Deciding between forming an LLC in Alabama or Oklahoma can be challenging due to the different regulations, taxes, and costs associated with each state.
Here we will break down the similarities and differences between Alabama vs. Oklahoma LLCs to help you make a decision on what’s best for your business.
Alabama vs. Oklahoma LLC
Formation Process: Alabama and Oklahoma have slightly different requirements and procedures for forming an LLC.
It involves filing Articles of Organization with the respective Secretary of State and paying the required fees.
Taxation and Regulations: Alabama imposes a state income tax on LLCs, while Oklahoma doesn’t have a specific state-level income tax for LLCs but taxes the LLC’s profits on the individual member’s personal income tax.
Business Climate and Opportunities: The business climate, industry presence, and support for entrepreneurship may vary between Alabama and Oklahoma, so it’s important to consider the local economy and opportunities available in each state.
| Alabama LLC | Oklahoma LLC |
|---|---|
| The formation process in Alabama requires a filing fee of $200. | In Oklahoma, the filing fee for LLC formation is $100. |
| Hiring a registered agent in Alabama typically costs between $100 and $300 per year. | The cost of hiring a registered agent in Oklahoma ranges from $50 to $300 per year. |
| Alabama imposes individual income tax rates ranging from 2% to 5%. | Oklahoma does not have a state income tax for individuals or corporations |
| It has a state sales tax rate of 4%, with additional local rates that result in an average combined rate of around 9%. | Its state sales tax rate is 4.5%, and local rates may apply, resulting in an average combined rate of around 8.91%. |
| Alabama’s property tax rates are relatively low and assessed at the county level. | Oklahoma has moderate property tax rates that are assessed at the county level. |
| It is required to pay an annual report fee of $50. | It is subject to an annual certification fee of $25. |
| Alabama is ranked 33rd in terms of ease of doing business | Oklahoma is ranked11th in terms of ease of doing business |
Cost Breakdown of The Two
You may use our free LLC cost calculator by state to find out filing fees, tax percentages, income taxes, and more.
Alabama LLC:
Formation Costs:
The filing fee is $200.
Hiring a registered agent service can cost between $100 and $300 per year.
There may be additional expenses for obtaining business licenses, permits, or professional services like legal or accounting assistance.
Ongoing Costs:
Alabama requires LLCs to file an annual report with a fee of $50.
Oklahoma LLC:
Formation Costs:
The filing fee is $100.
Hiring a registered agent service can cost between $50 and $300 per year.
Similar to Alabama, there may be additional expenses for licenses, permits, or professional services.
Ongoing Costs:
Oklahoma requires LLCs to file an annual certificate with a fee of $25.
Related Posts:
- Alabama LLC: Cost Breakdown, Pros and Cons, Requirements
- Oklahoma LLC: Cost Breakdown, Pros and Cons, Requirements
Similarities Between Alabama and Oklahoma LLC
Both Alabama and Oklahoma provide limited liability protection to members of an LLC.
This means that the personal assets of LLC members are generally protected from the business’s liabilities and debts.
As long as the LLC is properly formed and maintained, members typically have limited personal liability for the company’s obligations.
LLCs in both Alabama and Oklahoma are recognized as separate legal entities from their owners.
This separation allows for distinct rights and responsibilities for the LLC, including the ability to enter contracts, own property, and initiate legal actions.
Both states generally follow the federal tax treatment for LLCs, known as pass-through taxation.
This means that the LLC itself does not pay federal income taxes.
Instead, the profits and losses of the LLC “pass-through” to the individual members, who report them on their personal tax returns.
Alabama and Oklahoma provide flexibility in terms of LLC management. LLCs can be member-managed or manager-managed in both states.
Member-managed LLCs allow all members to participate in the management and decision-making process, while manager-managed LLCs designate specific individuals (managers) to handle the day-to-day operations.
While there may be slight procedural differences, both Alabama and Oklahoma require filing Articles of Organization with the respective Secretary of State’s office to form an LLC.
Additionally, both states have specific requirements for naming the LLC and designating a registered agent.
Additional Resources:
Steps to Form LLC in Alabama
Choose a name for your LLC that complies with Alabama’s naming requirements.
File the Articles of Organization with the Alabama Secretary of State.
Pay the required filing fee, which is currently $200.
Designate a registered agent with a physical address in Alabama to receive legal documents on behalf of the LLC.
Prepare an operating agreement that outlines the internal workings and management structure of the LLC.
Obtain any necessary licenses or permits required for your specific business activities.
File the necessary tax documents with the Alabama Department of Revenue.
Comply with any additional state and local requirements, such as obtaining a local business license or registering for state taxes if applicable.
Steps to Form LLC in Oklahoma
Choose a name for your LLC that complies with Oklahoma’s naming requirements.
