How to Create a General Partnership in Oklahoma | A Complete Guide

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Create a General Partnership in Oklahoma

If you would like to create a general partnership in Oklahoma, there are a few guidelines that you should understand. A general partnership is one of the things that a businessman considers since it comprises two or more entities to carry on a trade or business. Each partner contributes money, property, labor, or special skills, and each partner shares in the profits and losses from the business. You can start an LLC in Oklahoma for your general partnership to personally carry potentially unlimited liability.

Knowing about the general partnerships will benefit you and several partners, making you form your business properly. If you want to know more about the general partnership, follow our steps to Create a General Partnership in Oklahoma.

Webinarcare Editorial Team will help you create with thorough research and market study. Before starting a general partnership in Oklahoma, you must be guided by all the factors we have gathered in this article.

Steps in Creating a General Partnership in Oklahoma

What is General Partnership in Oklahoma?

A general partnership in Oklahoma is a business structure where two or more individuals come together to establish a business and agree to share the profits, losses, and management responsibilities. Each partner contributes skills, resources, and capital to the business and makes decisions collaboratively. In a general partnership, partners have unlimited personal liability for the debts and obligations of the business, meaning their personal assets can be used to cover any debts or liabilities incurred by the partnership. This type of business structure is relatively simple to form and offers flexibility in decision-making and management but lacks the legal protection of limited liability offered by other structures like Oklahoma Corporations or limited liability partnerships.

It is recommended that you consult to Oklahoma Business Attorney before beginning the process of forming your general partnership. They will understand what is best for you and your company. To shield your personal assets from corporate debts, you can always Start an LLC in Oklahoma rather than a general partnership.

– WEBINARCARE EDITORIAL TEAM

Example of a General Partnership

An example of a general partnership could be a small marketing agency created by two friends, Shane and Jane. Shane has a background in graphic design, while Jane has experience in digital marketing strategies. They decide to join forces and create a marketing agency that offers clients a combination of their expertise.

Shane and Jane contribute their skills, resources, and capital to start the business. They agree to share the profits, losses, and management responsibilities. Both partners actively participate in the agency’s day-to-day operations, making decisions and working with clients collaboratively.

In this general partnership, Shane and Jane have unlimited personal liability for any debts or obligations incurred by their marketing agency. If the agency faced financial difficulties, both partners’ personal assets could be used to cover the debts. However, the simplicity and flexibility of the general partnership structure allow them to manage and grow their business together easily.

Individuals looking to collaborate and numerous service providers have chosen general partnerships as their preferred business entity. That’s frequently because of its simple design, low price, and simplicity of setup. Some general partnership examples include: 

  • Providing Professional Services (architectural firms, medical clinics, etc.)
  • Selling goods at retail 
  • Opening a restaurant
  • Oklahoma Business Consulting

General partnerships are also formed by partners who are spouses or other family members who want to operate a business together.

Steps in Creating a General Partnership in Oklahoma

To create a general partnership in Oklahoma, you must follow the guidelines below: choosing a business name, making a partnership agreement, requesting an EIN, getting a license and permit, and opening a bank account. 

Step 1: Choose a Business Name

Naming your business is one of the most important activities during the startup phase, especially if you will form an LLC in Oklahoma. Your general partnership name serves as the foundation for your brand and is what clients use to connect you to the products or services you offer. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity without being hampered by irrelevant factors. 

For example, let’s assume the general partnership focuses on providing eco-friendly landscaping solutions. A potential name for this partnership could be “GreenScape Innovations.” This name highlights the business’s core values (eco-friendly) while also showcasing the industry (landscaping) and the innovative approach the partners aim to bring to the market.

