The Oklahoma Bar Journal May 2026

qualify for LLC status. No member is liable for debts and liabilities of another LLC member; however, officers may still be liable for trust fund taxes incurred by the business. 4 This means that officers can be sued by the OTC in certain circumstances when taxes are owed by the business. taxes, and each different business can have different filing require ments. The type of tax(es) a busi ness is required to pay depends on 1) the business structure, 2) what types of goods and/or services the business provides and 3) how the business is staffed. The business is required to register an account with the OTC for each tax type. For instance, one business can hold accounts for sales, withholding and mixed beverage tax. From there, a single business can manage each of these tax type accounts through its OkTAP profile. The following are the most common tax types. 5 Income taxes. Taxes paid on net income (after the cost of goods and deductions are taken out). Estimated income taxes may be required quar terly, with tax returns filed annually and payments made throughout the year using estimated tax forms. While it is well-known that Oklahomans are required to file individual income tax (IIT), many do not realize that business entities must also pay income tax (for exam ple, corporate income tax (CIT)). Individual income tax returns typically do not have much bearing on businesses; however, sole propri etors are required to remain current on individual income tax obliga tions for their business to remain in good standing. Self-employment taxes. Social Security tax for self-employed Identifying Tax Types There are numerous types of

licensing costs or reduced per sonal control. Corporations may be organized for either for-profit or nonprofit purposes. In C corporations, income goes to the corporation. Dividends are paid to the stockholders. In Sub S corporations, income is taxed like a partnership. Income and expenses are divided among shareholders who report on indi vidual income tax returns. A Sub S corporation can be formed by filing IRS Form 2553 within 75 days of the creation date. Proponents of the corporation structure enjoy its facilitation of effi cient management, as well as the life of a corporation being perpetual, stockholders have limited liability and that selling stock is relatively simple. There are also some unique constraints under the corporation structure, such as special taxation, higher organization costs, possible limitations on the type of business activities and that it is subject to both state and federal rules. Limited liability company (LLC). A hybrid business structure that combines features of corpo rations and partnerships, offering the advantages of a partnership while providing limited personal liability for its members. Like sole proprietorships, a single person may qualify for LLC status, and like corporations, LLCs are perpet ual. They also offer flexible taxation options, as a one-member LLC is typically taxed as a sole proprietor ship, and an LLC with two or more members is taxed as a partnership. While many business structures have uniform (or very similar) guidelines from state to state, LLCs can vary greatly depending on the state of incorporation. Certain entities – such as nonprofits, banks and insurance companies – cannot

are one and the same, meaning the sole proprietor/business owner is liable for all debts and liabili ties but also entitled to all profits and gains. Sole proprietor filing requirements are also among the most basic of business structures. No separate business income tax return is required because such information would be provided with the sole proprietor/business owner’s individual income tax return. Likewise, the OTC does not require sole proprietors to file an annual report. Partnership. An association of two or more persons carrying on as co-owners of a business for profit. A general partnership involves agreeing with one or more indi viduals to jointly own or share the profits of a business. There is no limit on the number or type of partners (individuals, other part nerships or corporations). A limited partnership consists of one or more general partners (those who are generally liable for the business) and one or more limited partners (those who have limited liability), and it must file organizing documents with the secretary of state. While still relatively simple to organize, a partnership allows for multiple owners as opposed to a sole proprietorship, and its sub structures provide more flexibility in allocating liability between indi viduals and the entity. Attorneys often choose partnership structures for their practices. Corporation. A separate legal entity with rights, privileges and liabilities distinct from those of an individual. Operating as a corpo ration may offer tax or financial advantages; however, these ben efits may be offset by additional considerations, such as higher

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

10 | MAY 2026

THE OKLAHOMA BAR JOURNAL