Oklahoma LLC Operating Agreement | A Comprehensive Guide


Steve Bennett
Steve Bennett
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Oklahoma Operating Agreement

When forming a Limited Liability Company (LLC) in Oklahoma, one of the most critical steps is creating and executing an LLC Operating Agreement. This legally binding document outlines your LLC’s ownership, management, and operational procedures, ensuring that your business runs smoothly and is protected from potential disputes and legal issues. Although only sometimes required by state law, having a well-drafted operating agreement is essential for an LLC. This article will explore the content and importance of an Operating Agreement in Oklahoma and discuss its key components.

Webinarcare Editorial Team will help you understand the process of having an operating agreement for your Oklahoma business. You must be guided by all the factors gathered in this article.

What is an Operating Agreement?

An operating agreement is a legally binding document that outlines a limited liability company‘s ownership structure, management, and operational procedures (LLC). It governs the internal workings of the LLC and establishes the rights, responsibilities, and obligations of its members (owners) and managers.

This includes details such as rules, regulations, and provisions related to the operation of the LLC. The Operating Agreement serves as a guide for dealing with disagreements, bringing in new members, and managing various situations that may arise while doing business. It delivers clarity and ensures smooth functioning while providing legal protection to businesses.

Although not always required by state law, having a well-drafted operating agreement is essential for an LLC. It helps prevent potential disputes among members, ensures smoother business operations, and provides a clear framework for making decisions and resolving issues. It also helps to establish limited liability protection for the members by demonstrating that the LLC is a separate legal entity with its own rules and procedures.

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Oklahoma LLC Operating Agreement Content

An operating agreement is a legal document detailing the LLC’s organizational structure and operational procedures. It includes forming the LLC, members and ownership, distribution of profit and losses, management structure, meetings and voting procedure, limitation of liability and indemnification, dissolving Oklahoma business, dispute resolution, and amendments and modification.

Article I: Formation of the LLC

The first step in creating an LLC Operating Agreement is to outline the basic information about your LLC, such as:

  • Name of the LLC: Your LLC’s name must include the words “Limited Liability Company” or the abbreviation “LLC” or “L.L.C.” and comply with the Oklahoma LLC naming requirements.
  • Principal Office Address: This is where your LLC’s primary business activities will be conducted.
  • Purpose of the LLC: This section should describe the primary purpose of your LLC and the types of business activities it will engage in.
  • Registered Agent Information: Your Registered Agent is a person or entity designated to receive legal documents on behalf of your LLC. The Registered Agent must have a physical street address in Oklahoma. It’s essential to choose a reliable and responsible Oklahoma Registered Agent, as failure to receive and respond to legal documents can have serious consequences for you to start a business in Oklahoma

You can serve as your Registered Agent, appoint a friend or family member, or hire the Best Oklahoma Registered Agent Services. We reviewed some of the services for you to check out if you still don’t have one.

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Article II: Members and Ownership

This section deals with identifying all the members of the LLC and their ownership percentages. It includes details like names, addresses, and contributions of each member. Details about how increases and decreases in membership are also covered in this section.

  • Initial Members: The names and addresses of each initial member should be listed, along with their respective ownership interests.
  • Ownership Interests: This section should detail each member’s ownership interest percentage.
  • Capital Contributions: Each member’s initial capital contribution to the LLC should be documented, along with any additional contributions that may be required.
  • Additional Members: The agreement should outline the process for admitting new members to the LLC and the rights and responsibilities of these new members.
  • Transfer of Membership Interests: The operating agreement should contain provisions governing the transfer of membership interests, including transfer restrictions and the right of first refusal for existing members.
  • Withdrawal of Members: The process and consequences for members who wish to withdraw from the LLC should be clearly defined. In Oklahoma, there is a definite guideline on How to Remove a Member from your Oklahoma LLC. 

Article III: Distribution of Profits and Losses

This article explains how the LLC profits and losses will be distributed among the members. It can be based on the ownership percentages or a different agreement stipulated by the members. It lays out the process for distribution and any restrictions on those distributions.

  • Allocation of Profits and Losses: The agreement should detail how profits and losses will be allocated among the members, typically based on their own interests.
  • Distributions to Members: The process for distributing profits to members should be outlined, including the timing and manner of distributions.