For your to come up with this business name idea, here are some guidelines to consider when choosing a name for a general partnership:

  • Reflect on the Nature of the Business: Choose a name representing your products or services, and communicate your business’s essence to your target audience.
  • Keep it Simple and Memorable: A short, easy-to-pronounce name will be easier for customers to remember and share with others.
  • Make it Unique: Research the names of other businesses in your industry to ensure your chosen name stands out and does not infringe on any existing trademarks or copyrights.
  • Consider the Partners’ Names: Some general partnerships incorporate the partners’ names in the business name (e.g., Smith & Johnson Consulting). However, this approach may only be suitable for some businesses, especially if the names are difficult to pronounce or remember.
  • Test the Name: Share the potential name with friends, family, and potential clients to gather feedback and ensure it resonates with your target audience.
  • Check for Domain Availability: Research the availability of your chosen name as a domain name for your website and on social media platforms to ensure a consistent online presence.
  • Avoid Limiting your Business Scope: Choose a flexible name to accommodate future product or service changes. Avoid using specific locations, product names, or niche markets in the name if you plan to expand or diversify later.
  • Comply with Legal Requirements: Ensure the chosen name complies with any legal requirements or restrictions in your jurisdiction, such as avoiding misleading or offensive terms.
  • Consider Professional Input: Consult with Oklahoma Business Attorney or trademark specialist to ensure your chosen name is legally sound and can be registered as a trademark if necessary.

By following these guidelines, you can choose a name for your general partnership that is memorable, unique, and effectively communicates your business’s essence.

In addition, most general partnership businesses use the last name of all of their partners.  For instance, if Jennie Kim and Lalisa Manoban enter business together, the partnership name is “Kim & Manoban” by default. However, if you would like to form a business name under something more appropriate, such as “EJI Design and Build,” then you’ll need to File a DBA in Oklahoma with Oklahoma Secretary of State.

Filing a DBA in Oklahoma has two methods, by mail and in person., which costs around $25. There is Indefinite validity in renewing your DBA. 

In Oklahoma, if you do not wish to file your general partnership business right away but want to hold the name that you have decided on, then you can reserve your business name for 60 days. You must file a name reservation application in the Oklahoma Secretary of State to keep the name. 

Step 2: Make a Partnership Agreement

After you have chosen a business name for your general partnership, the next step would be making a partnership agreement in Oklahoma. A partnership agreement is a crucial document that outlines the terms and conditions governing a partnership. It helps to establish a clear understanding of each partner’s roles, responsibilities, and expectations and prevents disputes and misunderstandings.

Additionally, it discusses business management guidelines and potential contingencies that may arise, such as a partner’s passing or a partner’s decision to leave the partnership.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Oklahoma. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in Oklahoma

After completing the partnership agreement, you should get or seek an Employer Identification Number (EIN) in Oklahoma. An EIN will serve as your general partnership’s tax identification number. The Internal Revenue Service can provide you with an EIN. (IRS). It is a nine-digit number comparable to your Social Security number. EIN, on the other hand, is distinct from SSN. It is exclusively used for business-related operations, such as filing general taxes. The form must be filled out and sent to the IRS website. Obtaining an EIN cost between $30 and $280. 

The application of an EIN in Oklahoma can be through the following:

  • Apply Online- The Online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4PDF application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

You can benefit in various ways once you obtain your EIN number. It will give your general partnership the final advantage to operate at its full potential without legal or court problems.

Step 4: Get a License and a Permit

You must have Oklahoma Business License before your general partnership business operates. A business license is a document granted by a government agency that allows you to operate your business in the territory governed by that agency.

To legally operate your partnership, you’ll need a business license. You may need more than one license in Oklahoma. Numerous general partnership licenses need to be filed and renewed regularly.

In Oklahoma, the business license fee costs about $50 – $300.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Oklahoma.

Step 5: Open a Bank Account

After filing and receiving your general partnership license, you should open a bank account for yourself, your clients, and your employees.

A US bank account may make your business dealings in Oklahoma easier because it increases your company’s authenticity and profitability. Most banks require an EIN for firms other than sole proprietorships to open a business account. Keeping separate finances also prevents you from combining personal and professional finances.

If you would like to open a bank account in Oklahoma, check out the Best Bank for Oklahoma Small Business.

Pros and Cons of a General Partnership in Oklahoma

In forming a general partnership in Oklahoma, there are pros and cons that you may experience. I will list the pros and cons for you to understand why and how a general partnership is crucial. 

