Small Business Taxes in Oklahoma | Our Essential Guide

Oklahoma Small Business Taxes

Owning and operating a small business in Oklahoma is exciting and fulfilling. However, it also comes with responsibilities, including staying informed about Oklahoma tax laws and ensuring that your Oklahoma business complies with all applicable regulations. If you will start a Limited Liability Company in Oklahoma, this one’s for you! 

This comprehensive guide will walk you through the critical aspects of Small Business Taxes in Oklahoma. Understanding different taxes allows you to make informed decisions that will benefit your business and help you stay on the right side of the law.

Webinarcare Editorial Team will help you easily understand small business taxes in Oklahoma. You must be guided by all the factors gathered in this article.

Small Business Tax Law in Oklahoma

Oklahoma’s small business tax law defines and outlines the tax obligations and exemptions for various businesses, including Limited Liability Companies (LLCs). These laws comprise various taxes that small businesses must comply with for income, sales, payroll, property, and other industry-specific taxes. Each type of tax presents unique implications for small businesses, and navigating through this maze can be quite challenging. Therefore, understanding these taxes in detail is crucial for LLCs as it aids in effective tax planning and helps avoid non-compliance penalties.

LLCs in Oklahoma enjoy certain benefits under the small business tax law. Generally, an LLC is considered a pass-through entity, and its profits are passed directly to its owners, who then report this income on their personal tax returns. This differs from starting a corporation in Oklahoma that faces double taxation on corporate profits and dividends. However, it’s noteworthy that the taxable profit of an LLC is not just the cash the owners take out – it includes the company’s overall profits.

So, appropriate measures must be taken to ensure accurate reporting and minimize tax liabilities as much as possible. Tax laws concerning LLCs often change, and keeping abreast of these updates plays a pivotal role in the successful running of the business. If you are still looking for an LLC service to help you with your taxes, we reviewed these services, including the top features and affordable prices.

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Type of Taxes For Small Businesses in Oklahoma

Starting a business in Oklahoma significantly contributes to the local economy. However, operating such businesses here requires an in-depth understanding of the types of small business taxes. Small businesses must adhere to these taxes’ specific regulations, rates, and filing deadlines to avoid penalties and operational interruptions. These taxes include but are not limited to:

  • Income Tax: Typically, all businesses in Oklahoma must file an income tax return and may need to pay capital gains tax on any profits. The income tax rate in Oklahoma can range from 0.5% – 5% (depending on income).
  • Sales Tax: Businesses in Oklahoma that sell physical products might be required to collect sales tax on transactions and forward it to the Oklahoma government. The sales tax rate in Oklahoma is 4.50%.
  • Payroll Tax: If a business in Oklahoma has employees, it is responsible for withholding payroll taxes from the employee’s wages and transferring them to the relevant tax agency.
  • Property Tax: Businesses that own property in Oklahoma may be subject to a property tax varying from county to county. The property tax rate in Oklahoma is 0.88%.
  • Franchise Tax: Some states, including Oklahoma, may have a franchise tax, which applies to businesses simply for the privilege of operating in that state. Oklahoma does not have a franchise tax for LLCs.
  • Self-Employment Tax: Sole proprietors and freelancers in Oklahoma may be required to pay self-employment taxes, covering social security and Medicare costs.
  • Excise Tax: Some businesses may be liable to pay excise taxes, typically applied to certain goods and services such as alcohol, tobacco, and gasoline.
  • Unemployment Insurance Tax: Employers in Oklahoma might be required to pay unemployment insurance taxes, which fund unemployment benefits for workers who lose their jobs.

Understanding the types of small business taxes in Oklahoma is the first step towards financial transparency. Remember, when you start an LLC, you’re not only launching a business, you’re also taking on a mantle of fiscal responsibility. Stay informed, stay compliant, and contribute to the growth of Oklahoma’s economy.

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Calculate Taxes in Oklahoma

Understanding how to calculate taxes for small businesses in Oklahoma. You will not just fathom the different taxes and how they work but also how you came up with them. Here is how you calculate taxes in Oklahoma.

