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2022 Guide to Starting an LLC in Utah

Utah LLC Quick Facts

Utah LLC Costs

Initial Cost:
– State LLC Filing Fee: $70

 

Recurring Cost:
– Annual Report Filing Fee: $20

Utah LLC Processing Time

– Filing Online: 1-2 business days
– Filing by Mail: 7-10 business days

Not sure about filing an LLC yourself?

Want an LLC, but not sure about filing the paperwork yourself? Let Zenbusiness, IncFile, or IncAuthority help guide you through the LLC formation process, so you know everything was done right.

IncFile and IncAuthority are both currently running a special where you only pay state fees for your LLC formation!

Overview

Guide to Starting an LLC in Utah

Are you interested in starting your own business, but don’t know where to start? Have you looked into LLCs, but are confused by the process? If so, read on for a guide to starting an LLC in Utah. We’ll walk you through the basics of what you need to do to get started, as well as some of the benefits of forming an LLC. Let’s get started!

What is an LLC?

An LLC, or limited liability company, is a type of business entity that offers its owners protection from personal liability for the debts and obligations of the business. LLCs are popular among small businesses and startups because they are relatively easy to establish and offer flexibility in terms of management and ownership structure. For example, unlike corporations, LLCs are not required to have a board of directors or hold annual meetings.

Related: Guide to starting a business in Utah

Steps to Form a Utah LLC

This guide will provide you with all of the information you need to start an LLC in Utah. The process is relatively simple, and with a little guidance, you can have your LLC up and running in no time. We will walk you through the steps involved in setting up your LLC, from initial filing to ongoing maintenance. So, let’s get started!

Total Time: 10 minutes

Step 1: Choose a Name for the LLC

The first step in forming a Utah Limited Liability Company is to make sure the name you want is available.  

It’s critical to do a name search before registering an LLC name, as the name of each LLC must be distinguishable from other entity names registered in the state of Utah. The Department of Commerce makes it easy to search and verify if your LLC name is available.  Here is more information on how to search available Utah LLC names.

In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:
– 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.

Before settling on an LLC name, you may want to do a domain name search to is if a URL is available to match your business name.

Step 2: Appoint a Utah Registered Agent

Every LLC in Utah is required to have a Registered Agent. A Registered Agent will act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.

The basic requirements to be a Registered Agent in Utah include:
– The agent must be a Utah resident at least 18 years of age or a commercial Registered Agent service with a registered office in the state.
– The agent must have a physical address in the state (PO Boxes aren’t allowed).
– The agent must generally be available during normal business hours at the address provided to receive service of process.

Learn more about the requirements for a Registered Agent in Utah

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. Keeping their name private is more important for some entrepreneurs than others, especially when doing business from home or still employed.  Hiring a commercial Registered Agent service like Northwest Registered Agent will help keep the owner’s names from being listed on the state’s website.

Step 3: File the Utah Certificate of Organization

The paperwork to officially create an LLC in Utah is called the Certificate of Organization (called the Articles of Organization in most states). To submit the paperwork, either file online through the Utah Department of Commerce, Division of Corporations and Commercial Code OneStop website or the Utah Certificate of Organization.

Related: How to fill out the Utah Certificate of Organization

When filling out the Certificate of Organization, a few sections and terms can be confusing at first glance. Let’s go over a few of these sections to help get your LLC started right.

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.

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 LLC members can be listed as an organizer.

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.

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

Estimated Cost: 70 USD

Consider using an LLC formation service like Zenbusiness, IncAuthority, Northwest, or IncFile to guide you through the LLC formation process, so you know everything was done right.

IncAuthority and IncFile are currently running a special where you only pay state fees for your LLC formation and they do the rest!

You have a Utah LLC! Now what??

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 is that 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 starting.
  • 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?

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 were formed on February 1, 2022, the first annual report would be due on February 1, 2023.

Related: How to File a Utah LLC Annual Report

Common Questions To Starting An LLC In Utah

How much does it cost to start an LLC in Utah?

The cost to start an LLC in Utah requires filing the Certificate of Organization with the Department of Commerce, which will cost $70.

How long does it take to start an LLC in Utah?

It takes LLCs in Utah 1-2 business days to process online filings, while mailed in forms can take 7-10 business days.

How much does it cost to renew an LLC in Utah?

Each year, LLCs in Utah will submit an annual report and a $20 filing fee to renew with the state.

Do I have to pay to hire a registered agent?

No. Anyone can act as a registered agent, provided they are at least 18 years old, reside in the state of Utah, and are generally available to receive documents during normal business hours.

Does an LLC need a business license in Utah?

It’s sometimes thought that the LLC and business license are the same in Utah, but they aren’t. An LLC is referred to as the business entity, which is how the business is organized to conduct business. A business license is an approval from a government entity to legally operate.

Related: What business licenses are needed in Utah?

What is a Foreign Limited Liability Company?

A foreign LLC isn’t a special type of LLC. Instead, it’s an LLC that was formed in another state (domestic LLC) that wants to physically operate in Utah. Physically operating means having a presence, such as having an office or hiring an employee.

Related: What is the difference between a domestic Utah LLC and a foreign LLC?

What is a Professional Limited Liability Company?

Businesses that require occupational licensing in Utah, such as accountants, architects, veterinarians, etc., can file for a Professional Limited Liability Company (PLLC) instead of an LLC.

Related: What is a Professional Limited Liability Company?

Is an LLC the same as a corporation?

The LLC is one of four main types of business entities. You can learn more about each here:
What is a sole proprietorship?
What is a general partnership?
How to form a Utah corporation

Can you have a single member LLC in Utah?

An LLC in Utah can be operated by one individual or many. An LLC owned by one person is referred to as a single-member LLC.

Should I use an LLC formation service or do it myself?

Following our guide, most people will be able to form an LLC on their own, however, LLC formation services like IncFile and IncAuthority will guide you through the process and guarantee it’s done right – and it doesn’t cost any extra to do so!

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