Pros of Forming a General Partnership in Oklahoma

  • Easy and Inexpensive to Form: General partnerships are relatively simple to establish, requiring minimal paperwork and registration costs compared to other business structures like corporations or limited liability companies.
  • Decision-Making: Partners can pool their skills, knowledge, and resources, leading to more efficient and effective decision-making and business operations.
  • Flexibility: General partnerships offer flexibility in management structure, profit distribution, and decision-making processes, allowing partners to customize their business relationships to best suit their needs.
  • Tax Benefits: In most jurisdictions, general partnerships are not taxed as separate entities. Instead, profits and losses are passed through to the partners, who report them on their income tax returns. This avoids the issue of double taxation that affects corporations.
  • Greater Access to Capital: With multiple partners, a general partnership may have increased access to capital and resources compared to a sole proprietorship.

Cons of Forming a General Partnership in Oklahoma

  • Unlimited Personal Liability: In a general partnership, all partners have unlimited personal liability for the debts and obligations of the business. This means that each partner’s personal assets can be used to cover any debts incurred by the partnership, which can be a significant risk.
  • Potential for Conflicts: As partners share management and decision-making responsibilities, disagreements or conflicts can arise, negatively impacting the business’s operations and success.
  • Limited Lifespan: A general partnership’s existence is often tied to the lives of its partners. The partnership may be dissolved if a partner withdraws, becomes incapacitated, or dies, potentially leading to instability and uncertainty.
  • Difficulty in Raising Capital: While general partnerships may have more access to capital than sole proprietorships, they may still need help raising funds compared to corporations or limited liability companies, as investors may be more hesitant to invest in a business with unlimited personal liability.
  • Lack of Legal Distinction: Unlike corporations or limited liability companies, general partnerships do not have a separate legal identity from their partners, limiting the partnership’s ability to enter into contracts or own property in its name.

When considering a general partnership, weighing the pros and cons and assessing whether this business structure aligns with your goals, risk tolerance, and desired level of management involvement is essential.

Maintain Business License in Oklahoma

You must maintain or renew your business license regularly now that you have established your general partnership. Make time at least once a year to check the status of your licenses. Then you will get everything important. You can deal with any problems that arise. In Oklahoma, the business license fee ranges from $50 – $300, and varies by jurisdiction and license type.

Pay Your Taxes in Oklahoma

Even if you have established your general partnership in Oklahoma, pay your taxes and keep everything up to date so you won’t pay any penalty. 

Oklahoma taxes information will help you with what to pay before or during the operation of your professional corporation. You can check out the Oklahoma Small Business Taxes to further understand why you must pay your taxes on time. 

Can I Convert My General Partnership Into Another Business Entity in Oklahoma?

By following the appropriate state procedures, you can convert your general partnership into another business entity, such as Oklahoma Corporation converting to an LLC; or Sole Proprietorship to Oklahoma LLC. This may involve filing conversion documents with the Oklahoma Secretary of State’s office and paying any required fees.

