Starting a limited liability company, or LLC, in Utah is a simple process that can be completed in just a few steps.
An LLC provides business owners with the limited liability protection of a corporation while still offering the tax benefits of a partnership. In this article, we will provide a detailed guide on how to start an LLC in Utah.
We will explain what an LLC is and discuss the different steps involved in setting one up in Utah. We will also explain how LLCs are taxed and highlight some of the benefits of owning one.
What Is a Utah LLC?
A limited liability company in Utah represents a business structure that is authorized by the state and offers a number of benefits.
An LLC combines both corporation and partnership features, which makes it an attractive option for LLC owners who are looking to limit their personal liability.
LLCs keep business assets separate from the personal assets of LLC owners, which means that the owners are not personally responsible for any financial debts or claims against the business.
A Utah limited liability company offers flexibility when it comes to management and taxation, and it can be a good option for a new business with one or multiple owners. There are a number of tax benefits associated with LLCs, and Utah LLCs can be taxed as a sole proprietorship, partnership, or corporation.
Steps to Starting an LLC in Utah
There are a number of steps involved in starting an LLC in Utah before you can conduct business in this state. A business owner should consult with an attorney to make sure they are taking the correct steps in LLC formation. Any mistakes made in the formation of an LLC can be costly and may lead to personal liability for the owners.
Step 1: Choose a Name for Your LLC
Utah LLC formation starts with choosing a business name. If you're looking to start an LLC in Utah, it's important to familiarize yourself with the state's naming requirements.
The name must be unlike any other registered name and cannot include certain restricted words or phrases. You can search the Utah Division of Corporations' database to make sure your desired LLC name is available.
Your business name must include the words "Limited Liability Company" or the abbreviation "LLC." On the other hand, restricted words, such as "bank," "insurance," and "attorney," cannot be used in your LLC name unless you obtain specific business licenses. Forbidden terms include any terms associated with a government agency or financial services.
You should also consider using an appropriate domain name when naming your Utah LLC. A domain name is the web address of your business website. It is important to secure a domain name that accurately reflects your business and is easy for customers to remember.
Once you come up with a suitable LLC name, you can file an Application for Reservation of Business Name with the Utah Division of Corporations & Commercial Code. There is a $22 filing fee. Once this procedure is done, your business name will be reserved for the next 120 days.
Step 2: Choose a Utah Registered Agent
Every LLC in Utah must have a registered agent or registered agent service. The registered agent handles receiving legal and tax notices on behalf of the company and forwarding them to the appropriate individuals.
The registered agent service can be provided by an individual or business entity. If you choose to use an individual, they must reside in Utah. If you choose to use a company, several registered agent services are available in the state.
A registered agent service or a registered agent has to fulfill several criteria in order to be a valid registered agent for a limited company. The registered agent must be available during regular business hours (M-F, typically from 08.00 to 17.00) to receive service of process and must have a Utah street address where they can receive mail.
Your registered agent will have to confirm that they agree to receive service of process on behalf of your company. Their signature and information will have to be provided on the Certificate of Organization.
When choosing a registered agent for your LLC, there are several things to keep in mind. Make sure to research registered agent services thoroughly and ask any questions you may have before selecting one.
Step 3: File Certificate of Organization With the State
A Utah LLC is not a legal entity until the Certificate of Organization is filed with the Utah Department of Commerce.
The document contains information about the LLC's name, registered agent, LLC's principal office address, and purpose. It is important to make sure all Utah Certificate of Organization information is correct, as the state will use it to track the LLC.
The Utah LLC Certificate of Organization can be filed online or by mail with the Utah Division of Corporations & Commercial Code. The filing fee is $70.
Step 4: Make a Utah LLC Operating Agreement
LLC operating agreement is an internal document that contains the rules and regulations of your LLC. This document is not required in Utah, but it's highly recommended. An operating agreement helps prevent disputes between members and provides a road map for the dissolution of the company. It's important to include the following information in your agreement:
- Name of the LLC
- Members' names and addresses
- The percentage of ownership each member has
- How the LLC will be managed
- What happens in the event of a dispute among members
- How profits and losses are divided
- Voting rights and procedures
- When, how, and why the LLC can dissolve.