  • Income Tax: Business income tax is calculated based on the profits reported on your income tax return. The amount of tax due will be based on the tax rate in your specific tax bracket.
  • Sales Tax: To calculate sales tax, multiply the total sales receipts by the sales tax rate in Oklahoma. The sales tax amount should be added to the customer’s price for goods or services.
  • Payroll Tax: Payroll taxes include federal income tax, Social Security, and Medicare taxes. You can use the tax tables or tax calculator provided by the IRS to calculate these taxes. In addition, employers are responsible for paying the Federal Unemployment Tax (FUTA).
  • Property Tax: Property taxes are calculated by multiplying the property’s assessed value by the local property tax rate.
  • Franchise Tax: Franchise tax calculation varies by state. It could be based on your net worth, income, or a flat fee. Consult the Oklahoma Tax Commission for details.
  • Self-Employment Tax: Self-employment tax consists of Social Security and Medicare taxes. To calculate it, multiply your net profit from self-employment by 15.3%.
  • Excise Tax: Excise taxes are usually included in the product’s price, like gasoline or alcohol, and are often levied per unit (like per gallon or bottle) rather than as a price percentage.
  • Unemployment Insurance Tax: These rates vary by state and by the individual employer’s experience rating. The employer’s experience rating is based on the benefits paid to former employees, so new businesses in Oklahoma usually have a relatively low rate.

It is recommended to consult a tax professional to ensure accuracy and compliance with all relevant tax laws.

File and Pay Business Taxes in Oklahoma

The process of filing and paying taxes in Oklahoma can be broken down into several steps. Here is a step-by-step guide on how to go about it:

  1. Gather all relevant documents: Collect all the necessary paperwork, including W-2 forms from your employer(s), 1099 forms for freelance or self-employment income, income statements from banks or financial institutions, and any other relevant receipts or records.
  2. Determine your filing status: Assess your marital status and household situation to determine the appropriate filing status, such as Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Widow(er) with Dependent Child.
  3. Choose a filing method: In Oklahoma, you can file taxes electronically using tax software or prepare a paper return. Electronic filing is generally faster, more convenient, and can minimize errors. You can file your taxes by mail and submit them to the Oklahoma Tax Commission.
  4. Calculate your taxable income: Calculate your total income by adding up all your earnings, including wages, tips, self-employment income, dividends, and interest. Deduct any eligible adjustments and deductions to arrive at your taxable income.
  5. Complete the tax return: Fill out the Oklahoma tax forms electronically or on paper based on your chosen filing method. Take your time to review and double-check the information provided to minimize errors.
  6. Submit your tax return: If filing electronically, follow the instructions provided by the tax software to submit your return electronically. If filing on paper, mail your completed tax return to the Oklahoma Tax Commission. Include any required forms, schedules, and copies of your W-2 or other income statements.
  7. Determine your payment method: Calculate the taxes owed or the refund due. If you owe taxes, there are several payment options available, such as electronically via direct debit or credit card, by mail with a check or money order, or through an electronic funds transfer. Choose the payment method that suits you best.
  8. Pay your taxes: Submit your tax payment by the Oklahoma deadline. Ensure the payment is postmarked by the due date to avoid penalties or interest charges.
  9. Keep copies for your records: Make copies of all documents associated with your tax return, including the completed forms, payment proof, and any supporting documentation. Store these records in a safe place for future reference.

Remember to consult Oklahoma’s official tax website or seek professional advice to ensure compliance with any specific tax regulations or updates in the state.

Small Business Tax Deductions

Tracking and claiming deductions for your Oklahoma small business can significantly reduce your tax burden. Some common deductions available to small businesses in Oklahoma include:

  • Business Expenses: Ordinary and necessary expenses, such as rent, utilities, and office supplies, can be deducted from your income.
  • Depreciation: The cost of business property, such as equipment, vehicles, and buildings, can be deducted over a specified period. Knowing it has tax deductions is better if you plan to create a rental property for your Oklahoma LLC
  • Employee Wages and Benefits: Employees’ salaries, wages, and benefits can be deducted as a business expense. 
  • Business-related Travel and Meals: Expenses incurred while traveling for business purposes or meals consumed during business meetings can be deducted, subject to certain limitations.
  • Home Office Deduction: If you use a portion of your home exclusively for business purposes, you may be able to deduct a portion of your home expenses, such as mortgage interest, property taxes, and utilities.
  • Retirement Plan Contributions: Contributions made to a qualified retirement plan for yourself and your employees can be deducted as a business expense.

Hire a Tax Professional in Oklahoma

Accurate tax filing requires a certain level of expertise. Recognizing this, seeking the services of a good tax professional in Oklahoma can be beneficial for your small business. Hiring a tax professional will safeguard you from possible mistakes and help you maximize your tax savings. Considering their value, selecting the right professional becomes crucial.

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Sanctions For Not Filing Small Business Taxes in Oklahoma

Sanctions and penalties exist for not paying taxes for a small business in Oklahoma. The specific sanctions and penalties can vary depending on the amount owed and the time the taxes remain unpaid. Some common sanctions and penalties for unpaid small business taxes in Oklahoma include:

  • Late payment fees
  • Interest charges on unpaid taxes
  • Revocation of business license
  • Seizure of business assets
  • Legal action, such as wage garnishment or liens on the property.

