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Forming an LLC in Utah

You are interested in forming a Utah Limited Liability Company. A Limited Liability Company (LLC) is a business entity that many small businesses choose as a way to organize themselves when they are just getting started. An LLC has a few advantages for small businesses but may not be appropriate for larger ventures or startups that are seeking investors. In addition, LLCs have a unique business structure that can get very technical.

You should look closely at other business entities like partnerships and S Corporations, before launching a Utah LLC.

We make business formation EASY. Learn about our DIY business formation services here.

Advantages of LLCs:

  • Limited personal liability for members for business debts and lawsuits.
  • Fewer reporting and recordkeeping requirements than other kinds of entities, including corporations.
  • Avoiding the double taxation—business and personal—of corporations if taxed as a pass-through entity.
  • Unlike corporations, Utah LLCs do not have to file annual or biennial reports with the state.

Disadvantages of LLCs in Utah:

  • An LLC is not a good investment vehicle for outside investors.
  • LLCs and S and C corporations pay commercial activity taxes, unlike sole proprietorships and partnerships.
  • LLC owners may pay self-employment taxes.

Registering Foreign LLCs in Utah

Any foreign (out-of-state) LLC that wants to do business in Utah must register with the Secretary of State for a certificate of authority. This is done through the OneStop Business registration page, as described below.

Step-By-Step: Forming a Utah Limited Liability Company

With all of that, you have decided to form an LLC in Utah. You have your members, your business plan, and a little startup capital, and you are on your way.

Here is a step-by-step guide for how to create a fully operational Utah LLC.

Step I: Name Your LLC

Creating a legally proper LLC name and then protecting it is one of the first actions in LLC formation. This is a process that can be complex and time-consuming, but it is essential for the LLC to operate legally in Utah.

Your company needs the right name. The name of your LLC is up to you but Utah law requires the name must be unique and different from any other company's name.

So your first task will be to search the Secretary of State, Utah Division of Corporations business name availability search page to make sure that your chosen name isn't already in use for an existing business.

This search is just a preliminary step to the state filing. You still need to go through the registration process to get your name approved by the state.

After you have decided on a name, the name you will submit to the Secretary of State must then contain one of these legal suffixes:

  • Limited Liability Company
  • Limited Company
  • L.L.C.
  • LLC
  • L.C.
  • LC
  • Ltd. Co.
  • Or any other variation.

The name of the LLC cannot use any variation of the word “corporation." It cannot use language considered obscene or that claims a profession or business affiliation that does not exist.

Professional LLCs

Utah allows professional LLCs. The organization must provide professional services, and the name must include the words “professional limited liability company," “P.L.L.C.," or “PLLC."

Series LLCs

Utah allows the creation of Series LLCs, which must be registered as such. A Series LLC is where one LLC owns/controls other LLCs.

Reserve Your Name

Utah allows you to reserve a business name for 120 days while the formation process is going forward. This is done through the Utah Business Center. Reserving a name is not a guarantee that your name will be approved, but it keeps anyone else from using it for that time. Reserving a name requires a $60.

Step II: Appoint a Registered Agent

The State of Utah requires an LLC to have a Commercial Registered Agent for service of process before formally filing with the state. A registered agent is designated to receive process (legal documents) on behalf of the LLC. A Utah registered agent can be an individual or a company (domestic or foreign), but it must have a physical Utah street address. A forming LLC will often choose a professional registered agent service or may choose the company lawyer.

Step III: Register With the State for Your UtahID

In order for your business to transact with the state, create a OneStop Business Registration, which will then generate your UtahID login credentials. This one login covers your interactions with the Utah State Tax Commission, Utah Department of Commerce, and Utah Department of Workforce Services.

Step IV: Legally Protect Your Business Name

Next, make sure that no one else can use it in business or on the internet. This means that you have to make sure that no one else is using that name. You do this by doing a name search to make sure that the Internet Domain Name is available. If it is available, grab it immediately (that will only cost a few dollars).

If you want to do business nationally, or you want to operate in several other states, you should trademark the nonprofit's name with the United States Patent and Trademark Office (USPTO). This process takes some time and money. The name is still protected as a common law trademark while that application is pending.

Once you receive your federal trademark, apply to the Utah Secretary of State to register it as a Utah trademark or service mark. You may also trademark the Utah LLC name with just the state, without a federal trademark.

DBAs: If you are going to do business under a fictitious name (DBA), you must register that name with the Utah Commerce Department.

Now that name is yours, you can keep anyone else from using it, and it conforms to Utah law.

Step V: Structure the Business

An LLC has a particular, unique business structure.

To begin with, the stakeholders of an LLC are called “members." There is no stock issued, so they cannot be “stockholders." This is the primary reason that an LLC is not a good investment vehicle for either the founders or potential investors.

There is no number of members required. You can have a single-member LLC.

Then you should write an LLC Operating Agreement. This is not required under Utah law, but it is a good idea, to keep everybody's interests clear.

A Utah Limited Liability Operating Agreement should contain the following points:

  • Percentage of members' ownership
  • Voting rights and responsibilities
  • Powers and duties of members and managers
  • Distribution of profits and loses
  • Holding meetings
  • Buyout and buy-sell rules (procedures for transferring interest or in the event of a death)

An LLC may be managed by the members, or it may hire an outside manager. You will indicate which you have chosen on your registration application.

Step VI: Write and File Your Utah Certificate of Organization With the Secretary of State

You are now ready to compose and register your Utah LLC as your business registration with the Utah Secretary of State.

Foreign LLCs cannot use this process. They must register separately, as noted above.

Your LLC Certificate of Organization must contain the following:

  • LLC name and mailing address of principal office
  • Name and physical address of the registered agent. Must have a Utah street address.
  • Organizer name (must be at least one)
  • Names and addresses of any additional members or managers
  • Organizer signature(s)
  • Filing fee of $70

This is filed with the Utah Department of Commerce, through the OneStop business portal.

If you file online, you will have an immediate response. If you file with paper forms, it will take 2-3 business days.

After Filing the Articles of Organization

You will have numerous state and federal requirements for your new LLC after you file with the state.

State Business Licenses

Business licenses in Utah are administered by local governments. There are no business licenses administered by the state government.

Utah Employment Rules

Your LLC will be subject to state rules if it has employees—even if the employees are also members.

All new hires must be reported to the Utah Department of Workforce Services.

You must pay unemployment insurance.

You must also register for workers Compensation Insurance.

LLCs and Taxation

You will be subject to both state taxes and federal income taxes. This is a job for your accountant, but here is a brief outline of your tax obligations.

You will be subject to both federal withholding tax if you have employees and, of course, to business income taxation.

LLCs also have very specific requirements for filing taxes. You may choose one of several different tax designations for your LLC, including C or S Corporation, partnership, or pass-through organization with personal liability for the members. Consult with your accountant for the best approach.

You must file to receive an IRS Federal Employer Identification Number (FEIN) on the Internal Revenue Service website if you will have employees. You must also apply for your FEIN if the LLC has more than one member. You will be subject to all federal tax-withholding rules.

All state corporate taxation, including sales tax, withholding tax, etc. is handled through the OneStop business portal.

Annual Reports

Utah LLCs must file an annual report with the Secretary of State in order to remain in good standing. This is called a “Business Renewal." There is a $20 fee.

Want Help Forming an LLC in Utah?

Although an LLC is much easier to start than a corporation, there are still certain procedures that must be followed. Fortunately, forming an LLC can be a straightforward process with FindLaw’s Business Formation Service. If you have questions about starting a Utah LLC, or would simply like some guidance from a professional, it's best to speak with an experienced business organizations attorney near you.

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