Operating agreements can be very simple or quite complex, depending on the needs of your LLC. If you're not sure what to include, it's best to consult with an attorney.
You can find a Utah LLC operating agreement template online or from your local legal supply store.
Make sure the template you choose for your operating agreement is specific to Utah and includes all the information mentioned above. Once you have a template, fill it in with the relevant information for your LLC and have all members sign it. This will ensure that everyone is on the same page and knows what to expect from the LLC.
Step 5: Obtain an EIN
Generally, a single-member LLC in Utah is treated as a sole proprietorship, which means it can go by with just an SSN. However, regardless of the number of members, every LLC has to obtain an EIN if it plans to hire employees and open a business bank account.
Employer identification number (federal tax identification number or federal employer identification number) is a nine-digit number assigned to businesses by the Internal Revenue Service. It is also used by individuals who have more than one job or are self-employed.
Limited liability companies in Utah can apply for an EIN online, fax, or mail.
To apply for an EIN online, visit the IRS website and click on "Apply for an Employer Identification Number (EIN)" under "Businesses." You will be directed to a secure application form that you will have to complete.
Step 6: Open Your LLC Bank Account
A business bank account keeps personal, and business expenses separate and can help your business build LLC's credit history. By keeping business and personal finances separate, you protect yourself from any business liabilities.
There are a few options for where to open your LLC's bank account: a traditional bank, credit union, or online-only bank. Whichever option you choose, make sure the institution offers business checking accounts with no monthly fees and low transaction costs.
You'll also want to be sure the bank has a robust online banking platform and offers mobile apps so you can manage your business finances on the go.
One of the best features of business credit cards is that they help businesses build their company's credit history. A good company credit score can open up doors for business financing down the road, such as loans or lines of credit. You can start building your business' credit history by applying for a business credit card that's tied to your LLC's name and EIN number.
When you're looking for a business credit card, be sure to compare the APR, annual fees, and rewards offered by different cards.
Step 7: Get Business Insurance for Your Utah LLC
A successful business lies in protecting yourself and your business from risks. Make sure you have the proper insurance to cover your LLC in Utah.
A few types of insurance are crucial for any business: general liability, property damage, product liability, and workers' compensation.
Depending on the type of business entity you have, you may also need other types of coverage. Be sure to speak with an insurance agent to find out what is best for your LLC.
Step 8: Obtain Business Licenses
A Utah LLC is required to obtain certain licenses in order to conduct business legally. The most common licenses are a business license and a sales tax permit. For more information on obtaining these licenses, don't hesitate to get in touch with your local city or county clerk's office.
The Utah Division of Occupational and Professional Licensing can provide information about state-level permits while the U.S. Small Business Administration handles federal licensing.
If you plan to start a professional Utah LLC, you will probably need professional licenses from the state. The following professions typically require a professional business license in Utah: accountants, architects, engineers, insurance agents, real estate brokers, and veterinarians.
Utah LLC Tax Requirements
Utah state tax commission requires LLCs to collect sales tax on all taxable transactions in the state. This means that any goods or services sold by your company must have the appropriate sales tax charged and remitted to the state.
There are a few exceptions, such as for food and prescription drugs, but most other items are subject to sales tax.
LLCs with employees must also withhold and remit state income tax from employee paychecks. The amount to be withheld is based on the individual's salary and filing status.
Federal taxes are also due on LLC income. The IRS classifies LLCs as pass-through entities, meaning the company's income and expenses are reported on the individual members' tax returns.
Each member is responsible for their own share of the taxes, so make sure to file your return accurately.
The default tax status of a single-member LLC is that of a sole proprietorship. Multi-member LLCs are treated as partnerships for tax purposes. Each business entity can choose to be taxed as a C or S corporation by filing a form with the IRS.
How Do I File an Annual Report for an LLC in Utah?
A Utah LLC annual report must be filed with the Utah Department of Commerce at the end of the month, depending on the LLC's anniversary date. The filing fee for your LLC annual report is $20, and it's submitted online.
