How to Create a Series LLC in Oklahoma

What Is a Series LLC?

A Series LLC is a unique form of a limited liability company that allows for the creation of multiple, distinct series within a single LLC. Each series operates independently, with its own assets, liabilities, and members. This structure allows for the segregation of assets and liabilities among different series, providing a flexible and cost-effective way to manage multiple business ventures under one umbrella entity.

Does Oklahoma Allow Series LLCs?

Yes, Oklahoma permits the formation of Series LLCs under its state laws. The authorization for Series LLCs is provided by the Oklahoma Limited Liability Company Act, specifically under Title 18, Section 2054.4. It is essential to include specific language in the formation documents to establish a Series LLC, ensuring that the series structure is recognized legally.

How a Oklahoma Series LLC Works

In an Oklahoma Series LLC, the master LLC acts as the overarching entity that controls the individual series. Each series can have its own members, assets, and liabilities, which are legally separate from those of the other series and the master LLC. This separation is maintained through meticulous recordkeeping and adherence to structural requirements, ensuring that the liabilities of one series do not affect the others.

Benefits of Forming a Series LLC in Oklahoma

• Cost Efficiency: Forming a Series LLC can be more cost-effective than creating multiple traditional LLCs, as it reduces the need for separate filings and administrative processes.
• Asset Segregation: Each series can hold its own assets and liabilities, protecting them from the risks associated with other series.
• Administrative Flexibility: The structure allows for streamlined management and operations across different business ventures.

Limitations and Risks of a Oklahoma Series LLC

• Legal Uncertainty: Some jurisdictions may not recognize the series structure, leading to potential legal challenges.
• Banking and Lending Challenges: Financial institutions may be unfamiliar with Series LLCs, complicating banking and lending processes.
• Tax Complexity: Managing tax compliance for multiple series can be complex and may require specialized accounting expertise.

Who Should Consider a Oklahoma Series LLC?

A Series LLC is ideal for businesses that manage multiple assets or ventures, such as real estate investment companies, asset holding entities, and intellectual property portfolios. However, for simpler business structures, a traditional LLC may be more appropriate due to its straightforward nature.

Step-by-Step: How to Create a Series LLC in Oklahoma

Step 1: Choose a Name for the Series LLC

The name of the Series LLC must comply with Oklahoma's naming requirements, including the use of "Limited Liability Company" or abbreviations like "LLC" or "L.L.C." Each series within the LLC should also have a distinct name that includes the name of the parent LLC.

Step 2: Appoint a Oklahoma Registered Agent

A registered agent is required to receive legal documents on behalf of the LLC. The agent must be a resident of Oklahoma or a business entity authorized to do business in the state.

Step 3: File the Certificate of Formation

The Certificate of Formation must be filed with the Oklahoma Secretary of State. This document includes basic information about the LLC, such as its name, registered agent, and management structure. Filings can be submitted online or by mail.

Step 4: Include Series LLC Language

It is crucial to include specific language in the Certificate of Formation that authorizes the creation of series. Failure to do so may result in the series structure not being legally recognized.

Step 5: Draft a Series-Compliant Operating Agreement

The operating agreement should outline the internal governance of the LLC and include provisions for the separation of assets and liabilities among the series. This document is vital for maintaining the legal integrity of the series structure.

Step 6: Establish Individual Series

Individual series are created internally within the LLC. Proper documentation and recordkeeping are essential to ensure each series is treated as a separate entity.

Step 7: Obtain EINs (Parent and Series, If Needed)

An Employer Identification Number (EIN) is required for the parent LLC and may be necessary for each series, depending on their business activities.

Step 8: Open Separate Bank Accounts

Each series should have its own bank account to maintain financial separation and avoid the commingling of funds, which could jeopardize liability protections.

Step 9: Comply With Oklahoma Tax Requirements

The LLC and its series must comply with Oklahoma's tax obligations, including state income tax and any applicable sales tax. Accurate reporting and timely payments are essential.

Oklahoma Series LLC Filing Fees and Costs

The filing fee for the Certificate of Formation is $100. Additional fees may apply for each series and for ongoing compliance requirements.

Oklahoma Franchise Tax and Series LLCs

Oklahoma imposes a franchise tax on LLCs, which applies to the parent LLC and may extend to each series. Each series must comply with reporting obligations as required by the Oklahoma Tax Commission.

Ongoing Compliance Requirements for Oklahoma Series LLCs

Ongoing compliance includes filing annual reports, maintaining accurate records, and adhering to state tax requirements. Each series must be managed as a separate entity to preserve liability protections.

Common Mistakes When Forming a Series LLC in Oklahoma

• Missing Required Series Language: Failing to include series authorization language in formation documents can invalidate the series structure.
• Poor Recordkeeping: Inadequate documentation can lead to legal challenges and loss of liability protection.
• Mixing Assets Between Series: Commingling assets can compromise the separation of liabilities and expose series to additional risks.

Series LLC vs Traditional LLC in Oklahoma

A Series LLC offers a flexible structure for managing multiple ventures, while a traditional LLC is simpler and may be more suitable for single-business operations. The choice between the two depends on the complexity and scope of the business activities.

Additional Resources

• Oklahoma Secretary of State Main Page
• Business Division/Formation Page
• Oklahoma Statutes (Complete Code)
• Oklahoma Tax Commission
• Contact Information: Phone: (405) 521-3912, Email: info@sos.ok.gov

This article provides general information about Oklahoma LLC formation requirements under the Oklahoma Limited Liability Company Act. It is not intended as legal advice. Persons forming an LLC should consult with a private attorney regarding their specific circumstances.