How to Form an LLC in Utah

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Utah LLC Quick Facts

Utah LLC Costs

Initial LLC Filing Fee – $70

 

Recurring State Fee: Annual Report – $20 Annual Report

LLC Processing Time

It normally takes 7-10 business days for the LLC paperwork to be approved in Utah.

Don’t want to form an LLC by yourself?

Let IncFile or IncAuthority guide you through the LLC formation process, so you know everything was done right. Only pay state fees!

Quick Reference

The Limited Liability Company (LLC) is a popular entity structure for many businesses starting in the state of Utah.  The LLC provides personal liability protection and has the potential to save money on taxes. With our step-by-step guide, you can learn how to form an LLC in Utah without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Costs to Form a Utah LC

To form a Limited Liability Company in Utah, file the Utah LLC Certificate of Organization with the Utah Department of Commerce.  The LLC filing fee is $70 and can be submitted in-person, by mail, or fax.  This form will not be accepted if it is handwritten.  It must be typed.

Approval for the LLC is typically around 7-10 business days.

If you have questions, contact the Utah Department of Commerce, Division of Corporations and Commercial Code.
Phone: 801-983-0275
Email: support@utah.gov

Guide to Forming an LLC in Utah

Forming an LLC can be both affordable and is something most people can do themselves. Entity formation companies like IncFile or IncAuthority help guide you through the process and make sure there are no mistakes.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

Step 1: Name of Limited Liability Company

Enter the name you want for the LLC.  The LLC’s name also has to differ from other entity names registered with the Department of Commerce.  You will want to check on available LLC names in Utah before filing the Certificate of Organization (referred to as the Articles of Organization in some states).

The name of the LLC must also include a designator at the end of the business name and describes what type of business entity it is. Available designators include the following phrases or abbreviations:

  • Limited Liability Company
  • Limited Company
  • Limited Liability Co.
  • Limited Co.
  • Ltd. Liability Company
  • Ltd. Company
  • Ltd. Liability Co.
  • Ltd. Co.
  • L.L.C.
  • LLC
  • L.C.
  • LC

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

Enter the name along with the designator you would like to use and click on “Check Name Availability”  A new page will open, indicating whether the name is available or not.  Even if the search comes back with the name is available, the Department of Commerce’s office will also review it to ensure it isn’t being used by someone else or that it is too similar to another name.

Before settling on a name, you may want to do a domain name search to match your business name and website address.

Step 2: Principal Office Address

In this section, enter the street address, city, state, and zip code of the initial principal office.  This address must be in Utah and can be the LLC’s physical address, or it can be the address where the business records are stored.  You may not use a PO Box for the designated office.

Step 3: Registered Agent

Before forming an LLC in Utah, a Registered Agent must be identified.  The Registered Agent can either be a full-time resident of Utah, a Business Entity, or a Registered Agent service.  If the agent is a business, it must be registered with the Department of Commerce and be in good standing.

The Registered Agent must have a physical address in the state (PO Boxes are not allowed), be available during normal business hours, and act as a point of contact for service of process to receive important legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.

You are not required to pay for a registered agent. Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or are still employed and don’t want their employer to find out.  Hiring a company like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.

Step 4: Signature of Organizer

An LLC Organizer is someone involved with the formation of the Certificate of Organization.  The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but any of the initial members can be listed as an organizer.

Have an organizer sign in step 4 after the form is printed.

Step 5: Name and Address of Members and/or Managers

This is an optional section.  Some people won’t fill in this section since they don’t want the member’s and manager’s names on the public record.  This can sometimes pose a problem when opening an LLC bank account as some banks won’t open an account without a listed member or manager.

The differences between a member-managed and manager-managed LLC:

  • Member-Managed LLCs have an active involvement in the management and have the authority to act on behalf of the LLC.
  • Manager-Managed LLCs are hired by the members to run the LLC, similar to a CEO of a corporation.  This is generally used when there are passive members in the LLC, and the members do not actively manage or operate in the affairs of the business.

Most LLCs are member-managed.

Step 6: Duration

This is another optional section.  Here, you can indicate how long the LLC will remain in existence.  Most LLCs will choose a Perpetual duration; however, some businesses (usually investment-related) will have a specific closure date.

By skipping this section, your LLC will be Perpetual by default.

Step 7: Business Description

Another optional section where you can provide some basic information about what the business does.  Some filers will include an open-ended business purpose saying, “This business will engage in any lawful business activity for which a Limited Liability Company may be organized in Utah.”

Related: How to Answer the Business Description

Step 8: Inclusion of Ownership Information

The next two questions are optional and ask demographic information about whether the LLC is female-owned and/or minority-owned.

Step 9: Pay and File

Pay and file the Certificate of Organization.

Send a copy to:
Utah Division of Corporations and Commercial Code
PO Box 146705
Salt Lake City, UT 84114-6705

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Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a Utah LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Utah operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number or FEIN) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file federal and state taxes, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Occasionally the bank will request a Utah Certificate of Good Standing to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting the business. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Sales Tax License – In order to sell products and certain services, registration for a sales & use tax permit with the Utah State Tax Commission will be needed.

Related: What Business Licenses are Needed in Utah?

Get Business Insurance

Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:

General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.

Related: 7 Types of Insurance Your Business May Need

File Annual Reports

LLCs are required to file an annual report with the Utah Department of Commerce.  The cost of the annual renewal is $20 and is due by the anniversary date of the LLC formation. For example if the LLC was formed February 1, 2021, the first annual report would be due February 1, 2021.

Related: How to File a Utah LLC Annual Report