This article originally appeared as a Gavel to Gavel guest column in the Journal Record on September 3, 2025.
By: Stassi M. Vullo
Stassi M. Vullo
Whether it is mowing lawns on the side, selling jewelry online, or using a home or vehicle as a short-term rental, Americans are increasingly venturing into entrepreneurial endeavors and exploring so-called “side hustles.” These activities come with many perks including networking opportunities, much-needed creative outlets, and, fundamentally, additional revenue streams. While this extra financial cushion can provide robust opportunities for a business owner and their family, some newfound entrepreneurs may not realize that performing these side hustles for payment qualifies as operating a business, even if unintentionally. If the unwitting entrepreneur does not take steps to form a specific type of business entity, they will be operating under Oklahoma’s default business type and therefore miss out on some crucial legal protections.
The default business types under Oklahoma law include 1) a sole proprietorship–a business with a single owner–and 2) a general partnership–two or more owners operating the business. A key characteristic of both business types is unlimited personal liability. Personal liability can be potentially detrimental to new business owners and their families because the owners or partners can be held personally responsible for business debts or legal claims, even if such debts or claims are against the business and not the owner in their individual capacity.
To protect their personal assets from business debts and lawsuits, many business owners opt to formally create an entity with the Secretary of State. There are several entity types available, including a Limited Partnership, Limited Liability Partnership, Limited Liability Company, or Corporation, with the most popular choice being the Limited Liability Company (LLC). When a business is structured as an LLC, there is legal separation between the company and its owner(s) (also referred to as “members” of the LLC). Unlike a sole proprietorship or general partnership, this separation generally shields the members’ personal assets from the company’s business debts and lawsuits. Therefore, in the case of a legal dispute, only the LLC’s assets are at risk, rather than the owners’ houses or personal savings accounts. Because members of an LLC are typically only liable up to the amount of their initial investment or contribution to the business, members can explore business ventures with limited risk.
Forming an LLC provides other advantages as well. For example, separating personal and business assets can be especially valuable if the owners decide to take on additional investors or sell the company. Additionally, LLCs offer flexible management, allowing members to tailor the governing documents to their unique needs, including how profits and losses are allocated and how voting rights are divided by and among members and managers.
In a time of expanding business potential, the possibilities are vast, but so is the risk if you don’t choose the right entity structure. A qualified business attorney can help you select the entity type that best fits your goals and ensure you are set up for long-term success with the proper legal and financial protections. Whether you’re perfecting lawn stripes, engraving necklaces, or renting out your home or car, make sure you’re doing it in a way that keeps both you and your business protected.
About the author:
Stassi M. Vullo is an attorney who represents individuals and both privately held and public companies in a wide range of business law, real estate, and employment matters.
CONTACT: smvullo@phillipsmurrah.com | 405.606.4782
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