The failure to submit an annual report will result in penalties and even the revocation of your LLC's registration. The information you need to provide on your report includes your LLC's name and address, the name and contact information of your registered agent service, a list of the members of your LLC, the names and street addresses of your LLC's managers (if applicable) and the total amount of gross revenue generated by your LLC during the previous year.
How Long Does It Take To Set Up an LLC in Utah?
The registration of your business entity in Utah will generally take about one week.
The Division of Corporations & Commercial Code will process your registration and mail you back a stamped and approved Certificate of Formation. You can opt for an expedite service which shortens the processing time to two business days, for a $75 fee.
How Much Does It Cost to Start an LLC in Utah?
The cost of forming a Utah LLC is $70, which covers the fee for filing the Certificate of Organization with the Utah Division of Corporations & Commercial Code.
However, there are some additional costs individual LLCs might have to cover, such as the cost of a registered agent or having an operating agreement drafted by a professional. Some licenses and permits may also be necessary, so it's important to do your research ahead of time.
How Much Does It Cost to Trademark a Name in Utah?
The cost to trademark a name in Utah is $275 on average. This price includes the application fee, search report, and registration certificate. The cost of the trademark will vary depending on the amount of work that is needed to complete your trademark registration and your business structure.
If you need help filing for a trademark in Utah, contact an experienced intellectual property lawyer. They can help you navigate the process and make sure your application is filed correctly. Trademarking your business name is an important step in protecting your brand and ensuring your business is legally recognized even if you decide to move your LLC to another state.
Can I Change My Registered Agent in Utah?
Yes, you can substitute your registered agent in Utah. You will need to file an LLC Registration Information Change Form to do so.
The filing fee is $15. The file is a simple digital document that you can submit online by checking the box, allowing you to change your registered agent. You will need to provide your new agent's information and deliver the signed document to the Utah Department of Commerce.
How do I add a DBA to my LLC in Utah?
Adding a DBA to your Utah LLC is a relatively simple process. You will need to file an assumed name form with the Utah Division of Corporations. The form can be found on the division's website.
There is a $22 filing fee for this form. Keep in mind that you have to renew your DBA in Utah every three years. After you have filed the DBA form, you will need to publish a notice of your new business name in a local newspaper. The cost of this publication will vary depending on the newspaper.
Can I Act as My Own Registered Agent in Utah?
Yes. You can act as your own Utah registered agent as long as you are a Utah resident. If you are not a resident of the state of Utah, you will need to find an agent that is registered in the state of Utah. If you choose to act as your own registered agent, you should keep a few things in mind.
First, you will need to maintain a physical address in Utah where official mail can be sent. You will also need to keep up-to-date with Utah's registered agent requirements, which include receiving and responding to official correspondence on behalf of your company.
How Often Do You Have to Renew Your LLC in Utah?
Annually. Your LLC renewal is your annual report which is due by the end of the month you registered your LLC.
If you fail to renew your LLC, it will be administratively dissolved by the state, and all of its assets will become the property of the state. You will then have to file a new LLC if you want to continue doing business in Utah.
How Do I Register a Foreign LLC in Utah?
Registering a foreign LLC requires filing a foreign qualification form with the Utah Division of Corporations.
The second step is to register with the Utah Department of Commerce. The Foreign Registration Statement can be downloaded from the Utah Division of Corporations and Commercial Code website. The filing fee for a foreign LLC is $70.
What Is an Entity Number in Utah?
The Department of Commerce, Division of Corporations and Commercial Code assigns an entity number to every business or organization formed in Utah.
This number is unique and remains with the company for its lifetime. This number is not the same as your EIN (employer identification number) or social security number. Entity number is specific to the state where you register your LLC, or, in this case, Utah.
If you're looking for a way to make your business more secure, consider starting an LLC. The process is fairly easy and doesn't take much time or money upfront, but it can provide protection against potential lawsuits in the future as well as help you save taxes down the road.
If you have any questions about this important decision or how to start an LLC in Utah, feel free to reach out for help from a professional.