Each Business Type Have Different Benefits and Requirements
Video Transcribed: What is the first step in creating an Oklahoma business? I am Ope Adegbuyi, a medical marijuana lawyer in Tulsa. We will be discussing how to create a business in Oklahoma.
There are four steps to creating a business, and in this video, we’ll be talking about step one. And step one is you have to choose your business structure. And so there are different business structures, such as LLCs, corporations, sole ownership, and partnership. However, typically medical marijuana businesses are LLCs or corporations. And so to choose your business structure, you have to file the document that goes with that business structure.
If you choose to be an LLC, you would file the Articles of Organizations with the Secretary of State. And if you choose to be a corporation, you file the Certificate of Incorporation with the Secretary of State.
Now, if you choose to be a corporation, you can be either an S-corp or a C-corp. The C-corp is the regular corporation structure, but the difference between S-corp and C-corp is how you’re taxed. And so if you choose to be an S-corp, you’d have to file the documents, required documents with the IRS.
If you choose to be an S-corp, which means that you are choosing to be taxed only once, which is when profits and some losses are passed through directly to the owner’s personal income without being taxed the corporate tax rates, then you would have to file the S-corp status with the IRS.
To qualify for the S-corp status, the corporation must meet the following requirements. One, it has to be a domestic corporation. That means it has to be an Oklahoma corporation. Two, you have only allowable shareholders. So there are specific types of shareholders that you can have in your business. Three, the shareholders may be individuals or some setting trusts and estates. Four, may not be a partnership corporation or non-resident alien shareholder. That means those are the kind of people, those are the kind of shareholders that you cannot have in your business. And then five, you don’t have more than 100 shareholders. Six, you have only one class of stock. And seven, you are not an ineligible corporation.
So certain financial institutions, insurance companies, and domestic international sales corporations are ineligible corporations. And then if you qualify, you then have to submit Form 2553, Election by Small Business Corporation, signed by all the shareholders in the corporation. And then you would have created an S-corp with the IRS.
So for more information from an Oklahoma marijuana business formation attorney, you can contact me at oklahomamedicalmarijuana.attorney.