As a licensed professional in Oklahoma you can structure your business as an Oklahoma professional limited liability company (PLLC). This will give you protection from several important types of liability. It also may provide certain tax advantages compared to other ways of structuring your business.
An Oklahoma PLLC is a limited liability company (LLC) formed specifically by people who will provide Oklahoma licensed professional services. LLCs in general are businesses registered with the state that consist of one or more people—called LLC members—who own the business. Like other LLCs, PLLCs protect their individual members from people with claims for many (but not all) types of financial debts or personal injuries.
Under Oklahoma's Professional Entity Act, a professional service is a state-licensed or -certified service provided by:
Anyone who is licensed to practice one of these professions in Oklahoma can form an Oklahoma PLLC.
To form your Oklahoma PLLC you'll need to:
You can file your articles online or on paper. An articles of organization form specifically for PLLCs (SOS FORM 0010-07/12) is available for download from the SOS website. The form includes helpful instructions. The current filing fee is $100.
Oklahoma requires that your PLLC's name contain the words "professional limited liability company" or the abbreviations "P.L.L.C." or "PLLC." The name also must comply with any requirements of any state regulating board that has jurisdiction over the professional services your PLLC will provide. For additional important information on LLC names, check the Business Name, Location & Licenses section of the Nolo website.
An Oklahoma PLLC can provide either one type of professional service or one of several legally allowed combinations of related professional services. Allowed related groups of licensed professionals include:
In general, an Oklahoma PLLC may not engage in any business other than rendering the professional service or services for which it was formed (along with directly related (ancillary) services). There are exceptions to this general rule relating to ownership of real estate or personal property, and to investing PLLC funds. Except in limited cases involving death or professional disqualification, all members of an Oklahoma PLLC must be licensed to provide the professional services offered by the PLLC. And, finally, remember that Oklahoma PLLCs and/or their members are subject to the regulation of the relevant state professional licensing authorities.
You should make sure you have an operating agreement for your PLLC. Unlike professional licenses, articles of organization, naming restrictions, and service restrictions, this is not a state requirement. However, it is important to have an operating agreement so that all members of the PLLC, as well as outside companies and businesses (for example banks), know what the internal rules are for the company. Depending on your own level of knowledge and expertise, you should consider having a lawyer assist you in preparing this document.
Forming your professional service business as a PLLC will protect you personally from:
Regarding protection from liability for the malpractice of fellow PLLC members, be aware that, for some professions in some states, PLLC members are required to have a minimum amount of malpractice insurance before they are eligible for such protection. Therefore, it's always a good idea to double check your state's PLLC laws, as well as your state's rules for your particular profession, regarding minimum insurance requirements.
Meanwhile, you are personally responsible if:
Because you are not protected from your own malpractice, you should make sure you have professional liability insurance—and, if applicable, that your coverage meets any minimum insurance requirements.
A PLLC is not the same thing as a professional corporation (PC). A PLLC is a newer type of business entity than a PC. Here are some of the key differences:
The tax differences between PLLCs and PCs can become complicated. For example, a PC can elect a special tax status (S corporation status) that effectively makes it a pass-through tax entity like a PLLC. And, meanwhile, PCs that don't elect special status may be subject to double taxation—in other words, both the PC itself and its shareholders may have to pay taxes on business income.
Oklahoma allows professionals to form both PLLCs and PCs, and both PLLCs and PCs provide liability protection for, respectively, their members or shareholders. Because the protection is essentially the same for both PLLCs and PCs, but PLLCs are simpler to create and operate, many professionals prefer the PLLC structure.
For more information on the requirements for forming and operating an LLC in Oklahoma, such as those relating to annual reports and taxes, see Nolo's articles in 50-State Guide to Forming an LLC and 50-State Guide to Annual Report and Tax Filing Requirements for LLCs, along with the other articles on LLCs in the LLC section of the Nolo website.