How to Start a Limited Partnership in Oklahoma | A Step-by-Step Guide

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Start a Limited Partnership in Oklahoma

A limited partnership is an attractive business structure for those who want to start an LLC in Oklahoma. It combines the best of both worlds, offering limited liability protection for limited partners and the ability to manage the business for general partners actively. This article will outline the steps on How to Start a Limited Partnership in Oklahoma, covering everything from researching and preparing to registering your limited partnership with the Oklahoma government and beyond.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Oklahoma Limited Partnership, all the steps in this article must guide you.

Steps in Starting a Limited Partnership in Oklahoma

What is a Limited Partnership?

A Limited Partnership (LP) is a business structure comprising two types of partners: general and limited. It is a legal entity distinct from its partners and combines certain features of partnerships and corporations.

General partners are responsible for the day-to-day management of the business, make decisions on behalf of the partnership, and have unlimited liability for the partnership’s debts and obligations. This means their assets can be seized to cover the partnership’s liabilities if necessary.

Limited partners, on the other hand, are passive investors who do not participate in business management. They provide capital to the partnership and receive a share of the profits in return. Their liability is limited to the amount they have invested in the partnership, meaning that their assets are generally not at risk for the partnership’s debts beyond their investment.

It is suggested that you speak with a legal professional before you begin setting up your limited partnership in Oklahoma. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited partnership.

– WEBINARCARE EDITORIAL TEAM

Steps in Starting a Limited Partnership in Oklahoma

To form a limited partnership in Oklahoma, you must consider following the below guidelines that, include research and preparation, establishing the limited partnership structure, drafting the limited partnership agreement, registering the limited partnership, complying with additional Oklahoma requirements, and ongoing management and compliance and reporting requirements. 

Step 1: Research and Preparation

Before starting a limited partnership in Oklahoma, you must familiarize yourself with this business structure’s laws and regulations. In the United States, limited partnerships are primarily governed by the Uniform Limited Partnership Act (ULPA). However, each state has its laws and regulations, so it’s essential to know the specific rules that apply in Oklahoma.

While researching, consider whether a limited partnership is the most suitable structure for your business needs. Limited partnerships are ideal for businesses with one or more passive investors who want to avoid taking on the business’s day-to-day responsibilities. Consider alternative structures like Oklahoma Corporations if a limited partnership doesn’t seem right.

Step 2: Establishing The Limited Partnership Structure

Once you’ve determined that a limited partnership is the right choice for your business, the next step is to establish the structure of your partnership. This involves choosing a name, hiring a Registered Agent, and determining the roles of the partners.

Choose a Name for the Limited Partnership

The name you choose for your limited partnership is essential to your business identity. In Oklahoma, there are specific requirements that your limited partnership name must meet, such as including the words “Limited Partnership” or the abbreviation “LP.” Before settling on a name, conduct Oklahoma Business Name Search through the Oklahoma Secretary of State Business Entity Search to ensure the name you’ve chosen is available and not already used by another business.

Naming requirements for a Limited Partnership in Oklahoma may include:

  • The name must be unique and distinguishable from other business entities registered in the state.
  • The name must include the words “Limited Partnership,” “L.P.,” or “LP.”
  • Certain words and phrases may be restricted or require additional approval from Oklahoma.

If the limited partnership name is available, you may choose to reserve it for a specific period of 60 days by filing a name reservation application and paying the online name reservation fee of $25 and mail name reservation fee of $25. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name. 

The DBA filing can be done by two methods, by mail and in person., which costs around $25. In addition, the DBA’s validity in Oklahoma is Indefinite, which you can file in Oklahoma Secretary of State.

You can check out how to file a DBA in Oklahoma for clearer understanding.

Hire a Registered Agent

A Registered Agent is a person or entity responsible for receiving legal documents and official notices on behalf of your LP. In Oklahoma, your Registered Agent must:

  • Be a resident of Oklahoma or a business entity authorized to do business in the state
  • Have a physical address in Oklahoma (P.O. boxes are not acceptable)

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. 

You can serve as your own Registered Agent or appoint a friend or family member, or hire a professional Oklahoma Registered Agent Services. With that, we reviewed some of the best-registered agent services and provided features as an add-on with their formation packages for you to check out.