Article IV: Management Structure

Your LLC Operating Agreement should outline the management structure of your business. This includes

Member-Managed vs. Manager-Managed: You must decide whether your LLC will be managed by its members or appointed managers. This decision will impact the roles and responsibilities of each party.

A Member-Managed LLC is a type of limited liability company (LLC) where the management and day-to-day operations of the business are handled by its members (owners) directly. In a Member-Managed LLC, each member has the authority to make decisions and take actions on behalf of the company, such as entering into contracts, hiring employees, and managing the finances.

This management structure contrasts with a Manager-Managed LLC, where the members appoint one or more managers to oversee the business operations. In a Manager-Managed LLC, the appointed managers have the authority to make decisions and act on behalf of the company. In contrast, the members typically have a more passive role, focusing on high-level decision-making and strategic planning.

Roles and Responsibilities of Members/Managers: The agreement should define the roles and responsibilities of each member or manager, including their duties, decision-making authority, and any limitations on their powers.

Article V: Meetings and Voting Procedures

This article outlines the rules for conducting meetings and voting procedures. It specifies the quorum required for decision-making, how votes are counted, and how members are notified about meetings. It also includes information about special meetings and emergency decisions.

  • Voting Rights and Decision-Making Process: The agreement should outline each member or manager’s voting rights and decision-making for various business matters.
  • Meetings and Notice Requirements: The operating agreement should specify the frequency of meetings, the process for calling special meetings, and the notice requirements for each type of meeting.

Article VI: Limitation of Liability and Indemnification

To protect the personal assets of your LLC’s members and managers, your operating agreement in Oklahoma should address the following:

  • Liability of Members/Managers: The agreement should limit the liability of members and managers for the debts and obligations of the LLC, following Oklahoma law.
  • Indemnification Provisions: The operating agreement should include provisions for indemnifying members and managers for actions taken on behalf of the LLC, as long as those actions are within the scope of their duties and do not involve gross negligence or willful misconduct.
  • Insurance Requirements: The agreement should specify any insurance requirements for your LLC, such as liability or property insurance. Small business insurance helps safeguard your business from financial losses, legal claims, and other unforeseen events. This protection allows entrepreneurs to focus on growing and sustaining their businesses within the Oklahoma economy.

You may check out the Best Small Business Insurance in Oklahoma to learn more about business insurance.

Article VII: Record Keeping and Financial Reporting

This article provides details about the record-keeping and financial auditing procedures. It outlines the importance of keeping accurate and comprehensive records of an LLC’s financial transactions. It also specifies the frequency of financial reporting and distribution to the members.

  • Accounting and Recordkeeping: The operating agreement should outline your Oklahoma LLC’s accounting methods and recordkeeping requirements. Effective financial management is important for the success of your Oklahoma LLC. Establish a reliable accounting system to track income, expenses, and tax obligations. You can manage your finances using spreadsheets, accounting software, or becoming a CPA in Oklahoma.
  • Fiscal Year: The agreement should specify the fiscal year for your LLC, which may be either a calendar year or any 12-month period.
  • Tax Treatment and Filing Requirements: The agreement should specify your LLC’s tax treatment and any required filings with the Oklahoma tax authorities. You should include the filing of the Oklahoma Articles of Organization, annual fees, and other associated fees that need to be filed.

For the initial and final cost for forming your Oklahoma LLC, look up the LLC Cost in Oklahoma for additional information. 

Article VIII: Dissolution and Winding Up

This section outlines the circumstances under which the LLC may be dissolved, such as a unanimous decision by members, legal issues, bankruptcy, or achieving its purpose. It also includes information about how the LLC’s assets will be liquidated and debts paid upon dissolution.

Events Triggering Dissolution: The agreement should list the events that will trigger the dissolution of your LLC, such as the death or withdrawal of a member, a unanimous vote of the members, or a court order. 

Some common events include:

  • A unanimous vote of the members to dissolve the business.
  • The death, resignation, or withdrawal of a member unless the remaining members agree to continue the business.
  • The expiration of a specified period or the completion of a specific purpose, as outlined in the operating agreement.
  • A court order mandating the dissolution of the LLC.

Winding Up Process: The operating agreement should outline the process for winding up the affairs of the LLC, which typically involves:

  • Settling the company’s outstanding debts and obligations.
  • Liquidating the company’s assets.
  • Resolving any pending legal disputes.
  • Preparing and filing final tax returns.