Paying small business taxes on time and in full is important to avoid these sanctions and penalties. Suppose you are unable to pay your small business taxes. In that case, it is recommended that you contact the Oklahoma Tax Commission or a tax professional to discuss payment options and avoid any penalties.

Where Do I File My Small Business Taxes in Oklahoma?

Small business taxes in Oklahoma can be filed with the Oklahoma Tax Commission or a state-approved online tax filing service. The specific process for filing small business taxes can vary depending on the business entity type and the revenue earned during the tax year. It is recommended that small business owners consult with a tax professional or visit the Oklahoma Tax Commission website for more information on how to file small business taxes in Oklahoma.

FAQs

What is the sales tax rate in Oklahoma?
The sales tax rate in Oklahoma is 4.5%.
How do I apply for a sales tax permit in Oklahoma?
You can apply for a sales tax permit online through the Oklahoma Tax Commission’s website.
What is the corporate franchise tax in Oklahoma?
Oklahoma does not have a corporate franchise tax.
How do I file my state income taxes in Oklahoma?
You can file your state income taxes in Oklahoma online through the Oklahoma Taxpayer Access Point (OKTAP) website.
How do I get a state tax ID number in Oklahoma?
You can get a state tax ID number in Oklahoma by applying for a sales tax permit through the Oklahoma Tax Commission’s website.
What is the excise tax rate in Oklahoma?
The excise tax rate in Oklahoma varies depending on the type of excise tax.
What is the unemployment tax rate in Oklahoma?
The unemployment tax rate in Oklahoma for new employers is 2.5%.
How often do I need to pay sales tax in Oklahoma?
You need to pay sales tax in Oklahoma on a monthly or quarterly basis, depending on your sales volume.
Do I need to pay city sales tax in Oklahoma?
City sales tax is optional in Oklahoma. You will need to check with your city to see if you are required to pay it.
What is the personal income tax rate in Oklahoma?
The personal income tax rate in Oklahoma is 5%.
How do I register my business in Oklahoma?
You can register your business in Oklahoma through the Oklahoma Secretary of State’s website.
How do I file my sales tax return in Oklahoma?
You can file your sales tax return in Oklahoma online through the Taxpayer Access Point (TAP) website.
When is the annual report due for my Oklahoma business?
The annual report for Oklahoma businesses is due by the last day of the anniversary month of the business’s creation.
What types of taxes does Oklahoma impose on businesses?
Oklahoma imposes sales tax, use tax, excise tax, and income tax on businesses.
Do I need to collect sales tax on online sales in Oklahoma?
Yes, you need to collect sales tax on online sales in Oklahoma if the customer is located in Oklahoma.
Can I file my Oklahoma state tax return for free?
Yes, you can file your Oklahoma state tax return for free through the Oklahoma Tax Commission’s website.
How do I get a tax clearance certificate in Oklahoma?
You can get a tax clearance certificate in Oklahoma by contacting the Oklahoma Tax Commission’s Compliance Division.
What is the penalty for not paying sales tax on time in Oklahoma?
The penalty for not paying sales tax on time in Oklahoma is 10% of the unpaid tax plus interest.
How do I update my business’s information with the Oklahoma Tax Commission?
You can update your business’s information with the Oklahoma Tax Commission online through the Taxpayer Access Point (TAP) website.
What is the use tax rate in Oklahoma?
The use tax rate in Oklahoma is the same as the sales tax rate, which is 4.5%.
What is the penalty for not filing my Oklahoma state income tax return on time?
The penalty for not filing your Oklahoma state income tax return on time is 5% of the unpaid tax per month, up to a maximum of 25%.
Does Oklahoma have a homestead tax exemption for small businesses?
No, Oklahoma does not have a homestead tax exemption for small businesses.
How do I request a tax refund in Oklahoma?
You can request a tax refund in Oklahoma by filing a Form 511 or Form 512EZ.
What is the deadline for filing my Oklahoma state income tax return?
The deadline for filing your Oklahoma state income tax return is April 15th, or the 20th day of the fourth month following the end of the tax year for corporations.
How do I pay my Oklahoma state income taxes?
You can pay your Oklahoma state income taxes online through the Oklahoma Taxpayer Access Point (OKTAP) website.
Can I deduct my federal income taxes on my Oklahoma state income tax return?
No, you cannot deduct your federal income taxes on your Oklahoma state income tax return.
How do I calculate the amount of sales tax owed on a purchase in Oklahoma?
To calculate the amount of sales tax owed on a purchase in Oklahoma, multiply the purchase price by the sales tax rate of 4.5%.
How do I close my business with the Oklahoma Tax Commission?
You can close your business with the Oklahoma Tax Commission by submitting a Form BT-263.
What is the minimum gross receipts threshold for paying sales tax in Oklahoma?