FAQs

What is a general partnership in Oklahoma?
A general partnership in Oklahoma is a type of business entity owned and operated by two or more individuals who share the profits and liabilities of the business.
How do I create a general partnership in Oklahoma?
To create a general partnership in Oklahoma, you need to file a certificate of partnership with the Oklahoma Secretary of State.
How much does it cost to create a general partnership in Oklahoma?
The filing fees for creating a general partnership in Oklahoma are currently $50.
Do I have to have a written partnership agreement to create a general partnership in Oklahoma?
No, a written partnership agreement is not required by law to create a general partnership in Oklahoma.
Can I hire employees for my Oklahoma general partnership?
Yes, you can hire employees for your Oklahoma general partnership.
Do I need to register my Oklahoma general partnership with the Oklahoma Tax Commission?
Yes, you need to register your Oklahoma general partnership with the Oklahoma Tax Commission.
How do I register my Oklahoma general partnership with the Oklahoma Tax Commission?
You can register your Oklahoma general partnership with the Oklahoma Tax Commission online, by mail, or in person.
What taxes will my Oklahoma general partnership need to pay?
Your Oklahoma general partnership will need to pay state and federal income taxes, as well as self-employment taxes.
Do I have to file an initial report after creating a general partnership in Oklahoma?
No, Oklahoma does not require partners to file an initial report after creating a general partnership.
Are there annual reports for Oklahoma general partnerships?
No, Oklahoma does not require general partnerships to file annual reports.
Can I change the name of my Oklahoma general partnership?
Yes, you can change the name of your Oklahoma general partnership by filing an amendment form.
Can I change the type of my Oklahoma general partnership?
Yes, you can change the type of your Oklahoma general partnership by filing an amendment form.
Can I dissolve my Oklahoma general partnership?
Yes, you can dissolve your Oklahoma general partnership by filing a certificate of termination.
What happens if I don’t file my paperwork correctly to create a general partnership in Oklahoma?
If you don’t file your paperwork correctly to create a general partnership in Oklahoma, your partnership may not be legally recognized.
Can I establish a general partnership in Oklahoma if I am not a resident of the state?
Yes, you can establish a general partnership in Oklahoma even if you are not a resident of the state.
Can I have a general partnership in Oklahoma and also operate a sole proprietorship?
Yes, you can have a general partnership in Oklahoma and operate a sole proprietorship at the same time.
Are there any restrictions for who can be a partner in an Oklahoma general partnership?
Any individual or legal entity can be a partner in an Oklahoma general partnership.
Can a corporation be a partner in an Oklahoma general partnership?
Yes, a corporation can be a partner in an Oklahoma general partnership.
Are there annual fees for Oklahoma general partnerships?
Yes, there is an annual fee of $25 for Oklahoma general partnerships.
Can I get a business license with my Oklahoma general partnership?
Yes, Oklahoma requires some general partnerships to have a business license.
Do all general partnerships have to contact the Oklahoma Secretary of State after creating their partnership?
Yes, all Oklahoma general partnerships are required to contact the Oklahoma Secretary of State after creating their partnership.
Is a general partnership in Oklahoma the same as a limited partnership?
No, a general partnership in Oklahoma is different than a limited partnership.
What are the liability issues for Oklahoma general partnerships?
Partners in Oklahoma general partnerships are personally liable for the business debts and interactions.
How should I seek legal and tax advice for my Oklahoma general partnership?
We recommend consulting an attorney or accountant to receive legal and tax advice specific to your Oklahoma general partnership.
Can partners in an Oklahoma general partnership live out of state?
Yes, partners in an Oklahoma general partnership can legally live out of state.
How many partners can be in a general partnership in Oklahoma?
There is no set limit to how many partners can be in an Oklahoma general partnership.
Do I need to file an operating agreement for my Oklahoma general partnership?
No, Oklahoma does not require you to file an operating agreement for your general partnership.
Are there any local licenses and permits required for Oklahoma general partnerships?
Depending on the location and type of business, there may be local licenses and permits required.
What are the advantages of a general partnership in Oklahoma?
A general partnership in Oklahoma offers shared management, shared profits, shared liability, and pass-through taxation.
How do I start a general partnership in Oklahoma?
To start a general partnership in Oklahoma, you must file a Certificate of Partnership with the Oklahoma Secretary of State.
What information is required to be included in the Certificate of Partnership?
The Certificate of Partnership in Oklahoma must include the name of the partnership, the name and address of each partner, and the partnership’s registered agent and office address.
Are all partners in an Oklahoma general partnership equally liable?
Yes, all partners in an Oklahoma general partnership are personally liable for the debts and obligations of the partnership.
Can an Oklahoma general partnership be sued?
Yes, an Oklahoma general partnership is a legal entity that can be sued in its own name.
What is the tax status of an Oklahoma general partnership?
