Tax Expert

Since the advent of the limited liability company (LLC) in Oklahoma, most new businesses are no longer being organized under the Oklahoma Corporation Act (as an Inc. or P.C.) but instead are taking advantage of the legal and tax benefits of a limited liability company. The legal protection of an LLC is the same or greater than that of a corporation and there are not the formalities of keeping minutes of board meetings and the record keeping formalities of a corporation. What are the tax advantages to being organized as a limited liability company? One of the major benefits for businesses in Oklahoma is avoidance of the Oklahoma Franchise Tax.

 

Oklahoma taxes corporations at a rate of $1.25 for every $1,000 of capital of the corporation on an annual basis. This tax is calculated on the Oklahoma Franchise Tax form. This tax is in addition to corporate and individual income tax. LLC’s in Oklahoma are not subject to this “excise” tax but instead are subject to a flat $50 annual registration fee. The tax savings of not paying Oklahoma Franchise Tax has convinced many business owners to convert their corporations to an LLC.

 

If your practice is paying too much for taxes, talk to your CPA about whether it makes sense for your company to convert to an LLC. The conversion in Oklahoma must be done by a licensed attorney as it involves a legal conversion of business under Oklahoma law. Your practice can still keep your same employer identification number and name. Your patients and the public will hardly notice the change from P.C. to LLC at the end of your name, but you will notice the change in the amount of taxes you save each year.

 

 

Gretchen Gregg