When it comes to choosing the right state for forming a Limited Liability Company (LLC), factors such as tax implications, legal frameworks, and the overall business environment play a crucial role in decision-making.
In this comparison, we’ll explore the differences and similarities between Delaware and Oklahoma as states for LLC formation.
The state of Delaware is renowned for its business-friendly legal system and privacy protections, while Oklahoma offers its own advantages as a place for starting and running an LLC.
Delaware vs. Oklahoma LLC
Delaware
Business-Friendly Legal System
Delaware is well-known for its business-friendly legal environment.
The state has a long history of corporate law expertise and a specialized court, the Court of Chancery, which handles corporate disputes.
Its legal system provides a high level of predictability and consistency for businesses.
Privacy Protections
Delaware offers a significant degree of privacy for LLC owners.
The state does not require the disclosure of member names and addresses in public filings, providing anonymity to LLC members.
This privacy can be advantageous for those who value confidentiality in their business dealings.
Oklahoma LLC
Low Operating Costs
Oklahoma is often recognized for its low operating costs, which can be advantageous for small and medium-sized businesses.
The state offers affordable real estate, a cost-effective labor force, and competitive utility costs, contributing to overall cost savings.
Strong Economic Diversification
Oklahoma has a diverse economy, including energy, aerospace, agriculture, and manufacturing sectors.
This diversification can provide opportunities for a wide range of businesses to thrive and tap into various industries.
| Delaware LLC | Oklahoma LLC |
|---|---|
| Delaware has a well-established legal system, including a specialized Court of Chancery, known for corporate expertise. | Oklahoma has business-friendly environment, legal system is not as specialized in corporate law as Delaware’s. |
| It offers a high level of privacy by not requiring the disclosure of member names and addresses in public filings. | It has standard disclosure requirements for LLC members, offering less privacy compared to Delaware. |
| Delaware has a progressive state income tax system with rates ranging from 2.20% to 6.60%, affecting both residents and non-residents. | Oklahoma’s state income tax system is also progressive but generally has lower rates, ranging from 0.25% to 4.75%, impacting residents and non-residents earning income in the state. |
| It is known for not having a state-level sales tax, benefiting businesses and consumers. | It imposes a state sales tax of 4.50%, impacting the cost of goods and services. |
| Delaware has a relatively high corporate income tax rate of 8.70% on businesses operating as C corporations. | Oklahoma imposes a corporate income tax on C corporations with a rate of 4.00%, generally lower than Delaware’s rate. |
| It charges an annual franchise tax of $300, which is a flat fee for LLCs, regardless of income or revenue. | It does not have an annual franchise tax specifically for LLCs, potentially advantageous for businesses with substantial revenue. |
| The initial filing fee for a Delaware LLC is typically around $90, making it an affordable choice for business registration. | Oklahoma charges a reasonable $100 filing fee for LLC formation, which is slightly higher than Delaware’s fee. |
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.
Delaware LLC
Filing Fee
The initial filing fee for a Delaware LLC is typically around $90, making it an affordable choice for business registration.
Annual Franchise Tax
Delaware imposes an annual franchise tax of approximately $300, which is relatively low compared to some other states.
Registered Agent Fee
The annual fee for a registered agent service in Delaware can range from $100 to $300 or more, depending on the provider and services offered.
Oklahoma LLC
Filing Fee
Oklahoma charges a reasonable $100 filing fee for LLC formation, which is slightly higher than Delaware’s fee.
Annual Certificate Fee
To maintain good standing, Oklahoma LLCs are required to pay an annual certificate fee of $25. This fee is lower than Delaware’s annual franchise tax.
Registered Agent Fee
The annual fee for a registered agent service in Delaware can range from $100 to $300 or more, depending on the provider and services offered.
Related Posts:
- Delaware LLC: Cost Breakdown, Pros and Cons, Requirements
- Oklahoma LLC: Cost Breakdown, Pros and Cons, Requirements
Similarities Between Delaware and Oklahoma LLC
Limited Liability Protection
Both Delaware and Oklahoma offer limited liability protection to LLC members.
This means that the personal assets of members are generally protected from the debts and liabilities of the LLC.
Flexible Management Structure
In both states, LLCs have flexibility in structuring their management.
Members can choose to manage the LLC themselves or designate a manager or managers to handle day-to-day operations.
Annual Reporting Requirements
Both states require LLCs to file annual reports or pay annual fees to maintain good standing. Delaware has an annual franchise tax, while Oklahoma has an annual certificate fee.
Tax Flexibility
LLCs in both Delaware and Oklahoma have the flexibility to choose their tax structure.
They can opt to be taxed as pass-through entities, where profits and losses pass through to individual members, or elect corporate taxation if it suits their financial goals better.
Registered Agent Requirement
Both states mandate the appointment of a registered agent with a physical address within the state.
The registered agent receives legal documents and official notices on behalf of the LLC.
Additional Resources:
Steps to Form LLC in Delaware
Choose a unique name for your LLC, following Delaware’s naming requirements.
Designate a registered agent with a physical address in Delaware.
File the Certificate of Formation (Articles of Organization) with the Delaware Division of Corporations, paying the filing fee.
Consider drafting an Operating Agreement, although it’s not mandatory in Delaware.
