A limited liability partnership (LLP) is one way a business owner can organize their company. Similar to other types of partnerships, this particular type of business structure has two or more owners. These owners are called partners.
An LLP allows all of the partners to engage in full control of the business while also being shielded by limited liability. The partners in an LLP are only liable up to the amount of their investment into the company. Any Oklahoma LLP is required to register with the Oklahoma Secretary of State.
If an individual is considering organizing their business as an LLP, it is important to be aware of how a limited liability partnership works. An LLP is a business entity that is created by state law. In other words, the rules and regulations for these business entities will vary by state.
An LLP is a popular business form for licensed professionals. Many individuals enter into an LLP because they want to protect their personal property in the event that they are sued. That is one of the main advantages to a limited liability partnership, that the partners are not personally liable and cannot be forced to pay business liabilities with their personal property or assets.
Can Anyone Form a Limited Liability Partnership in Oklahoma?
Anyone can form an LLP in Oklahoma. The caveat to this is that the LLP must designate a registered agent within the state. This can be an individual or a business located in Oklahoma.
The LLP will be required to either establish an office in the state which possesses a valid street address or appoint an agent for service of process who has a valid Oklahoma street address. This agent must be willing and able to receive legal documents and any other official papers on behalf of the LLP.
The agent for service of process may be an individual who resides in Oklahoma or a company that is properly registered to do business in Oklahoma with an office located in the state. The LLP will be required to register this agent with the Oklahoma Secretary of State or it will not be legally permitted to do business as an LLP in Oklahoma.
What are the Requirements for an LLP? What Paperwork is Needed?
There are several requirements for an LLP in Oklahoma. One of the first items the LLP must do is have the partnership formally vote to become an LLP. The partnership must then decide on a name, preferably one that reflects the type of business they will be conducting.
The LLP name must contain the words limited liability partnership in the title. It is acceptable to use abbreviations, such as LLP or RLLP, for registered limited liability partnership. As noted above, the LLP is also required to designate a registered agent for service of process or establish an office in the State of Oklahoma with a valid street address.
There is paperwork that is required to form an LLP that must be filed with the Oklahoma Secretary of State. The partners will need to fill out the proper form online or print out the form, fill it out completely and accurately, and mail it in to the Oklahoma Secretary of State’s Office.
It is important to note that there are different forms for an LLP that was created in Oklahoma, or a domestic LLP, and an LLP that was formed in another state but wants to do business in Oklahoma, or a foreign LLP. For a domestic LLP, the proper form is a Limited Liability Partnership Statement of Qualification. The proper form for a foreign LLP is a Limited Liability Partnership Statement of Foreign Qualification.
Both of these forms have the same information requirements, including:
- An indication that the form submitted is the LLP’s initial statement;
- The LLP’s name;
- The street address of the LLP’s chief executive office as well as the street address of any office that the LLP may have in Oklahoma if it is different than the chief executive office;
- The name and the street address of the LLP’s agent for service of process if the company does not have an office in Oklahoma; and
- A later effective date for the document if the LLP does not wish for it to be effective upon filing.
Two of the partners must sign the form prior to filing it with the Oklahoma Secretary of State.
What Type of Liability Protection Does a Limited Liability Partnership in Oklahoma Offer?
There are numerous benefits of limited liability partnerships. However, there are also some drawbacks of limited liability partnerships. One benefit is that the State of Oklahoma does not place any obligations on an LLP to pay an annual fee or file any annual reports. In other words, the LLP is not required to do anything other than maintain the LLP status once it has been formed and approved.
There may be disadvantages, however, to forming an LLP in Oklahoma. Oklahoma has one of the worst economies in the United States according to the Federal Bureau of Economic Analysis (BEA). As of 2015, the BEA actually listed Oklahoma as the state with the works economy due to its declining GDP. Although Oklahoma’s economy is beginning to improve, it may be a challenging location to start a new business due to the economic issues.
What is the Difference between Limited Liability Company vs. Limited Liability Partnership in Oklahoma?
Pursuant to Oklahoma business law, there are some differences between limited liability companies (LLCs) and limited liability partnerships (LLPs). To form an LLC in Oklahoma, the business name must be one that is not currently in use. Similar to the LLP, the LLC must designate a registered agent for service in the state. If this is not done, the Oklahoma Secretary of State will designate itself as the registered agent of the LLC and charge an annual fee of $40 for the service.
The LLC is required to file specific paperwork with the Oklahoma Secretary of State. Similar to the LLP, the LLC can be either foreign or domestic.
One of the main benefits of forming an LLC in Oklahoma is that the individual is permitted to remain anonymous, which is not permitted in most states. The LLC formation form does not specifically ask who owns the LLC.
Additionally, unlike other states, Oklahoma does not require that an LLC pay an annual franchise tax. Oklahoma also provides protection for the business interests of the members of the LLC. If a member of an LLC has a personal debt to be paid, a creditor is not permitted to ask that the member sell their membership to cover that debt.
Members of the LLC are not held personally liable for violations that stem from the company, which is the meaning of the term limited liability. However, individual members of the LLC may still be held liable for any violations that are the result of their own illegal conduct or negligence, such as engaging in insider trading.
In many cases, the main difference between the LLC and the LLP is the reason the business is formed. For example, an LLP is usually formed by professional individuals who are required to obtain a state license in order to practice. This may include:
- Doctors; and
By forming an LLP, each professional is protected against liability for negligence of their other partners. Forming an LLP may also allow professionals to reduce their overhead costs, such as the office building, while making more profits than they likely could on their own.
Should I Hire a Lawyer for Help with an LLP in Oklahoma?
Yes, it is essential to have the assistance of an experienced Oklahoma corporate attorney for help with an LLP in Oklahoma. Any error you make during the registration process may result in your partnership not becoming an LLP.
An Oklahoma corporate attorney can explain the process to you as well as assist you in completing and filing the necessary paperwork to form your LLP. This will ensure your LLP will be formed and you can take advantage of the protections it offers.