Choosing the Structure of Your Business or Organization
You may operate your business or organization under any one of several organizational structures.
Each type of structure has certain advantages and disadvantages that should be considered.
You should contact an attorney, accountant, financial advisor, banker, or other business or
legal advisors to determine which form is most suitable for your business or organization.
A Sole Proprietorship is one individual or married couple in business alone.
Sole proprietorships are the most common form of business structure.
This type of business is simple to form and operate, and may enjoy greater
flexibility of management and fewer legal controls. However, the business owner
is personally liable for all debts incurred by the business.
A General Partnership is composed of two or more persons (usually not a married couple)
who agree to contribute money, labor, and/or skill to a business. Each partner shares the profits,
losses, and management of the business, and each partner is personally and equally liable
for debts of the partnership. Formal terms of the partnership are usually contained in a
written partnership agreement.
A Limited Partnership* is composed of one or more general partners and one or more limited partners.
The general partners manage the business and share full in its profits and losses.
Limited partners share in the profits of the business, but their losses are limited to the extent of their
investment. Limited partners are usually not involved in the day-to-day operations of the business.
A Limited Liability Partnership* is similar to a General Partnership except that
normally a partner does not have personal liability for the negligence of another partner.
This business structure is used most commonly by professionals such as accountants and lawyers.
A Corporation* is a more complex business structure. As a chartered legal entity,
a corporation has certain rights, privileges, and liabilities beyond those of an individual.
Doing business as a corporation may yield tax or financial benefits, but these can be offset by
other considerations, such as increased licensing fees or decreased personal control.
Corporations may be formed for profit or nonprofit purposes.
The Limited Liability Company (LLC)* and the Limited Liability Partnership (LLP)* are the
newest forms of business structure in Oklahoma. An LLC or LLP is formed by one or more individuals
or entities through a special written agreement. The agreement details the organization of the
LLC or LLP, including: provisions for management, assignability of interests, and distribution
of profits or losses. Limited liability companies and limited liability partnerships are permitted
to engage in any lawful, for profit business or activity other than banking or insurance.
*Registers with the Secretary of State