma law will govern by default. Oklahoma law can limit who has authority to take which actions and how any disputes are to be resolved, which you may not agree with.
If two or more people will own the company, we highly recommend having an Operating Agreement or Bylaws, as applicable, in place to govern any disputes or provide guidance for questions you may have while operating the business.
Reason #3: Who Is or Will Be the Company’s Attorney?
Oklahoma law requires a company to be represented by an attorney in litigation, whether the company is pursuing or defending against a claim. An attorney for the company can also assist with satisfying annual requirements, drafting an Operating Agreement or Bylaws, serving as a registered agent, and in various other aspects to help the company grow while limiting liability risks. (Please also see this article on maintaining liability protections with your LLC.)
Our attorneys at Rainey Law have served corporations and LLCs for over 100 combined years! We take pride in helping our client’s businesses grow and succeed, which includes creating companies and ensuring compliance with applicable Oklahoma laws. For more information on how we can help you create and maintain your company, see We Love Family Businesses, or contact us at 405-753-1500.