Obtain an EIN (Employer Identification Number) from the IRS for tax purposes.
File an Annual Report and pay the associated fee to maintain good standing.
Ensure compliance with any required business licenses or permits.
Pay Delaware’s annual franchise tax based on your LLC’s specific circumstances.
Operate your Delaware LLC in accordance with your Operating Agreement and applicable laws.
Steps to Form LLC in Oklahoma
Choose a unique LLC name and verify its availability.
Designate a registered agent with an Oklahoma address.
File the Articles of Organization with the Secretary of State and pay the filing fee.
Create an Operating Agreement (optional but recommended).
Obtain an EIN (Employer Identification Number) from the IRS.
Comply with state and local licensing and permitting requirements.
File the Annual Certificate and pay associated fees to maintain compliance.
Stay updated on ongoing compliance obligations and tax requirements.
Feature Comparisons Between Delaware LLC vs. Oklahoma LLC
Delaware LLC
Business-Friendly Legal Environment
Delaware is renowned for its business-friendly legal system, including a specialized Court of Chancery with expertise in corporate matters.
Privacy Protections
Delaware allows for a high degree of privacy by not requiring the disclosure of member names and addresses in public filings.
Tax Advantages
Delaware does not have a state-level sales tax, making it advantageous for businesses involved in retail and e-commerce but it does have corporate income tax rates.
Oklahoma LLC
Cost-Effective Formation
Oklahoma offers a cost-effective option for LLC formation with a relatively low filing fee of $100.
Reasonable Annual Fee
The annual certificate fee in Oklahoma is $25, which is lower than the annual franchise tax in Delaware.
Diverse Economy
Oklahoma has a diverse economy with strengths in energy, agriculture, aerospace, and manufacturing, providing opportunities for various types of businesses.
Business Environment
Delaware LLC Business Environment
Business-Friendly Legal System
Delaware is renowned for its business-friendly legal environment.
It has a well-established body of corporate law and a specialized court, the Court of Chancery, dedicated to handling corporate disputes.
This legal expertise can be advantageous for businesses facing complex legal issues.
Privacy Protections
Delaware offers a high degree of privacy for LLC owners.
The state doesn’t require the disclosure of member names and addresses in public filings, providing anonymity to LLC members.
Oklahoma LLC Business Environment
Cost-Effective Formation
Oklahoma offers a cost-effective option for LLC formation with a relatively low filing fee and annual certificate fee.
Diverse Economy
Oklahoma has a diverse economy with strengths in energy, agriculture, aerospace, and manufacturing. This diversity can provide opportunities for various types of businesses.
Lower Income Tax
Oklahoma generally has lower state income tax rates for individuals compared to Delaware, which can be advantageous for LLC members.
Read Also:
- 30 Best Business Ideas in Delaware
- 28 Best Business Ideas in Oklahoma
- 50 Good Reasons Why Home State LLC is Preferable
Delaware vs. Oklahoma Taxes
Delaware Taxes
1. State Income Tax
Delaware has a progressive state income tax system with six tax brackets, ranging from 2.2% to 6.6%. This tax applies to individual and business income.
2. Sales Tax
Delaware is known for not having a state sales tax. This makes it an attractive location for retail businesses and consumers, as there is no additional sales tax on purchases.
3. Corporate Income Tax
Delaware levies a corporate income tax with a flat rate of 8.7%. This tax applies to the profits of corporations operating in the state.
4. Franchise Tax
Delaware imposes an annual franchise tax on corporations and LLCs. The franchise tax is calculated based on the entity’s authorized shares or assumed par value capital.
Oklahoma Taxes
1. State Income Tax
Oklahoma has a progressive state income tax system with seven tax brackets.
The rates ranged from 0.25% to 4.75%. Both residents and non-residents who earn income in Oklahoma are subject to state income tax.
2. Sales Tax
Oklahoma has a state sales tax rate of 4.50%, which applies to the sale of most tangible personal property and some services.
3. Property Tax
Property tax rates in Oklahoma vary by county and locality.
The state has a property tax system that includes both real property (land and buildings) and personal property (business equipment and inventory).
4. Corporate Income Tax
Oklahoma levies a corporate income tax on C corporations, with a flat rate of 4.00%.
Flexibility in Rules and Regulations
Delaware LLC
Delaware is renowned for its business-friendly legal environment. It provides a high degree of legal predictability and flexibility in structuring LLCs.
The state’s Court of Chancery specializes in business and corporate law cases, offering expertise and efficiency in handling legal matters.
Delaware’s regulatory requirements are often considered simpler and more straightforward than those of many other states.
The state’s annual franchise tax, while mandatory, is often relatively low, particularly for smaller LLCs.
Delaware provides privacy protections by not requiring the public disclosure of member names in public records.
This level of confidentiality can be appealing to businesses seeking to keep ownership details private.
Oklahoma
Oklahoma may not have the same level of corporate legal expertise as Delaware, it is generally considered business-friendly.
The state government actively seeks to encourage economic development and entrepreneurship.
Oklahoma offers relatively streamlined and simplified regulatory processes for businesses, which can be advantageous for smaller companies and startups.
You can find local chambers of commerce, economic development agencies, and business associations in Oklahoma.
That provides support and resources to businesses, especially those rooted in the local community.
Key Differences Between Delaware and Oklahoma
