Business Law

The legal building blocks of a successful Oklahoma business

When building a house, at least a well-built house, you need a solid foundation, good materials, and someone who knows what they are doing to assemble all the pieces.

A similar principle applies when building an Oklahoma business: You need to have solid component parts and you need to know how the parts fit together.

This post is intended to discuss the items that an Oklahoma business needs to address to build a foundation for success.  Of course, as part of building your new business, you need to assemble a support team, a concept I talk about in this blog post.

The beginning: Organizational Structure
This means fundamental formation:  for a corporation, it means filing your certificate of incorporation with the Oklahoma Secretary of State and for a limited liability company it means filing your articles of organization with the Oklahoma Secretary of State.

Your business’s constitution
 Similar to how a country might have a constitution or a city might have a charter, Oklahoma corporations and limited liability companies have a central governing document: for limited liability companies it is an operating agreement and for a corporation it is bylaws.

Ensuring your business standing is “good”
Once you form your company and enact your constitution, you need to ensure you are taking the very simple steps necessary to remain in good standing with the State of Oklahoma:

If you are a corporation, you need to file a franchise tax return each year (see more about that —> here);

If you are a limited liability company you need to file an annual report (see more about that —> here)

The people running the business
For a corporation, it goes, from the top down, shareholders, members of the board of directors, and officers run the corporation on a day-to-day basis.

For a limited liability company, members (the owners) choose the manager(s) who run the day-to-day operations of the company (unless the LLC is “member-managed).

Note: If you are starting a business with at least one other person, it would be a good idea to consider my blog post The questions you need to ask when starting an Oklahoma business with another person

Contracts
At the core of a successful business are the relationships it has with its employees, customers, and products and services.  For those relationships to be clear and operate efficiently, you need written contracts.  Among other things, a written contract defines the terms of your relationship, the money, and how the relationship ends.

Intellectual Property
Your business’s intellectual property is an asset that is often overlooked or disregarded.  What is intellectual property?  In practical terms, intellectual property is things like your business’s name, its logo, its marketing slogan as well as private and proprietary information that provides your business with an edge over its competitors.  How do you protect your intellectual property? You use the items listed below:

Intellectual property has value just like more tangible assets such as inventory, furniture and fixture and buildings.

Finance
As a means of addressing finances and simply making a wise decision, get a CPA involved with your business.  Not just for doing your taxes, but also for advising you on tax strategy and ensuring you have a sound accounting structure in place.  And if you need financing, consider reading my article I started an Oklahoma business, I need more money . . . what do I do?

Taxes
This category is simple yet eminently important.  Obviously, you need to calculate your taxes, file your returns and pay any tax due (unless you are an Oklahoma limited liability company). The CPA I referenced above should be helpful in all things tax, both Oklahoma tax and the IRS.

 

There will probably be other legal-related issues, both that unfortunately, you can anticipate and those legal issues that you cannot anticipate.  This post is a great start, and  I am available to help with all of your Oklahoma business’s legal issues.  Feel free to email me: sjr@shawnjroberts.com

 

 

Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma limited liability company

Okay, I want to start an Oklahoma business, what do I need to do?

So you decided you are going to start your own business?

Going to be your own boss?

I am sure you are excited and pumped up with the energy that flows from seeing how you can make a positive change in your life.

At some point, you will need to start putting the ideas into execution and that point is where I can help.  I help small business owners get from the conception stage to the operation phase.  Birth through adulthood and independence so to speak.

But where do I start, you are probably asking yourself?

Surprisingly, there are very few legal requirements controlling the start of a business. Sometimes it may be as simple as starting advertising and then providing your service or product when you have customers.  While legally the steps could be few, practically it is wise to plan and prepare to pave the way for success.
 
Below is a post from the Oklahoma Secretary of State that seems helpful to me. I would be telling you similar things so rather than do that, here is a link to the post (https://www.sos.ok.gov/business/infoSB.aspx).
 
This post starts out with the conclusion that you are going to create a corporation or a limited liability company, both being referred to as an “entity.” However, it also touches on other items that are important. Also, here is a link to a post from the Oklahoma Department of Commerce that is helpful in understanding the items to consider when starting your business.
 
One place where I come into the process is to help you set up an entity: either an Oklahoma corporation or Oklahoma limited liability company.  There are several reasons why you want to have an entity own and operate your business.  The most important of which is you want to avoid being individually (i.e,, personally) liable for issues created by your business.  To understand Oklahoma individual liability, check out this blog post.
Posted by Shawn Roberts in Blogposts, Business Law

The Team you need when you start your new Oklahoma Business

People put together teams for purpose of winning football games, building automobiles, and traveling into space, among other things. 

One value of the team is that all team members have different roles, which when brought together provides the organization with a sum greater than its parts.

As an Oklahoma business owner, you need a team as well.  The team brings skills and experience that you likely do not have.  Who are the critical team members for the Oklahoma small business that wants to maximize its efficiency and effectiveness?

Accountant
For a business to be a long-term success, it must properly manage its money and ensure that it complies with all tax laws from the Oklahoma Tax Commission and Internal Revenue Service.  An accountant (a/k/a “CPA”) brings tax knowledge and experience helping businesses comply with all tax laws.

Insurance Agent
No business expects things to go wrong.  However, a prudent business owner knows that things sometimes go wrong anyway, often through no fault of the business owner.  For these situations, insurance is critical.  Not just any “insurance” but insurance coverage that meets your specific business’s liability needs.  This is where an insurance agent comes in:  You can draw on the experience of the insurance agent as to what type of insurance you need and how much coverage you need.