Distribution of Assets: The operating agreement should specify how the LLC’s remaining assets will be distributed among the members upon dissolution, typically in proportion to their ownership interests.

Certificate of Cancellation: After the winding-up process is completed, the LLC may be required to file a certificate of cancellation or articles of dissolution with the Oklahoma Secretary of State to dissolve the company and remove it from its records formally. 

Article IX: Dispute Resolution

This article provides the protocol for handling any disputes arising between LLC members. It can include stipulations for mediation or arbitration in case of any conflicts. The agreement should include a process for resolving member disputes, such as mediation or arbitration.

Article X: Amendments and Modifications

Your LLC Operating Agreement in Oklahoma should include a process for making amendments and modifications, such as:

  • Process for Amending the Operating Agreement: The agreement should outline the process for proposing, considering, and approving amendments to the operating agreement.
  • Required Approval for Amendments: The agreement should specify the percentage of member approval required to amend the operating agreement.

Once your LLC Operating Agreement has been drafted, it should be executed by the initial members or managers and adopted by any additional members who join the LLC.

Role of Registered Agent in LLC Operating Agreement

A Registered Agent is a person or entity designated to receive legal documents and official correspondence on behalf of an LLC. While the primary role of a Registered Agent is to maintain a reliable point of contact for legal matters, some registered agent service providers also offer additional services, such as creating an operating agreement for your LLC. Below are some advantages of having a Registered Agent create an operating agreement for your business:

  • Expertise: A Registered Agent specializing in LLC Formation Services often has extensive knowledge and experience drafting operating agreements. They are familiar with the requirements and best practices for creating a comprehensive and legally compliant operating agreement, which can help protect your business interests and minimize potential disputes among members.
  • State-Specific Requirements: A Registered Agent offering operating agreement services is well-versed in state-specific laws and regulations governing LLCs. They can ensure that your operating agreement complies with the specific requirements of the state in which your LLC is formed, including mandatory provisions and filing requirements.
  • Time-Saving: Drafting an operating agreement in Oklahoma can be complex and time-consuming, especially for business owners unfamiliar with legal terminology and procedures. By delegating this task to a Registered Agent, you can save time and focus on other crucial aspects of your business.
  • Customization: A Registered Agent with experience creating operating agreements can tailor the document to meet your business’s unique needs and circumstances. They can help you address specific management structures, financial arrangements, and other critical aspects of your LLC that may not be covered in a generic operating agreement template.
  • Ongoing Support: The Registered Agent services provide ongoing support and guidance in maintaining and updating your operating agreement as your business grows and evolves. This can help ensure that your operating agreement remains relevant and compliant with changing laws and regulations.

While there are advantages to having a Registered Agent create an operating agreement for your LLC, it is essential to carefully review and understand the terms of the agreement before signing. Additionally, it is a good idea to consult with legal and tax professionals to ensure that the operating agreement aligns with your business goals and complies with all applicable laws and regulations.

