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Forming an LLC is a smart move for small business owners in Utah as a limited liability company offers flexibility while protecting the business from any liability.
But if you’re unsure where to begin to form your LLC in Utah, don’t worry. In this article, you will find everything you need to know about forming an LLC in Utah, from choosing a name to picking the proper tax structure for your business.
If you want help forming your LLC, ZenBusiness is our top pick for fast and affordable LLC setup, all online.
Step 1: Choose a Name For the LLC
Choosing a name for your LLC is the first step in forming an LLC. When deciding on a name, you must ensure that the name meets all the naming guidelines and rules outlined by the State of Utah. A name that does not meet their requirements can result in your LLC application being rejected.
Here are the Utah LLC naming guidelines:
- The name must be 100% unique and not already registered on the Utah Department of Commerce, Division of Corporations, and Commercial Code. You can search for name availability online on the Utah Business Name Database.
- The name must include the following phrase or abbreviations: Limited Liability Company, Limited Company, LLC, L.L.C, LC, or L.C.
- The name cannot contain words that can be confused with government or military institutions. These are words like FBI, Government, and Treasury.
For a complete list of the naming rules in Utah, see here.
Once you have decided on a name, if you want to be proactive, you should check to ensure that the domain name is available for your chosen business name. The last thing you want to do is to form your business only to find out that your preferred domain name is already taken!
There is also an option of reserving your chosen name with the State if you are not ready to move forward in the LLC formation process but don’t want the name to be used by someone else. The name can be reserved for up to 120 days with the Utah Division of Corporations, for a fee of $22. This form can be submitted by mail or online.
In the state of Utah, LLCs can conduct business under a different name than what was registered. This is known as a fictitious name or an assumed name. To use a fictitious name, you will need to register it through the Utah Department of Commerce for a fee of $22.
Step 2: Appoint a Registered Agent
Utah’s legal requirement requires all LLCs to have an appointed registered agent. A registered agent is either an individual, yourself included, or a business entity authorized to do business in Utah. Your appointed registered agent will essentially be a point of contact to the state, manage government filings, and collect and receive any legal mail on behalf of your business.
Your chosen registered agent must have a physical address, and they must be on-site every day during regular business hours to collect any mail.
Step 3: File the Certificate of Organization
Also known as the Articles of Organization, the Certificate of Organization is what will officially authorize your LLC to operate in Utah. You can submit this form online or by mail with a non-refundable fee of $54.
Submitting online is the easiest method, as you will complete the application on the OneStop Business registration system. If you choose to submit it by mail, you will need to complete the form, the Utah website states it cannot be handwritten, and mail it to the following address:
Utah Division of Corporations & Commercial Code
P.O. Box 146705
Salt Lake City, UT 84114
When completing the Certificate of Organization, there are several things you need to include:
- The name of your LLC
- The physical address of the LLC
- The name and address of your chosen registered agent
- The purpose of your business
- The names and addresses of all managers or members of the LLC
- The end date of the LLC, if applicable
- The signature of the organizer
After submission, the Utah Department of Commerce will review your application and approve or reject it. Once you have gotten the approval, your LLC will essentially become a legal entity.
Step 4: Create an Operating Agreement
Creating an operating agreement in Utah is not a legal requirement but a smart business move. Think of the operating agreement as a user manual for the business. Drawn up by a lawyer or members of the LLC, the operating agreement can consist of everything one would need to know about the LLC. This document can also be used in the case of legal disputes or even as a decision influencer in a courtroom.
There are no set rules about what needs to be included in the operating agreement. However, a good operating agreement should include the following:
- The name and address of the LLC
- All relevant contact details of the members
- The name and contact details of the registered agent
- A brief summary of the information that was provided in the Certificate of Organization
- The purpose of the business
- General day-to-day business procedures
- How profits and losses are divided amongst the members
- Procedures for hiring and firing employees
- Any clauses that you feel are relevant
All members of the LLC should agree with all that is included in the operating agreement and sign the document.
Step 5: Obtain an EIN
An Employer Identity Number, EIN, is a nine-digit number issued by the Internal Revenue Service (IRS) free of charge. This number is used to identify a business for tax purposes. You can apply for your EIN online or by mail.
Having an EIN allows you to open bank accounts for the business, pay and manage taxes, and hire employees.