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Determine the Roles of the Partners

A limited partnership consists of two types of partners: general and limited. General partners are responsible for the day-to-day management of the business and have unlimited liability for the partnership’s debts and obligations. Limited partners, on the other hand, are passive investors who don’t participate in the management of the business and have limited liability up to the amount they’ve invested in the partnership.

As you structure your partnership, carefully consider who will take on the roles of general and limited partners. Remember that general partners will have more responsibility and potential liability, so choose those individuals wisely.

Step 3: Drafting the Limited Partnership Agreement

With the partnership structure established, the next step is to draft a limited partnership agreement. This document sets forth the partnership’s terms and conditions and should be carefully crafted to ensure it meets all legal requirements in Oklahoma.

Include Essential Elements

A well-drafted limited partnership agreement should include the following essential elements:

  •  Name of the limited partnership
  •  Purpose of the limited partnership
  •  Duration of the limited partnership
  •  Names and addresses of general and limited partners
  •  Capital contributions of each partner
  •  Allocation of profits and losses
  •  Management and decision-making structure
  •  Process for admitting new partners

Address Optional Elements

In addition to the essential elements, it’s a good idea to address the following optional elements in your limited partnership agreement:

  •   Transfer of partnership interests
  •   Withdrawal or removal of partners
  •   Dissolution and winding up the process

To ensure your limited partnership agreement is legally sound and compliant with Oklahoma laws and regulations, it’s advisable to seek legal advice from a Business Attorney in Oklahoma with experience in limited partnerships.

Step 4: Registering the Limited Partnership

Once your limited partnership agreement is in place, the next step is to register your limited partnership with the Oklahoma government. This process typically involves filing a Certificate of Limited Partnership with the Oklahoma Secretary of State’s office.

Prepare and File the Certificate of Limited Partnership

To file the Certificate of Limited Partnership, complete the required forms, which can typically be found on the Oklahoma Secretary of State. Include all necessary information and signatures, and pay the filing fee of $100.

Obtain an Employer Identification Number (EIN) from the IRS

After registering your limited partnership with the Oklahoma government, you’ll need to obtain Oklahoma Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number is used to identify your partnership for tax purposes and is required for filing federal and state tax returns.

The application of an EIN 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-4 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.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Register For Oklahoma Taxes

Depending on your business activities and location, you may need to register for certain Oklahoma taxes. Check with the Oklahoma Tax Commission or a tax professional to determine which taxes apply to your limited partnership.

Step 5: Complying With Additional Oklahoma Requirements

In addition to registering your limited partnership with the Oklahoma government, there may be other requirements you need to meet to operate your business legally. These may include obtaining business licenses or permits, filing annual reports with the Oklahoma Secretary of State, and maintaining proper records and documentation.

Obtain Any Necessary Business Licenses or Permits.

Depending on the nature of your business, you may need to obtain various licenses or permits from state or local authorities. Check with the Oklahoma Department of Business and Industry or a licensing professional to determine which licenses and permits apply to your limited partnership. However, in Oklahoma, the costs of Oklahoma Business Licenses range from $50 – $300.

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

File Annual Reports 

Oklahoma require limited partnerships to file Annual Reports with the Oklahoma Secretary of State’s office. These reports typically include updated information about the partnership, such as the names and addresses of partners and any changes to the partnership agreement. 

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Maintain Proper Records and Documentation

As a limited partnership, it’s essential to maintain proper records and documentation, including copies of your limited partnership agreement, tax returns, financial statements, and any other relevant documents. These records should be kept in a safe and accessible location and may be required in the event of an audit or legal dispute.

Step 6: Ongoing Management and Compliance

Starting a limited partnership in Oklahoma is the beginning. To ensure the ongoing success of your business, it’s crucial to stay on top of management and compliance tasks. It is better to have regular meetings with your partners to ensure everyone is on the same page regarding the direction and performance of your business. These meetings can also help identify and address issues or concerns before they become more significant problems.

As a limited partnership, you must file annual tax returns and pay any required taxes at the federal and state levels. Consult with a tax professional to ensure you comply with all tax laws and deadlines.