An Oklahoma general partnership is a pass-through entity, which means that the partnership itself does not pay taxes on its income; instead, the partners report their share of the partnership’s income on their individual tax returns.
What kind of records does an Oklahoma general partnership need to keep?
An Oklahoma general partnership is required to keep records of its financial transactions, including income and expenses, and other documents related to the operation of the business.
How do I dissolve an Oklahoma general partnership?
To dissolve an Oklahoma general partnership, the partners must file a Certificate of Cancellation with the Oklahoma Secretary of State.
Can an Oklahoma general partnership have a DBA?
Yes, an Oklahoma general partnership can operate under a fictitious name by filing a Certificate of Assumed Name with the Oklahoma Secretary of State.
What is an assumed business name in Oklahoma?
An assumed business name in Oklahoma is a DBA (doing business as) name, which is a name that a sole proprietorship or general partnership can operate under instead of its legal name.
Can an Oklahoma general partnership have more than one DBA?
Yes, an Oklahoma general partnership can operate under multiple assumed names if it files a Certificate of Assumed Name for each one.
Can I use a trademark as a DBA for an Oklahoma general partnership?
Yes, as long as the trademark is not already in use by another business in Oklahoma, you can use it as a DBA for a general partnership.
Do I need to register my Oklahoma general partnership at the county level?
No, you do not need to register your Oklahoma general partnership at the county level; however, you may need to obtain county licenses and permits depending on the nature of your business.
How many partners can be in an Oklahoma general partnership?
An Oklahoma general partnership can have two or more partners.
Are foreign general partnerships allowed to do business in Oklahoma?
Yes, a foreign general partnership can do business in Oklahoma if it registers and obtains a Certificate of Authority from the Oklahoma Secretary of State.
How much does it cost to register a general partnership in Oklahoma?
It costs $100 to file a Certificate of Partnership in Oklahoma.
Can a general partnership in Oklahoma be owned by entities instead of individuals?
No, a general partnership in Oklahoma must be owned by individuals and cannot be owned by entities such as corporations or LLCs.
Can two or more Oklahoma LLCs form a general partnership?
Yes, two or more Oklahoma LLCs can form a general partnership if they meet the requirements for forming a general partnership.
Are there any personal income tax benefits to having a general partnership in Oklahoma?
Yes, the pass-through taxation of an Oklahoma general partnership can offer tax benefits to the partners, as they only pay taxes on their individual shares of the partnership’s income.
What happens to an Oklahoma general partnership if one of the partners dies or leaves the partnership?
The Oklahoma general partnership may be dissolved or may continue with the remaining partners, depending on the terms of the partnership agreement.
Can a partnership agreement be amended in Oklahoma?
Yes, a partnership agreement can be amended in Oklahoma with the consent of all the partners.
How can I find a template for an Oklahoma partnership agreement?
Templates for Oklahoma partnership agreements can be found online or a business attorney can assist in drafting one.
Can an Oklahoma general partnership hire employees?
Yes, an Oklahoma general partnership can hire employees and will need to obtain a state EIN number and report employment taxes.
Are partnerships required to have a written partnership agreement in Oklahoma?
No, partnerships are not required to have a written partnership agreement in Oklahoma, but it is highly recommended to avoid disputes.
What is the difference between a general partnership and a limited partnership in Oklahoma?
In a general partnership, all partners have equal liability and control of the business, whereas in a limited partnership, there are general partners who have control and liability and limited partners who only have an investment in the business.
Does an Oklahoma general partnership need to register with the IRS?
An Oklahoma general partnership does not need to register with the IRS, but the partners will need to obtain a federal EIN number when they file their tax returns.
Where can I find more information about starting a general partnership in Oklahoma?
More information about starting a general partnership in Oklahoma can be found on the Oklahoma Secretary of State’s website and the Oklahoma Tax Commission’s website.

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Conclusion

A general partnership can be viable for individuals looking to establish a business in Oklahoma with shared decision-making, management responsibilities, and profits. This type of business structure is relatively simple to establish and offers flexibility in operations. However, it is essential for potential partners to carefully consider the unlimited personal liability aspect of general partnerships, which means that each partner’s personal assets could be at risk to cover any debts or obligations incurred by the business. Before forming a general partnership, the partners should have a clear and well-drafted partnership agreement that outlines the roles, responsibilities, profit-sharing, and dispute-resolution mechanisms to ensure a smooth working relationship and minimize potential conflicts. Partners should also explore other business structures, like limited liability partnerships or corporations, to determine the best fit for their needs and goals.

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