Corporation
Formation

Understanding Corporate Structure

A corporation is a separate legal entity owned by shareholders and managed by a board of directors. Under the Oklahoma General Corporation Act (18 O.S. § 1001 et seq.), this structure provides strong liability protection and is often preferred by businesses seeking outside investment or planning significant growth.

C-Corporation vs. S-Corporation

C-Corporation

The default corporate form. Key characteristics:

• Double taxation – The corporation pays taxes on profits; shareholders pay again on dividends
• Unlimited shareholders – Any number, any type (individuals, entities, foreign investors)
• Multiple stock classes – Common, preferred, voting, non-voting
• Retained earnings – Profits can be reinvested without immediate taxation to shareholders
• Investor-friendly – Venture capital and institutional investors expect C-Corp structure

S-Corporation

A tax election available to qualifying corporations. Characteristics:

• Pass-through taxation – Income flows to shareholders' personal returns, avoiding double taxation
• Maximum 100 shareholders – All must be U.S. citizens or residents
• One class of stock – Limited flexibility in ownership structure
• Salary/distribution planning – Can reduce self-employment taxes compared to sole proprietorship or partnership

The Incorporation Process

1. Choose Your Corporate Name

The name must be distinguishable from other Oklahoma corporations and include a corporate designator (Corporation, Corp., Incorporated, Inc., or Company, Co.).

2. File Articles of Incorporation

This document filed with the Secretary of State creates your corporation. It includes:

• Corporate name
• Registered agent and office
• Authorized shares and par value
• Corporate purpose
• Incorporator information

3. Create Corporate Bylaws

Bylaws are your corporation's operating rules. They address:

• Shareholder meeting procedures
• Director election and duties
• Officer positions and responsibilities
• Voting procedures
• Amendment procedures

4. Organizational Meeting

The initial meeting where directors are elected, bylaws adopted, officers appointed, stock issued, and bank accounts authorized. We prepare all documentation.

5. Issue Stock Certificates

Stock must be properly issued to shareholders with appropriate documentation, including subscription agreements if needed.

6. Obtain EIN and Make Elections

We assist with IRS filings including the EIN application and S-Corp election (Form 2553) if desired.

Maintaining Corporate Protection

Your liability protection only works if you respect the corporate form:

• Hold required annual meetings
• Maintain separate bank accounts
• Document major decisions in writing
• Keep adequate capitalization
• Sign contracts in your corporate capacity
• File annual reports on time

Common Corporation Formation Mistakes

Corporate formation requires attention to detail. Avoid these expensive errors:

• Skipping organizational meeting: Without proper documentation, your corporation may not be legally complete
• Ignoring corporate formalities: Missing annual meetings or commingling funds can "pierce the corporate veil"
• Wrong S-Corp timing: Missing the 75-day window for IRS Form 2553 means waiting until next tax year
• Inadequate capitalization: Underfunding your corporation weakens liability protection
• Generic bylaws: Cookie-cutter bylaws may not fit your business needs or Oklahoma law