Advantages of Limited Partnerships in Oklahoma

Here are some key advantages of forming a limited partnership in Oklahoma:

  • Limited Liability for Limited Partners: One of the main benefits of a limited partnership is that limited partners enjoy limited liability protection. This means their assets are generally not at risk for the partnership’s debts and obligations beyond their investment in the partnership. This limited liability can be attractive for investors who want to participate in a business venture without taking on the same level of risk as general partners.
  • Pass-through Taxation: Limited partnerships are typically subject to pass-through taxation, meaning the partnership’s profits and losses flow to the partners’ individual tax returns. This structure avoids double taxation, as the partnership is generally not subject to federal income tax. Instead, each partner is responsible for paying taxes on their share of the partnership’s income at their individual tax rate.
  • Flexibility: A limited partnership allows for flexibility in the management structure. General partners have the authority to make decisions and manage the business, while limited partners can remain passive investors. This division of responsibilities and decision-making power can appeal to both parties. It allows general partners to maintain control over the business operations and limited partners to invest without being involved in day-to-day management.
  • Ease of Formation: A limited partnership is typically less complicated and expensive than a corporation. Limited partnerships generally require filing a Certificate of Limited Partnership with the state and creating a limited partnership agreement, which is less complex than the documentation required for a corporation.
  • Attracting Capital: Limited partnerships can attract capital from investors who want to participate in a business venture without taking on the responsibilities and risks of being a general partner. This structure can help businesses secure funding while allowing limited partners to benefit from the partnership’s profits.
  • Continuity of the Partnership: In Oklahoma, limited partnerships can continue to exist even if one of the general partners dies, withdraws, or is replaced, as long as there is at least one remaining general partner. This continuity can provide stability and help ensure the ongoing success of the partnership.

Can a Foreign Limited Partnership Do Business in Oklahoma?

Yes, a foreign Limited Partnership can do business in Oklahoma by registering as a foreign LP with the Oklahoma Secretary of State or appropriate state agency. The foreign LP must provide a certificate of good standing from its home state and pay any required registration fees.

What are the Tax Implications of Forming a Limited Partnership in Oklahoma?

Limited Partnerships are generally considered pass-through entities for tax purposes, meaning that the profits and losses of the business are passed through to the individual partners, who report them on their personal income tax returns. However, specific tax implications may vary depending on the state and the nature of your business. It is recommended to consult with a tax professional to determine your specific tax obligations.