Prepare and file the Articles of Organization with the Oklahoma Secretary of State.
Pay the required filing fee, which is currently $100.
Designate a registered agent with a physical address in Oklahoma to receive legal documents on behalf of the LLC.
Create an operating agreement that outlines the internal workings and management structure of the LLC (while not required by law, having an operating agreement is highly recommended).
Obtain any necessary licenses or permits required for your specific business activities.
Register for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS) if you plan to hire employees or have multiple members in the LLC.
Comply with any additional state and local requirements, such as obtaining a local business license or registering for state taxes if applicable.
Feature Comparisons Between Alabama LLC vs. Oklahoma LLC
Formation Process: The process of forming an LLC in both Alabama and Oklahoma follows a similar structure, involving filing Articles of Organization with the respective Secretary of State.
However, there may be slight differences in the specific requirements and forms needed for each state.
Limited Liability Protection: Both Alabama and Oklahoma provide limited liability protection to LLC members, which means that personal assets are generally shielded from business liabilities and debts.
Management Structure: Both states offer flexibility in LLC management. LLCs can be member-managed or manager-managed in both Alabama and Oklahoma.
Member-managed LLCs allow all members to participate in the management and decision-making process, while manager-managed LLCs designate specific individuals (managers) to handle operations.
Taxation: Alabama imposes a state income tax on LLCs, while Oklahoma does not have a specific state-level income tax for LLCs.
Instead, the LLC’s profits are typically passed through to the individual members and subject to personal income tax.
Annual Reporting: Both Alabama and Oklahoma require LLCs to file annual reports or certificates, accompanied by the respective filing fees.
The specific requirements and fees may differ between the two states.
Registered Agent: Both states require LLCs to have a registered agent with a physical address in the state who can receive legal documents on behalf of the LLC.
Operating Agreement: While not legally required in either state, having an operating agreement is highly recommended for both Alabama and Oklahoma LLCs.
This document outlines the internal workings, management structure, and rights and responsibilities of the LLC’s members.
Business Environment
Alabama:
Alabama has a diverse economy with significant sectors such as aerospace, automotive manufacturing, agriculture, healthcare, and technology.
The state has seen growth in industries like automotive production and aerospace engineering.
Alabama offers various resources and programs to support small businesses, including access to capital, training, and mentorship programs.
Alabama has implemented business-friendly policies such as tax incentives, grants, and economic development programs to attract and support businesses.
The state of Alabama has a well-trained workforce, with several universities, technical colleges, and vocational schools providing skilled labor for businesses.
Oklahoma:
Oklahoma’s economy is diverse, with key sectors including oil and gas, agriculture, aerospace, manufacturing, and renewable energy. The state is known for its oil and natural gas production.
Oklahoma offers resources and support for small businesses through organizations like the Oklahoma Small Business Development Center and the Oklahoma Department of Commerce.
Business-Friendly Policies: Oklahoma has implemented business-friendly policies to encourage economic growth, including tax incentives and programs to attract new businesses to the state.
Oklahoma has a skilled workforce, particularly in industries such as energy and aerospace.
The state has several universities and technical schools that offer training programs to support businesses’ workforce needs.
Read Also:
Alabama vs. Oklahoma Taxes
Alabama Taxes:
State income tax with rates ranging from 2% to 5% for individuals and a flat rate of 0.675% for LLCs.
State sales tax of 4%, with additional local taxes, resulting in an average combined rate of around 9%.
Property taxes are relatively low and assessed at the county level.
Oklahoma Taxes:
Oklahoma does not have a state income tax for individuals or corporations
State sales tax of 4.5%, with additional local taxes, resulting in an average combined rate of around 8.91%.
Property taxes are moderate and assessed at the county level.
Flexibility in Rules and Regulations
Alabama:
Business Licensing: Alabama has relatively straightforward processes for obtaining general business licenses and permits, providing some flexibility for businesses to start their operations.
Employment Regulations: Alabama generally has fewer labor regulations compared to some other states, which can provide more flexibility for businesses in terms of employment practices.
Environmental Regulations: Alabama has implemented regulations to protect the environment, but the state also offers flexibility in compliance through programs and initiatives aimed at assisting businesses in meeting environmental standards.
Oklahoma:
Business Licensing: Oklahoma offers a streamlined process for obtaining business licenses and permits, providing some flexibility for businesses to start and operate efficiently.
Employment Regulations: Oklahoma has labor laws and regulations in place to protect workers, but the state also provides some flexibility through provisions such as at-will employment, which allows employers to terminate employees without cause under certain circumstances.
Environmental Regulations: Oklahoma has environmental regulations in place to protect natural resources and ensure sustainable practices.
The state offers some flexibility by providing assistance and resources to businesses in meeting environmental requirements.
Key Differences Between Alabama and Oklahoma- An Overview