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FAQs

What is the role of an LLC operating agreement in Oklahoma?
An LLC operating agreement in Oklahoma lays out the rules, regulations, and ownership structure of an LLC.
Are LLC operating agreements required in Oklahoma?
No, it is not legally required to have an LLC operating agreement in Oklahoma, but it is highly recommended.
Who should have an LLC operating agreement in Oklahoma?
Any LLC that has more than one member should have an operating agreement in Oklahoma.
Can a single-member LLC have an operating agreement in Oklahoma?
Yes, even a single-member LLC in Oklahoma can have an operating agreement to lay out its internal rules and regulations.
What should be included in an LLC operating agreement in Oklahoma?
The structure of the LLC, allocation of profits and losses, the voting rights of members and procedures for admitting or removing new members are just a few things that should be included in an LLC operating agreement in Oklahoma.
Is it wise for an Oklahoma LLC to use a template for its operating agreement?
Using a template for an LLC operating agreement in Oklahoma may be convenient, but it may not cover all the unique aspects of your business.
Should an LLC operating agreement be notarized in Oklahoma?
Although not required, it is generally a good practice to have an LLC operating agreement notarized in Oklahoma to have a more formal document.
How often should an LLC operating agreement in Oklahoma be reviewed?
An LLC operating agreement in Oklahoma should be reviewed annually or whenever major changes occur within the business.
Can an LLC in Oklahoma distribute assets without an operating agreement?
Yes, but doing so without an operating agreement may pose a higher risk of legal liability.
What happens if there is a dispute over an Oklahoma LLC operating agreement?
If there are disputes over an LLC operating agreement in Oklahoma, it can be settled through arbitration or litigation.
How do you amend an LLC operating agreement in Oklahoma?
An amendment to an operating agreement can be made by a majority vote of the members of an LLC in Oklahoma.
Is a registered agent required to receive an Oklahoma LLC operating agreement?
No, an LLC may designated an agent to receive legal documents like an operating agreement in Oklahoma.
Are LLC operating agreements public record in Oklahoma?
No, LLC operating agreements are typically internal documents and are not required to be made public in Oklahoma.
Should an Oklahoma LLC revisit its operating agreement before entering into a new business venture?
Yes, it is often a wise idea to revisit an operating agreement in Oklahoma before taking on a new business venture to ensure it is structured correctly.
Who drafts an LLC operating agreement in Oklahoma?
LLC operating agreements can be drafted by any member in Oklahoma, or by legal or financial experts.
Is it mandatory for every member to sign an LLC operating agreement in Oklahoma?
Yes, for an LLC operating agreement in Oklahoma to be effective, all members must sign it.
How do you dissolve an LLC in Oklahoma without an operating agreement?
If an LLC in Oklahoma does not have an operating agreement, it should follow the legal process of dissolving by notifying the state and creditors.
Who is responsible for maintaining an LLC operating agreement in Oklahoma?
The members of the LLC in Oklahoma are responsible for maintaining the operating agreement.
Can an LLC operating agreement in Oklahoma override state law?
No, an LLC operating agreement in Oklahoma cannot override state law.
What is the fee for filing an LLC operating agreement in Oklahoma?
There is no fee to file an LLC operating agreement with the state of Oklahoma.
Can an LLC in Oklahoma operate without an operating agreement?
Yes, an LLC in Oklahoma can legally operate without an operating agreement, but it is not recommended.
Can an LLC change its operating agreement in Oklahoma without notifying members?
No, LLC members in Oklahoma must be notified when operating agreement changes are made.
Do all members have equal voting rights in an LLC operating agreement in Oklahoma?
No, voting rights can be allocated differently in an LLC operating agreement in Oklahoma.
Is the LLC operating agreement the same as bylaws in Oklahoma?
No, an LLC operating agreement and bylaws are two different things and serve different purposes.
Can an LLC in Oklahoma operate without a member-managed operating agreement?
Yes, an LLC in Oklahoma can operate with either a member-managed or manager-managed operating agreement.
Does Oklahoma require any other documents for LLC formation besides an operating agreement?
Oklahoma does not necessarily require any other documents besides the certificate of organization to form an LLC, but it is recommended to have an operating agreement.
Can restrictions be placed on LLC ownership transfer in Oklahoma’s operating agreement?
Yes, members can decide to include specific provisions on ownership transfer in their operating agreement in Oklahoma.
Can an LLC operating agreement in Oklahoma be amended without approval by all members?
No, in most cases, all members of an LLC in Oklahoma must agree to changes in an operating agreement.
What is an LLC operating agreement in Oklahoma?
An LLC operating agreement in Oklahoma is a legal document that describes the ownership structure, members’ rights and responsibilities, and key operational procedures of a Limited Liability Company (LLC) established in the state of Oklahoma.
Do I need to have an operating agreement for my LLC in Oklahoma?
Although Oklahoma state law doesn’t require LLCs to have an operating agreement, having one can be crucial to protect your business’s legal rights and financial interests.