Although obtaining an EIN is not a requirement for single-member LLCs, it’ll be necessary if you want to hire employees or open a business bank account down the line.
Step 6: File Annual Renewals
All Utah LLCs are required to file an annual renewal, also known as an annual report. The renewal is due each year on the date of your LLC’s registration with the state. To file the annual renewal, you will need to pay a non-refundable $18 fee and file it either online or by mail.
Failure to file an annual renewal in time may result in the State dissolving your LLC, so ensure you adhere to all deadlines.
Cost to Start an LLC in Utah
Compared to several other states, Utah is less costly to start an LLC. Reserving a name will cost you $22, and registering an assumed name will also cost $22. Appointing a registered agent will also cost you money; for most registered agent services, you’re looking at spending between $49 and $300 per year. Finally, the cost to actually register your LLC is $54.
These are just the costs of starting the LLC; you should expect additional costs to be incurred later.
What To Do After Forming Your LLC in Utah
So you’ve received your Certificate of Organization and are a legal business entity! But that’s just the start. A couple of tasks still need to be completed after forming your LLC.
Apply For Relevant Permits
Depending on which category your LLC falls under, you may have to apply for permits before you can start business. The most common permit needed for LLCs in Utah is the seller’s permit – you can apply for one here.
If you are unsure of what permit you might need, Utah’s Division of Occupational and Professional Licensing website has all the necessary information. If you are still unsure, consider consulting an LLC formation service or a business attorney.
Open a Business Bank Account
You will want to separate your personal assets from the business. Opening a bank account for the company is a great way to achieve this. Having a separate bank account will help you keep track of expenses and make tax filings much easier.
Get Legal Advice
Getting sound legal advice means hiring a good business lawyer to ensure that your LLC does not make costly mistakes and that all aspects of the business operate legally.
Hire an Accountant
You can hire an accountant by putting one on your payroll or hiring a third-party accounting firm to help you with your business finances. By hiring an accountant, you will not have to worry about how to file taxes and other monetary concerns. An accountant can help you to avoid costly mistakes that can occur if you overpay on taxes.
How to Keep Your LLC Compliant in Utah
Forming an LLC involves a lot of paperwork, and one of the easiest ways to lose the business is by not keeping it compliant.
Here are several ways you ensure your LLC remains compliant in Utah:
- File the annual renewal before the deadline
- Manage and pay all taxes correctly
- Ensure your licenses and permits are up to date
- Maintain your registered agent
- Conduct business in the manner that was described in the Certificate of Organization
Tax Filing Requirements for LLCs in Utah
There are many other tax filing requirements you will need to keep in mind:
- State income tax – Paid through your personal income tax return
- Sales tax – If you have a seller’s permit, you will need to pay sales tax to the State
- Federal self-employment tax – All earnings that are withdrawn from the LLC by members are taxed at the federal level
- Employee taxes – Only applicable if you have employees that are drawing monthly salaries
Frequently Asked Questions
How long does it take to register an LLC in Utah?
Registering online is the fastest option. The entire process takes up to 2 business days. This includes the time it takes to process the application and issue an approval so that you can start legally conducting business.
Registering by mail takes longer. The processing time is around 3-7 business days. But if you account for the mailing time as well, expect the actual time it takes to register to be about 2-3 weeks.
There is only one expedited service available for mail registration. For an extra $75, the entire process is guaranteed to take 2 business days.
What tax structure should I choose for an LLC in Utah?
In Utah, all single or multi-member LLCs are given by default the pass-through entity tax structure. This tax structure is the most common and the easiest for LLCs. This tax structure means that the LLC itself does not pay state taxes, and the IRS does not recognize the LLC as a taxable entity.
Instead, the members of the LLC will include their earnings in their own personal income tax returns once a year.
Sometimes, it can be advantageous to be taxed as a corporation instead. To understand if this is the right choice, consult a business attorney or accountant to figure out the best tax structure for your specific business.
Should you hire an LLC formation service in Utah?
There is no right or wrong answer to this question. Forming an LLC on your own is not difficult; it just requires a lot of paperwork and organizational skills. Hiring a formation service will help if you have never formed an LLC or would prefer to focus on other aspects of forming a new business.
Filed under: Utah Business Guides