FAQs

What is a limited partnership?
A limited partnership is a type of business structure where there are at least two owners, including limited partners who contribute capital but don’t actively participate in management, and a general partner who runs the business and is personally liable.
How do I start a limited partnership in Oklahoma?
To start a limited partnership in Oklahoma, you need to file a Certificate of Limited Partnership with the Oklahoma Secretary of State and pay the required fee.
How much does it cost to start a limited partnership in Oklahoma?
The fee to file a Certificate of Limited Partnership in Oklahoma is $100.
How many people do I need to start a limited partnership in Oklahoma?
You need at least two people to start a limited partnership in Oklahoma.
Do I need a lawyer to start a limited partnership in Oklahoma?
It’s not required to hire a lawyer to start a limited partnership in Oklahoma, but it’s recommended to seek legal advice when drafting partnership agreements.
What is the minimum capital requirement for a limited partnership in Oklahoma?
There is no minimum capital requirement for a limited partnership in Oklahoma.
Who can be a general partner in an Oklahoma limited partnership?
Anyone can be a general partner in an Oklahoma limited partnership, including individuals, corporations, and other limited partnerships.
Is there a residency requirement to start a limited partnership in Oklahoma?
There is no residency requirement to start a limited partnership in Oklahoma.
Do I need to register my Oklahoma limited partnership with any other state agencies?
No, you only need to file your Certificate of Limited Partnership with the Oklahoma Secretary of State.
How do I register my limited partnership name in Oklahoma?
You can register your limited partnership name in Oklahoma by searching the Oklahoma Secretary of State’s website to make sure it’s not already taken, and then including it on your Certificate of Limited Partnership.
How can I change my limited partnership’s name in Oklahoma?
To change your limited partnership’s name in Oklahoma, you need to file a Certificate of Amendment with the Oklahoma Secretary of State and pay the required fee.
How long does it take to form a limited partnership in Oklahoma?
It typically takes around seven business days for the Oklahoma Secretary of State to process a Certificate of Limited Partnership.
Can a limited partner also be a general partner in an Oklahoma limited partnership?
Yes, a limited partner can also be a general partner in an Oklahoma limited partnership.
What are the tax implications of forming a limited partnership in Oklahoma?
Limited partnerships don’t pay federal income tax, but instead pass through profits and losses to partners, who report them on their personal tax returns.
Do limited partnerships in Oklahoma need to file annual reports?
Yes, limited partnerships in Oklahoma need to file an Annual Certificate with the Oklahoma Secretary of State and pay the required fee.
Can I convert my business into a limited partnership in Oklahoma?
Yes, it’s possible to convert an existing business into a limited partnership in Oklahoma by filing a Certificate of Conversion with the Secretary of State.
Can I register my limited partnership online in Oklahoma?
Yes, you can file your Certificate of Limited Partnership online through the Oklahoma Secretary of State’s website.
Can a limited partnership terminate in Oklahoma?
Yes, a limited partnership can voluntarily withdraw from the state of Oklahoma by filing a Certificate of Termination with the Secretary of State.
Do limited partners in Oklahoma have liability protection?
Yes, limited partners in Oklahoma have liability protection, which means they’re not personally responsible for the partnership’s debts and liabilities beyond their initial investment.
Can a limited partnership in Oklahoma have an unlimited number of general partners?
Yes, a limited partnership in Oklahoma can have an unlimited number of general partners.
Do I need to obtain any licenses or permits to run a limited partnership in Oklahoma?
You may need to obtain licenses or permits depending on the type of business you’re running, but there are no specific licenses or permits required for a limited partnership in Oklahoma.
How do I dissolve a limited partnership in Oklahoma?
To dissolve a limited partnership in Oklahoma, you need to file a Certificate of Termination with the Secretary of State and pay all outstanding fees.
Does Oklahoma law require limited partnerships to have written partnership agreements?
No, it’s not required by Oklahoma law to have a written partnership agreement, but it’s recommended to avoid potential disputes.
Can limited partners receive salaries for their work in an Oklahoma limited partnership?
No, limited partners cannot receive salaries for their work in an Oklahoma limited partnership.
Can an out-of-state limited partnership do business in Oklahoma?
Yes, an out-of-state limited partnership can do business in Oklahoma, but it will need to register with the state and may need to obtain additional permits and licenses.
Should I form a limited partnership or a limited liability partnership in Oklahoma?
The decision between forming a limited partnership or a limited liability partnership in Oklahoma will depend on your specific business needs and preferences.
What’s the difference between a general partner and a limited partner in Oklahoma?
General partners in an Oklahoma limited partnership have unlimited liability for the partnership’s debts and management responsibilities, whereas limited partners have limited liability and can only contribute capital.
What’s the difference between a general partnership and a limited partnership in Oklahoma?
In a general partnership, all partners have unlimited liability for the business and are actively involved in management, whereas in a limited partnership, there are at least two owners, and limited partners only contribute capital and are not involved in management.