The minimum gross receipts threshold for paying sales tax in Oklahoma is $10,000 per year.
What are the small business taxes in Oklahoma?
Small businesses in Oklahoma must pay income tax, tax on business assets, and sales tax.
How do I obtain an Employer Identification Number (EIN) in Oklahoma?
You can obtain an EIN online through the IRS website or by mailing Form SS-4 to the IRS.
Do I need to file for sales tax in Oklahoma?
Yes, if your business collects sales tax from customers then you need to register and file sales tax returns with the Oklahoma Tax Commission.
What is the current corporate income tax rate in Oklahoma?
The current corporate income tax rate in Oklahoma is a flat 6%.
How can I pay my taxes online in Oklahoma?
You can pay your Oklahoma taxes online through the Oklahoma Taxpayer Access Point (OKTAP).
How long does it take to obtain an Oklahoma sales tax permit?
It typically takes around two to three weeks to receive your Oklahoma sales tax permit after submitting your application.
How can I get help with my Oklahoma small business taxes?
Contact the Oklahoma Tax Commission for assistance with your Oklahoma small business taxes.
Is there a penalty for filing my Oklahoma sales tax late?
Yes, there is a penalty for filing Oklahoma sales tax returns late, which is based on the amount of tax owed.
What is the minimum annual tax for corporations in Oklahoma?
The minimum annual tax for corporations in Oklahoma is $25.
What is the due date for filing state income taxes in Oklahoma?
The due date for filing state income taxes in Oklahoma is April 15th.
Where can I find the Oklahoma sales tax rate for my city?
You can find the Oklahoma sales tax rate for your city on the Oklahoma Tax Commission website.
Do I need to collect and remit local sales taxes in Oklahoma?
Yes, Oklahoma requires businesses to collect and remit local sales taxes in addition to state sales taxes.
How can I apply for an Oklahoma sales tax permit?
You can apply for an Oklahoma sales tax permit online through the Oklahoma Tax Commission website.
Does Oklahoma have a franchise tax?
No, Oklahoma does not have a franchise tax.
What is the due date for filing Oklahoma payroll taxes?
Oklahoma payroll taxes must be filed quarterly, with the due date falling on the last day of the month following the end of each quarter.
What is the penalty for failing to file Oklahoma payroll taxes on time?
The penalty for failing to file Oklahoma payroll taxes on time is 5% of the taxes due per month, up to a maximum of 25%.
How can I apply for a filing extension for my Oklahoma income tax return?
You can request an extension for filing your Oklahoma income tax return by filing Form 504-I with the Oklahoma Tax Commission.
Are there any local business taxes in Oklahoma?
Yes, many cities in Oklahoma assess local business taxes.
Are there any tax breaks available to small businesses in Oklahoma?
Yes, Oklahoma offers several tax breaks and incentives to small businesses, such as the Small Employer Quality Jobs Incentive Act.
Can I file my Oklahoma sales tax returns online?
Yes, Oklahoma businesses can file their sales tax returns online through the Oklahoma Tax Commission website.
Are there any free tax clinics for small businesses in Oklahoma?
Yes, the Oklahoma Independent Assurance Association offers free tax help for small businesses.
Does my Oklahoma small business need to collect use tax?
Yes, Oklahoma businesses that purchase items for use in the state without paying sales tax must report and pay use tax on those items.
Does Oklahoma have a flat income tax rate?
No, Oklahoma has a progressive income tax system.
Are there any tax credits available to Oklahoma small businesses that create jobs?
Yes, the Oklahoma Quality Jobs Program provides tax credits to small businesses that create new jobs in the state.
Can I deduct state income tax paid to Oklahoma on my federal tax return?
Yes, Oklahoma state income tax is deductible on your federal tax return.
Are there any tax exemptions for agricultural businesses in Oklahoma?
Yes, Oklahoma provides sales tax exemptions for certain agricultural businesses, such as feed and non-commercial fertilizer sales.
What is the due date for filing Oklahoma sales tax returns?
Oklahoma sales tax returns are due on the 20th of the month following the end of each reporting period.
Can I file my Oklahoma payroll taxes online?
Yes, Oklahoma allows businesses to file their payroll taxes online through the OKTAP system.
Can I claim depreciation on assets used by my Oklahoma small business?
Yes, Oklahoma allows businesses to claim depreciation on assets used in the state.

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Conclusion

Understanding and complying with small business tax laws in Oklahoma is crucial for the success of your business. By staying informed about filing requirements, tax rates, deductions, and credits, you can make informed decisions that will benefit your business and help you avoid potential tax penalties. Consider consulting with a tax professional to ensure your small business fully complies with all applicable tax laws in Oklahoma.

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