Thinking about starting your own business in Oklahoma? To help you get started, we’re here with a guide to break down what you need to know into simple steps.

Steps For Starting A Business In Oklahoma

Step 1: Choose a Business Idea

When deciding on a business to start in Oklahoma, there are a lot of things to consider. Looking at a couple of my favorites, the first is to look for something that lines up with what you love and what you’re good at. Running a business that fits your skills and interests is usually more fun and more likely to be successful. Another is to do some digging to understand the potential demand for your product or service in Oklahoma. Find out who your customers might be, what they prefer, and what competition is already out there. Maybe there’s a need in the market that your business can meet.

If you are searching for the right business idea, or want to learn more about the idea you have, be sure to check out our business library, which offers detailed information on over 300 industries, costs to start, and more.

Step 2: Write a Business Plan

The next step in starting a business is writing a business plan. A business plan serves multiple purposes, one of which is acting as a roadmap for your business, outlining your goals, strategies, and projections. It helps you identify potential challenges, risks, and opportunities while mapping out the steps you need to take to launch the business.

A business plan will also provide potential lenders, investors, or partners with a clear understanding of your business model, financial projections, and marketing strategies, which can help establish credibility and obtain funding.

Related: How to write a business plan

Step 3: Find the Money

With the startup costs (hopefully) calculated in the business plan, the next step in starting a business is a challenging one for many entrepreneurs. This step is making sure there is enough money to get started. An overview of common funding options available in Oklahoma include:

Personal funds: Regardless of the other funding sources, it’s not common to start a business without an investment from the owner. While some businesses are entirely funded with the owner’s savings, make sure to have a little extra as backup.
Friends and family: Friends and family that believe in you and your idea may loan or invest in your business. Be sure to write down repayment expectations, as misunderstandings about money can ruin relationships.
Bank loans: Traditional bank loans are a common funding source for small businesses. Banks in Oklahoma offer various loan products tailored to the needs of small businesses, including term loans, lines of credit, and equipment financing. To qualify for a bank loan, you’ll typically need a strong credit history, business plan, collateral, and personal investment of at least 15%-25% of the total startup costs.
SBA loan guarantee: The U.S. Small Business Administration (SBA) offers loan guarantee programs to help small businesses in Oklahoma access financing. The SBA doesn’t provide loans directly but guarantees a portion of the loan made by approved lenders, reducing the risk for lenders and making it easier for small businesses to qualify. Some popular SBA loan programs include the 7(a) and the 504 Loan Program.
Microloan programs: Microloans are small loans for businesses with limited capital requirements or who cannot qualify for conventional lending. These loans are typically provided by nonprofit organizations, community development financial institutions (CDFIs), and specialized microlenders. Organizations such as the REI Oklahoma Business Lending Program and the Oklahoma Capital Access Program offer microloans to small businesses in Oklahoma.
Investors: Another funding option is to seek investment from angel investors or venture capitalists. Angel investors are typically high-net-worth individuals who invest in startups in exchange for equity or convertible debt. Venture capitalists are investment firms that provide funding to high-potential, high-growth companies. While these investors can provide substantial funding and valuable expertise, they often require a share of ownership and control in your business.
Small business grants: While there is a lot of interest in grants, it’s not common for a new business to receive one. While they are occasionally available, they tend to be targeted at science & technology-related companies through the SBIR (Small Business Innovation Research) or STTR (Small Business Technology Transfer) federal programs. In addition, there are grants offered at the state level for a variety of initiatives like technology startups, agriculture, or tourism, but they tend to be for operating businesses.

Step 4: Select a Business Structure

A business structure (also called a business entity) is how a company is legally organized to do business. Selecting the appropriate business structure can impact your personal liability, tax obligations, and administrative requirements. In Oklahoma, the four common types of business entities are sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

Sole proprietorship: This is the simplest and most common form of business entity. A sole proprietorship is owned and operated by a single individual who controls the business and is personally responsible for all business debts and liabilities. The pros of a sole proprietorship include ease of formation, minimal administrative and reporting requirements, and pass-through taxation, where profits are taxed only at the individual level. The cons are unlimited personal liability and limited growth potential due to the reliance on the owner’s personal credit and assets.

General partnership: A general partnership consists of two or more individuals who share the ownership, management, and profits of a business. Each partner is personally liable for the business’s debts and liabilities. The pros include ease of formation, shared management and financial responsibilities, and pass-through taxation. The cons involve unlimited personal liability for all partners, potential disputes over decision-making, and the lack of continuity if a partner leaves or dies.

Corporation: A corporation is a separate legal entity owned by shareholders, which provides limited liability protection to its owners. The pros of a corporation include limited personal liability, the ability to access capital through the issuance of stock, and the potential for perpetual existence. The cons include complex formation, administrative requirements, and potentially double taxation (where profits are taxed at both the corporate and individual levels).

Limited Liability Company (LLC): An LLC is a hybrid business entity that combines the limited liability of a corporation with the pass-through taxation of a sole proprietorship or partnership. The pros of an LLC include limited personal liability for members, pass-through taxation, and flexible management structures. The cons involve more complex formation and higher formation fees than sole proprietorships and general partnerships.

Forming a corporation or LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.

Some popular formation services include:

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Step 5: Register the Business

With the business structure sorted out, the next step is to register the business. There are several federal, state, and local requirements for Oklahoma businesses. Each business will have different needs based on where they are located and what they do, but some common business registrations include:

Business licenses: The state of Oklahoma doesn’t require a general business license. Depending on city and county requirements, you may need to obtain local permits and licenses, such as a business license, zoning permit, and occupational license.

