Starting a Business in Oklahoma
Oklahoma is consistently ranked as one of the top states in the nation to start a business, as it is currently home to over 300,000 small businesses. It is an especially good place for a startup venture or other small to medium sized business to grow and prosper. This is due to many reasons such as a straightforward regulatory process (except for lagging applications for business licenses), a low tax burden, and an extremely affordable cost of living. Oklahoma businesses can benefit from a slew of different incentive programs that can help facilitate expansion and upward mobility. The most common incentives are those given through tax credits, Sales and Use Tax Exemptions, grant/loan programs, and benefits to companies who reside inside an Oklahoma Growth Zone.
STEPS TO STARTING A BUSINESS IN OKLAHOMAThe Oklahoma Tax Commission regulates tax exemptions and the Oklahoma Secretary of State approves business entity formations. Once you have selected a name for your company and filed for incorporation with the Oklahoma Secretary of State, you can move on to other administrative activities. First, you would want to obtain an EIN. With it you could do things such as open a business bank account and open business credit cards. The next task you would want to handle is registering online for an Oklahoma Sales Tax Permit (Seller’s Permit). This will allow you to collect sales tax from customer and remit it to the correct agency. The final major compliance issue you would have to deal with is making sure you find the correct Business Licenses to operate legally. After applying for an EIN, conducting business license research and filing an online application for Oklahoma business registration, you could move on to other actions. These include record keeping relating to the Oklahoma Packet A, looking up an Oklahoma sales tax rate or paying sales tax. Some of you customers may be located out of state that you ship products or offer taxable services to. If so, this may result in you being deemed a remote seller. You would need to apply for SST streamlined sales tax if you meet certain requirements. After you have completed the various tasks, you can look into benefit incentives. Here are some of the programs offered in Oklahoma to help with expansion:
- The Oklahoma New Jobs Program gives a tax credit to manufacturing companies that make improvements to capital resources or expand the workforce by adding new employment. Either a $500 credit is given for each qualified job or one percent of the capital investment in a project, whichever is greater.
- The most well-known job expansion program in Oklahoma is the Quality Jobs Program. It provides grants that give rebates to businesses that can create new high quality jobs. The amount of reimbursement is equivalent to five percent of payroll. Additionally, a business must add two and a half million dollars in new employee payroll within a few years.
- Oklahoma Sales Tax Exemptions are given to any manufacturing company for equipment or machinery that is used in regular manufacturing operations. Additionally, all materials and parts used to manufacture a final product will be exempt from having sales tax levied on them. Computer equipment purchased for use in operations is also exempt from sales tax. A sales tax license will also be required to qualify for the exemptions.
- Oklahoma offers a tax credit to aerospace businesses that hire qualified engineers. The tax credit which is equivalent to 5% of the engineer’s compensation and an additional 5% if the engineer went to an Oklahoma education school of higher education. If the company paid for the education, then they will be reimbursed for half of the tuition and the engineer will receive a separate tax credit.
- The Oklahoma Enterprise Zone Program gives various benefits to any qualified company located in an opportunity or enterprise area. There is an ad valorem tax exemption given for 6 years instead of 5. The new jobs tax credit is doubled for a company located within a qualified zone. Additionally, there are various loan programs available to a business in a qualified zone.