Can I create an LLC operating agreement online in Oklahoma?
Yes, you can find and complete an LLC operating agreement online in Oklahoma, but it’s recommended to hire a local business attorney to make sure the agreement suits your specific needs and meets Oklahoma’s legal requirements.
How is an LLC operating agreement different from articles of organization in Oklahoma?
Articles of organization are the formal documents that establish your LLC as a legal business entity in Oklahoma, while the operating agreement outlines the structure and internal governing of the LLC.
Can I amend an LLC operating agreement in Oklahoma?
Yes, you can amend an LLC operating agreement in Oklahoma as long as all members agree to the changes and the amendment complies with Oklahoma state laws.
Does an LLC operating agreement need to be notarized in Oklahoma?
No, an LLC operating agreement doesn’t need to be notarized in Oklahoma, but all members should sign the agreement to make it legally binding in court.
How many members can an LLC have in Oklahoma?
Oklahoma doesn’t restrict the number of members who can form LLCs, but each LLC must have at least one member.
What are the advantages of having an LLC in Oklahoma?
Some advantages of having an LLC in Oklahoma include personal asset protection, flexibility in ownership structure, pass-through taxation, and simplified business filings.
Can an LLC in Oklahoma choose to be taxed as an S corporation?
Yes, an LLC in Oklahoma can elect to be taxed as an S corporation, provided the LLC has no more than 100 members, and all members are either U.S. citizens or legal residents.
Is there a filing fee when creating an LLC in Oklahoma?
Yes, the filing fee to create an LLC in Oklahoma is currently $100.
Can an LLC in Oklahoma be managed by non-members?
Yes, an LLC in Oklahoma can be manager-managed or member-managed. In manager-managed LLCs, a designated manager makes business decisions and runs the company’s daily operations.
How can I dissolve an LLC in Oklahoma?
You can dissolve an LLC in Oklahoma by filing a Termination Certificate with the state and notifying the appropriate government agencies, employees, and creditors.
Can an LLC in Oklahoma be formed for a specific purpose?
Yes, you can form a single-purpose LLC in Oklahoma that’s designed to operate for a specific business project or investment.
Do members of an LLC in Oklahoma have personal liability for business debts?
Members typically won’t be personally liable for an LLC’s debts and obligations in Oklahoma. However, members could be at risk if they acted outside their LLC roles or didn’t maintain accurate record-keeping.
Can an LLC in Oklahoma hold its annual meeting outside of the state?
Yes, if authorized in the operating agreement, an LLC in Oklahoma could hold its annual meeting outside the state or via electronic communication.
Is it easy to transfer ownership in an LLC in Oklahoma?
Transferring membership interests in an LLC in Oklahoma can be more complicated than for other types of businesses, but the operating agreement should contain provisions that dictate how ownership changes should occur.
What are the member’s right in an LLC operating agreement in Oklahoma?
Members have various rights under an LLC operating agreement in Oklahoma, including the right to manage and control the business, receive profits and distributions, and participate in ownership decisions.
Can outsiders view an LLC’ operating agreement in Oklahoma?
LLC operating Agreements in Oklahoma are typically considered private business records and aren’t public documents. Members can review the agreement but outsiders generally cannot.
What is the difference between a member and a manager in an LLC operating agreement?
Members are company owners, while managers are LLC representatives who oversee the day-to-day operations of a manager-managed LLC.
Is the language in an LLC operating agreement in Oklahoma legally binding?
Yes. Once signed by all members, an LLC operating agreement becomes a legally binding contract enforceable under Oklahoma law.
Are LLCs in Oklahoma required to obtain business licenses and permits to operate?
Yes, LLCs in Oklahoma may be required to obtain specific local or state business licenses, depending on its industry and business operations.
Can an LLC use an assumed name in Oklahoma?
Yes, an LLC in Oklahoma can use assumed names (also called “doing business as” or “DBA” names) as long as they register those names with the Secretary of State.
Do LLCs in Oklahoma have to file annual reports?
Yes, LLCs in Oklahoma must file annual reports with the secretary of state and pay the required fees once a year.
Can an LLC operating agreement restrict the rights of members to sell their ownership interest in Oklahoma?
Yes, an LLC operating agreement in Oklahoma can include stipulations for membership sale, restricting a member’s ability to sell their ownership share or may require that approval is provided by the remaining shareholders before any sale ever takes place.
Can two or more LLCs merge in Oklahoma?
Yes, two or more LLCs in Oklahoma can merge voluntarily in efforts to consolidate their work into the same overall organization configuration.

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Conclusion

Having a well-drafted LLC Operating Agreement in place is crucial for the success and protection of your Oklahoma LLC. It provides a clear framework for the ownership, management, and operation of your business, helping to prevent disputes and ensure compliance with state law. It is highly recommended to consult with legal and tax professionals when drafting and executing your operating agreement to ensure it meets your specific needs and complies with all applicable laws and regulations.

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