Federal Employer Identification Number (FEIN): An FEIN, also known as a Federal Tax Identification Number, is required for many businesses, with the exception of sole proprietorships and single-member LLCs without employees. It’s used by the Internal Revenue Service (IRS) to identify your business for tax purposes. You can obtain an EIN for free by applying online through the IRS website.

Sales tax permit: If you plan to sell goods or provide taxable services in Oklahoma, you must obtain a sales tax permit from the Oklahoma Tax Commission.

Business name registration: Businesses are not required to register a fictitious business name in Oklahoma, but many banks will require the name to be registered before allowing the business to open a business bank account.

Fictitious business names can be registered with the County Clerk’s office in the county where the business is located. The county fee for filing a Certificate of Fictitious Name with the County varies slightly but is typically around $25.

Professional licensing: Some services, such as contractors, personal trainers, and barbers, require licensing in Oklahoma.

Step 6: Open a Business Bank Account

Another important step in starting a business is opening a business bank account. When business and personal finances are mixed, keeping track of expenses and income becomes increasingly difficult, which can cause issues during tax season.

Additionally, mixing finances can lead to losing asset protection for businesses set up as corporations and LLCs. If legal issues arise within the business, personal assets may be at risk if they’re not adequately separated from business assets.

Step 7: Hire Employees

Preparing to hire your first employee is a significant step and requires a bit of planning. New employers are required to register with a number of agencies, including the Oklahoma Employment Security Commission (OESC), Oklahoma Tax Commission (OTC), and others.

Employers are also responsible for reporting new hires, verifying employees are eligible to work in the U.S., income tax withholding, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.

Step 8: Obtain Business Insurance

As a business owner, you never know what kind of unexpected events might occur that could harm your business. That’s why the next step is to research what insurance is needed for your business. A few reasons why you may need business insurance include:

Protects your finances: Without insurance, you’re putting your finances at risk. If an unexpected event damages your business property or someone gets injured on your premises, you could be liable. This could potentially bankrupt your business and leave you in financial ruin. However, with proper insurance coverage, you can protect yourself and your business from these types of financial losses.
Peace of mind: Running a small business is stressful enough without worrying about unexpected events that might harm your business. Insurance can give you peace of mind, knowing you’re protected against events beyond your control. This allows you to focus on growing your business without worrying about the “what ifs.”
In some cases, it’s the law: Some types of insurance are legally required in Oklahoma. A common one is that if you have employees, you’re required to have workers’ compensation insurance. Additionally, if you own a vehicle that’s used for business purposes, you may be required to have commercial auto insurance. Failing to have these required insurances can result in fines, lawsuits, and other penalties.

Step 9: Track Income & Expenses

The next thing you’ll need to think about is how you’ll keep track of your money. Tracking the income and expenses of a business is referred to as bookkeeping, which is just a fancy word for recording, organizing, and keeping up with all the money matters in your business. Setting up bookkeeping can be as simple as using pen and paper, a spreadsheet, or accounting software. Some business owners would rather not deal with bookkeeping and choose to hire a bookkeeper to handle it for them.

The reason this is so important is that not keeping an eye on your finances, or making mistakes with your records, can cause big problems. You might face penalties or fines, and even get extra attention from tax authorities – something no small business owner wants.

This material is property of StartingYourBusiness.com

Common questions when starting a business in Oklahoma

What are the steps to starting an LLC in Oklahoma?

There are three main steps to starting an LLC in Oklahoma. These include:

1. Making sure the LLC name is available
2. Appointing an Oklahoma Registered Agent
3. Filing the Articles of Organization

To learn more, check out our guide to starting an LLC in Oklahoma.

How much does it cost to start an LLC in Oklahoma?

The cost to start an LLC in Oklahoma is $100, which is the filing fee to submit the Articles of Organization with the Oklahoma Secretary of State.

Does a sole proprietor need a business license in Oklahoma?

In Oklahoma, whether a sole proprietor needs a business license depends on the type of business they are running and where it’s located, and not the type of business structure.

Different cities and counties in Oklahoma have their own rules about business licenses. Also, certain types of businesses, like restaurants or those that sell alcohol, usually need special licenses or permits, no matter where they are in the state.

Oklahoma Small Business Resources

There are 371,640 small businesses in Oklahoma, which is 99.4% of all businesses in the state,¹ and 51% of Oklahoma employees work for small businesses.² Because of the economic impact of small businesses, there are a number of small business resources to help Oklahoma businesses start and grow. Some of these include:

i2E – Innovation to Enterprise: i2E collaborates with entrepreneurs, researchers, and companies to help them commercialize their technologies, kick-start new businesses, and access capital.
OK Catalyst: OK Catalyst aids science and technology-focused innovators by leveraging the Small Business Innovation & Research and Small Business Technology Transfer programs (SBIR/STTR).
Oklahoma Manufacturing Alliance: This program helps small manufacturers start and grow.
Oklahoma Small Business Development Center: Supported by the U.S. Small Business Administration, the SBDC offers assistance in areas such as business plan development, marketing research and identification, international trade, cash flow analysis, and general management.
OSU Center for New Product Development: The NPDC combines professional design engineers, undergraduate engineering students, and university faculty and resources to launch new products, create and retain jobs, and boost innovation.
SCORE Oklahoma: As a nonprofit association, SCORE volunteers provide training and guidance for entrepreneurs in Oklahoma.
Tom Love Innovation Hub: The Innovation Hub assists new and innovative ventures through programming, support in prototyping, various events, and coaching.