Starting an LLC in Utah is easily achievable with the right guidance.
As a seasoned business expert, I've witnessed the significance of establishing an LLC.
Collaborating with adept legal professionals, we've streamlined the process for your venture's success.
In this guide, I'll walk you through essential steps and share valuable insights to help you embark on your journey to form an LLC.
Quick Summary
- To form an LLC, you'll need to follow various steps, including selecting a distinctive business name, securing a registered agent, filing articles of organization, and obtaining essential licenses and permits
- Utah-based LLC offers many benefits, including liability for business debts and flexibility in ownership structure
- Compared to corporations, an LLC offers a less formal compliance process. However, it is essential to seek guidance from legal experts to ensure proper adherence to all regulations
Steps to Starting an LLC in Utah
There are several 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 a Utah LLC can be costly and may lead to personal liability for the owners.
1. Choose a Name for Your LLC
Utah LLC formation starts with choosing a business name. If you're looking to start a Utah LLC, 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 [1].
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 the Business Name with the Utah Division of Corporations and Commercial Code [2].
There is a $22 filing fee. Once this procedure is done, your business name will be reserved for the next 120 days.
2. Choose a Utah Registered Agent
Every Utah LLC must have a registered agent or registered agent service. The Utah registered agent handles receiving legal and tax notices on behalf of the company and forwarding them to the appropriate individuals.
Utah 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.
To be a valid registered agent, they must be available during regular business hours, have a Utah street address for mail, and agree to receive service of process.
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.
3. File a Utah LLC 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 [3].
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.
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 operating agreement:
- Name of the professional limited liability company
- 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 to help polish operating agreements.
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 an operating agreement 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.
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.
Be sure to process your EIN after the operating agreement to ensure a smoother business flow.
Federal Employer identification number (federal tax identification number or federal EIN) is a nine-digit number assigned to existing 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, by fax, or by mail.
To apply for an EIN online, visit the Internal Revenue Service 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 [4].
6. Open Your LLC Business Bank Account
Open your LLC business bank account to help your business build its 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 LLC business credit cards is that they help existing 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.
When you're looking for a business credit card, be sure to compare the APR, annual fees, and rewards offered by different cards.
7. Get Business Insurance for Your Utah LLC
Get essential business insurance for your Utah LLC to safeguard against risks. Include general liability, property damage, product liability, and workers' compensation coverage.
Consult an insurance agent to determine additional suitable options for your business entity. Protect yourself and your venture for lasting success.
8. Obtain Utah Business Licenses
A Utah LLC is required to obtain certain LLC licenses to conduct business legally. The most common licenses are a business license and a sales tax permit.
For more information on obtaining these Utah business 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 [5].
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
- Veterinarians
Consider talking to a lawyer for more information about the specific business license requirements.
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 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 website classifies LLCs as pass-through entities, meaning the company's income and expenses are reported on the individual member's 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.
What Is a Utah LLC?
A Utah LLC is a state-authorized business structure with advantages. Combining aspects of corporations and partnerships limits personal liability for owners.
Business and personal assets remain separate, shielding owners from financial debts and claims.
Utah LLCs offer management and taxation flexibility, making them ideal for new businesses with one or multiple owners.
Enjoy tax benefits as they can be taxed as a sole proprietorship, partnership, or corporation.
FAQs
How Much Does It Cost to Trademark a Name in Utah?
Trademarking a name in Utah costs approximately $275, covering the application fee, search report, and registration certificate.
Fees may vary based on complexity and business structure. Consult an IP lawyer for proper filing and brand protection.
How do I add a DBA to my LLC in Utah?
To add a DBA to your Utah LLC, file an assumed name form with the Utah Division of Corporations for a $22 fee. Renew the DBA every three years. Publish the new name in a local newspaper (cost varies).
Can I Act as My Own Registered Agent in Utah?
You can act as your own registered agent in Utah if you're a resident.
Non-residents must find a registered agent in Utah. Ensure a physical address in the state and stay compliant with official correspondence requirements.
How Often Do You Have to Renew Your LLC in Utah?
You must renew your Utah LLC annually through the annual report, due by your registration month's end. Failure to renew leads to administrative dissolution, necessitating a new LLC filing to continue business in Utah.
How Do I Register a Foreign LLC in Utah?
To register a foreign LLC in Utah, file a foreign qualification form with the Division of Corporations and register with the Department of Commerce.
What Is an Entity Number in Utah?
An entity number in Utah is a unique identifier assigned by the Department of Commerce to each business or organization. It is specific to the state and different from EIN or social security numbers.
Starting an LLC in Utah
Opt for an LLC to achieve business security. While the process is simple and affordable, it safeguards against lawsuits and offers tax benefits.
If you have any questions about this important decision or how to start a Limited Liability Company in Utah, feel free to reach out for help from ZenBusiness.
We recommend ZenBusiness for their experience, overall expertise, fast processes, and experienced customer support.
You should put them on the top of your list if you want to create your LLC in minutes starting at $0.
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References:
- https://corporations.utah.gov/searches/
- https://corporations.utah.gov/wp-content/uploads/2021/09/nmreserv.pdf
- https://corporations.utah.gov/business-entities/domestic-limited-liability-company/
- https://www.irs.gov/
- https://dopl.utah.gov/licenses/
