Oklahoma Corporation advantages and disadvantages

Oklahoma Corporation
Advantages and Disadvantages

Oklahoma Corporation and Asset Protection

Oklahoma Corporation:

Oklahoma Corporation - Articles of Incorporation must be drafted and submitted to the Oklahoma Secretary of State, Corporations Division. Once articles of incorporation have been successfully filed, your Oklahoma Corporation has been formed and this begins its existence as a Oklahoma corporate entity.

Should I form a Oklahoma Corporation?

A corporation, chartered by the state in which it is headquartered, is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of directors to oversee the major policies and decisions. The corporation has a life of its own and does not dissolve when ownership changes.

Advantages and Disadvantages:
Oklahoma Corporation

Advantages of a Corporation

Shareholders have limited liability for the corporation's debts or judgments against the corporations.
Generally, shareholders can only be held accountable for their investment in stock of the company. (Note however, that officers can be held personally liable for their actions, such as the failure to withhold and pay employment taxes.)
Corporations can raise additional funds through the sale of stock.
A corporation may deduct the cost of benefits it provides to officers and employees.
Can elect S Corporation status if certain requirements are met. This election enables company to be taxed similar to a partnership.
A corporation pays 15% federal income tax on taxable income up to $50,000; 25% tax on income from $50,001 - $75,000; 34% tax on income from $75,001 - $100,000; 39% tax on income from $100,001 - $335,000; and 34% tax on income over $335,000.
A sole proprietor who filed a federal income tax return under the status of married, filing jointly, would pay 15% federal income tax on taxable income up to $35,800; 28% tax on income from $35,801 to 86,500; and 31% tax on income over $86,501.

Disadvantages of a Corporation

The process of incorporation requires more time and money than other forms of organization.
Corporations are monitored by federal, state and some local agencies, and as a result may have more paperwork to comply with regulations.
Incorporating may result in higher overall taxes. Dividends paid to shareholders are not deductible form business income, thus this income can be taxed twice.

Federal Tax Forms for Regular or "C" Corporations

Form 1120 or 1120-A: Corporation Income Tax Return
Form 1120-W Estimated Tax for Corporation
Form 8109-B Deposit Coupon
Form 4625 Depreciation

Oklahoma�s Business Tax Climate Ranks 14th

Oklahoma ranks 14th in the State Business Tax Climate Index, which measures the impact on business of five major elements of the tax system: the percentage of income taken by all taxes, the individual income tax rates, the corporate income taxes, the sales tax rate, and the complexity of the tax system. Neighboring states ranked as follows: Kansas (32nd), Colorado (8th), New Mexico (40th), Texas (4th), Arkansas (43rd) and Missouri (11th).

Oklahoma�s State/Local Tax Burden Below National Average

Consistently over the past 14 years, Oklahoma has had a state/local tax burden that was below the national average. Despite peaking at 9.9% in 2001, the state has consistently kept its figure below the national average. Estimated now at 9.2% of income (ranked 39th nationally), Oklahoma�s state/local tax burden percentage is below the national average of 10.0%.

Oklahoma�s Individual Income Tax System:

Oklahoma�s personal income tax system consists of eight brackets and a top rate of 6.65% kicking in at an income level of $10,000. Oklahoma�s top rate of 6.65% is 18th highest among states levying personal income taxes. Oklahoma's 2002 individual income tax collections were $655 per person (23rd highest nationally). 50-State Table of Individual Income Tax Rates

Oklahoma�s Corporate Income Tax Rate and Collections among the Lowest Nationally

Oklahoma�s corporate tax structure consists of simply a flat tax of 6% on all corporate income. This tax ranks the state 10th lowest among states levying corporate income taxes. In 2001, corporate tax collections reached $48 per capita.

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