What is the minimum number of partners required for an Oklahoma limited partnership?
An Oklahoma limited partnership must have at least one general partner and one limited partner.
What is the liability of a limited partner in an Oklahoma limited partnership?
A limited partner in an Oklahoma limited partnership has limited liability. The maximum amount they can lose is the amount of their investment.
How is an Oklahoma limited partnership taxed?
An Oklahoma limited partnership is taxed as a pass-through entity, meaning that the partnership itself does not pay tax, but instead, the profits or losses are passed through to the partners and they pay tax on their individual tax returns.
Is there a fee for filing a Certificate of Limited Partnership in Oklahoma?
Yes, there is a fee for filing a Certificate of Limited Partnership in Oklahoma. The fee varies depending on the amount of capital invested in the partnership.
How long does it take to form an Oklahoma limited partnership?
The time it takes to form an Oklahoma limited partnership varies. It can take anywhere from a few days to a few weeks depending on the workload of the Oklahoma Secretary of State’s office.
Can I change the name of my Oklahoma limited partnership after it’s been formed?
Yes, the name of an Oklahoma limited partnership can be changed by filing an Amended Certificate of Limited Partnership with the Oklahoma Secretary of State.
What are the advantages of a limited partnership in Oklahoma?
The advantages of a limited partnership in Oklahoma are that the general partner(s) can have full management control while the limited partner(s) enjoy limited liability and ownership without direct responsibility for the business.
Are there any disadvantages to forming an Oklahoma limited partnership?
One disadvantage of forming an Oklahoma limited partnership is that the general partner(s) can be held personally responsible for any debts incurred by the partnership.
Can a limited partner serve as a general partner in an Oklahoma limited partnership?
No, a limited partner cannot serve as a general partner in an Oklahoma limited partnership without losing their limited liability protection.
Must the duration of an Oklahoma limited partnership be stated in the Certificate of Limited Partnership?
Yes, the duration of an Oklahoma limited partnership must be stated in the Certificate of Limited Partnership.
Do I need a lawyer to form an Oklahoma limited partnership?
No, you do not need a lawyer to form an Oklahoma limited partnership, but it’s recommended that you seek legal advice before proceeding.
Do I need to file an annual report to maintain my Oklahoma limited partnership?
Yes, an annual report must be filed with the Oklahoma Secretary of State to maintain your Oklahoma limited partnership.
Can an Oklahoma limited partnership be dissolved?
Yes, an Oklahoma limited partnership can be dissolved by filing a Certificate of Cancellation with the Oklahoma Secretary of State.
Can a limited partnership have only limited partners?
No, an Oklahoma limited partnership must have at least one general partner to manage the business operations.
Are there any residency requirements for the partners of an Oklahoma limited partnership?
No, there are no residency requirements for the partners of an Oklahoma limited partnership.
Can I convert my existing business to an Oklahoma limited partnership?
Yes, an existing business can be converted to an Oklahoma limited partnership by filing a Certificate of Conversion with the Oklahoma Secretary of State.
Can I add more partners to my Oklahoma limited partnership after it’s been formed?
Yes, more partners can be added to an Oklahoma limited partnership after it’s been formed by filing an Amended Certificate of Limited Partnership with the Oklahoma Secretary of State.
Can I withdraw from an Oklahoma limited partnership?
Yes, a partner can be withdrawn from an Oklahoma limited partnership, but it requires a written notice to the partnership and the other partners.
How do I get an EIN for my Oklahoma limited partnership?
The EIN for an Oklahoma limited partnership can be obtained from the Internal Revenue Service (IRS) website.
Can I change the distribution of profits in my Oklahoma limited partnership?
Yes, the distribution of profits in an Oklahoma limited partnership can be changed by writing up a new agreement between the partners and filing it with the Oklahoma Secretary of State.
How do I find out if a name is available for my Oklahoma limited partnership?
You can check the availability of a name for your Oklahoma limited partnership on the Oklahoma Secretary of State’s website.
Can an Oklahoma limited partnership be converted to a corporation?
Yes, an Oklahoma limited partnership can be converted to a corporation by filing a Certificate of Conversion with the Oklahoma Secretary of State.
How do I dissolve an Oklahoma limited partnership?
An Oklahoma limited partnership can be dissolved by filing a Certificate of Cancellation with the Oklahoma Secretary of State.
Can an Oklahoma limited partnership have foreign partners?
Yes, an Oklahoma limited partnership can have foreign partners.
How do I register my Oklahoma limited partnership for state taxes?
You can register your Oklahoma limited partnership for state taxes with the Oklahoma Tax Commission after you’ve filed your Certificate of Limited Partnership.

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Conclusion

Starting a limited partnership in Oklahoma can be a rewarding experience, providing you with the benefits of limited liability protection for passive investors and the opportunity to manage your business actively. By following the steps outlined in this article and staying on top of ongoing management and compliance tasks, you can establish a successful limited partnership and enjoy the benefits of this unique business structure.

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