Attorney
Considering who authored this Blog Post, you are probably not surprised that an attorney made the team.  Nonetheless, an Oklahoma attorney is a valuable team member because the attorney brings legal knowledge combined with experience.  The attorney has seen many of the issues small businesses run into, knows the type of documents the business needs and can counsel the business on best practices to avoid legal issues.  The attorney has answers to questions like: What type of legal organization should I be?  How do I protect my business when employees leave?

 

Have you assembled your team?  If not, why not?

Posted by Shawn Roberts in Blogposts, Business Law

The questions you need to ask when starting an Oklahoma business with another person

There is nothing like the excitement of starting a new business.  Even more so when you have a partner, someone to share the experience with. 

Things are probably never as good as when you are infused with the pure adrenaline of seeing your dreams become reality. 

–BUT–

things happen, businesses fail, and even worse sometimes businesses succeed.  When these events happen often the business is closing, an owner wants to leave, or an owner dies.  The time to sort out these situations and to plan for these situations is while things are good and calm, which means at the businesses’ inception.

Consider these questions when you are starting a business with another person:

  • Are you, as an owner, protected from having the liability of the business seep into your personal assets?
  • What if the business gets sued?
  • What if someone quits or is fired?
  • Do you have the proper type and amount of insurance?
  • How do you buy out the person who has left?
  • How much do you pay the heirs of an owner who has died?
  • How do you determine the value of their interest in the entity?

I help people answer these questions and put processes in place to make these circumstances happen as smoothly as possible.  If you would like to talk about these things, please feel free to reach out to me.

Posted by Shawn Roberts in Blogposts, Business Law

What is an Oklahoma Stock Purchase Agreement?

An Oklahoma Stock Purchase Agreement is used when the buyer is going to purchase all of the owner’s interest in the company that owns the business.

For example, if you are buying a restaurant and the restaurant is owned by Smith Corporation, in a stock purchase you would buy all of the outstanding stock of Smith Corporation. By purchasing all of the outstanding stock, you end up stepping into the shoes of the previous owners. That means all assets and liabilities that the previous owners have, you now have except for anything that is expressly excluded in the asset purchase agreement.

Curious about the difference between an Oklahoma Stock Purchase Agreement and an Oklahoma Asset Purchase Agreement?  Check out this post that contains an explanation.

 

Posted by Shawn Roberts in Blogposts, Business Law

What is an Oklahoma Asset Purchase Agreement?

An Oklahoma Asset Purchase Agreement is used when a buyer wants to only purchase specific assets of a business rather than the entire business.

For example, purchasing the restaurant mentioned above through an asset purchase agreement would probably mean purchasing the physical location, the inventory and equipment, goodwill associated with the restaurant, and perhaps other information related to customers. In an asset purchase agreement, the buyer is only responsible for the assets he purchases and the liabilities that come with those assets.

Curious about the difference between an Oklahoma Asset Purchase Agreement and an Oklahoma Stock Purchase Agreement?  Check out this post that contains an explanation.

Posted by Shawn Roberts in Blogposts, Business Law

What is an Oklahoma limited liability company operating agreement?

You have probably heard of limited liability companies or LLCs as they are often referred to. 

You may not have heard about the key constitutional document for an Oklahoma LLC: the Operating Agreement.

An operating agreement is an agreement by the members of the LLC as to how the company will be run.  Among other things, the operating agreement controls:

1. Relations among the members as members and between the members and the limited liability company;
2. The rights and duties under the Oklahoma Limited Liability Company Act of a person in the capacity of manager;
3. The activities of the company and the conduct of those activities; and
4. The means and conditions for amending the operating agreement.

Title 18 O.S. section 2012.2

You can think of an LLC operating agreement as the manual for operating your Oklahoma limited liability company.

Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma limited liability company

What are the bylaws for an Oklahoma corporation?

How do the people who run the corporation (directors, officers) figure out what the rules of an Oklahoma corporation are? 

One source of this information is the Oklahoma corporation’s bylaws.  According to Ms. Merriam-Webster, bylaws are defined as “a rule adopted by an organization chiefly for the government of its members and the regulation of its affairs.”

The bylaws are the corporation’s constitutional documents that among other things, may contain provisions relating to the business of the corporation, the conduct of its affairs, and its rights or powers or the rights or powers of its shareholders, directors, officers or employees.  Title 18 O.S. section 2013. 

Posted by Shawn Roberts in Blogposts, Business Law

Vivid Imagery: The Flow of an Oklahoma Lawsuit

To most people the Oklahoma Court system is a mysterious and complicated place with only “insiders” such as attorneys and judges to understand it.  

The diagram below shows the flow of an Oklahoma lawsuit until it completion in a trial conducted by either a Judge or a Jury.  

This diagram obviously won’t remove all the mystery of the system but hopefully it provides you with a better big picture understanding of the Oklahoma Court system.

 

Posted by Shawn Roberts in Business Law

What is an Oklahoma Buy-Sell Agreement?

You may have heard the term “buy-sell agreement” or maybe the term “Shareholders Agreement.” 

These terms essentially describe the same thing:

An agreement between the people that own a business (either Oklahoma corporation or limited liability company) about how the ownership interest (either shares of stock and units of an LLC) is going to be handled if an owner leaves the business.  An owner may leave a business either voluntarily (think no longer interested in the business, has a better opportunity) or involuntarily (think death or disability).

The buy-sell agreement provides a structure for valuing the ownership interest in the business and then transferring ownership of the interests when a person leaves the company.  If you are interested in reading more about why a buy-sell agreement is critical for Oklahoma businesses, check out the post 3 reasons you need a buy-sell agreement for your Oklahoma small business.

Posted by Shawn Roberts in Blogposts, Business Law