Looking for more information on how to start an LLC in Utah? One of the many advantages of incorporating a limited liability corporation (LLC) in Utah is that it simplifies the tax filing process. It’s also advantageous that business owners in Utah can usually incorporate an LLC for a low cost. The procedures on how to get your LLC in Utah are outlined below.
Utah LLCs are cheap and easy to set up. Utah, like other states, has several state-specific LLC requirements. A Utah limited liability company can be incorporated fast and easily. By filing Articles of Organization with the Utah Secretary of State online, you can quickly incorporate a Utah LLC.
An LLC is a simple business form that provides legal protection to business owners by protecting personal assets from company debts. Furthermore, LLCs frequently pay lesser taxes than corporations. However, depending on where you live, forming an LLC can be complicated, with the creation process, filing fees, and ongoing legal requirements varying from state to state.
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There are a variety of reasons to consider forming an LLC in Utah. The Limited Liability Company (LLC) is a common entity structure for new businesses in Utah. The LLC shields you from personal accountability while also potentially saving you money on taxes. If you want to learn how to form an LLC in Utah, now is the right opportunity. You can read our comprehensive guide on How To Form An LLC for more information on how to form an LLC in any state.
Fortunately, incorporating a limited liability company (LLC) is not difficult. With proper planning and this step-by-step guidance, you can set up your Utah LLC in no time. We’ll walk you through the whole process of how to set up an LLC in Utah.
Before we start, here are the top picks for LLC filing services in Utah :
What Are The Benefits Of An LLC In Utah?
- Limited liability protection will be available to Utah LLCs, which ensures debtors can sue the LLC but not the owner or investors
- A Utah LLC is categorized as a flow-through entity, which means it is not subject to corporate income tax
- Profits from an LLC are not taxed twice as much as earnings from a C-corporation
- Utah offers tax credit programs for a maximum of 20 years, with a maximum credit of 50%
- The most significant benefit of forming a new firm in Utah as an S Corporation is that it will have its own existence
- A Utah LLC has the benefit of being able to select different forms of distribution of profits
- Utah’s business tax incentives include funding and innovation incentives for small and medium-sized businesses and startups.
A Limited Liability Company, or LLC, is a hybrid company form that combines the features of a corporation with those of a partnership or sole proprietorship. It protects your personal assets from your business assets, allowing you to protect your personal assets.
LLCs are the most prevalent structure for small businesses in Utah. This is due to the simplicity with which a limited liability corporation (LLC) can be formed and operated and the numerous benefits it offers. Depending on the type of business structure you choose, a unique feature may be a benefit or a negative. The following are some of the advantages of how to start a business in Utah. Let’s have a look at some of the benefits of LLC in Utah:
1. Pass-through taxation
If you form a new company as an S corporation in Utah, the company or firm will not have to pay any taxes. Instead, the corporation’s profit or loss will be distributed to its stockholders. Earnings are taxed before being dispersed to owners, and profits are taxed again when owners declare their part of the profits on their personal tax returns.
2. Limited Liability Protection
“Personal liability protection” is one of the most significant benefits of forming a Utah LLC. As the proprietor of an LLC, you will not be held personally liable for any of the company’s debts. Your personal assets, such as your automobile, property, and bank accounts, will be protected from LLC creditors.
3. Independent life
When you set up a new business as a Corporation in Utah, it will be self-contained. This means that a stockholder’s incapacity or death would not have a serious effect on the company’s activities.
4. Flexible Taxation
A limited liability business (LLC) can pay income tax in one of three ways. Being taxed as an S company is one alternative. An S corporation is a tax structure, not a specific sort of corporate entity.
5. Increased Credibility
Incorporating a limited liability company (LLC) gives your company more legitimacy. A limited liability company (LLC) is considered a more corporate management structure than a sole privately owned company. Customers and partners will recognize you as a respectable company if you include LLCs in your company.
6. Ownership Flexibility
There are limited constraints on how you can arrange the management and ownership of an LLC in Utah:
- You can form a single-member LLC or a multi-member LLC.
- Members can control a Multi-Member LLC, which is referred to as member-managed.
- Manager-managed LLCs are those that are controlled by a manager who is appointed by the members.
7. Perpetual Existence
A new company incorporated as a Corporation in Utah will have perpetual succession. This means that a stockholder’s incapacity or death would not have a serious effect on the company’s activities.
Limited liability businesses in Utah are simple to start and maintain, requiring minimal paperwork and cost. LLCs, unlike C companies, are not obliged to designate formal officer responsibilities, have annual meetings, adopt bylaws, or keep track of business records and decisions.
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Disadvantages Of Forming An LLC In Utah
- Incorporation is a time-consuming and expensive process when compared with other types of company formations
- A Utah LLC has a limited lifespan and can be dissolved if one of its members passes away
- An LLC can’t issue shares, making it more difficult to raise funds from investors
There are various disadvantages while forming an LLC In Utah, which include the following:
- Since LLCs, like sole proprietorships, are pass-through businesses, LLC owners must pay taxes on their portion of the LLC’s net income, whether or not they get a payout.
- High registration cost compared to sole proprietorships and general partnerships
- An LLC, unlike a corporation, cannot raise funds by issuing stock
- Members of an LLC found it more difficult for obtaining loans compared to a corporation
Steps For How To Start An LLC In Utah
In Utah, forming an LLC is not exceptionally difficult or expensive, but it is a multi-step procedure that necessitates the use of certain specialized forms. If you make a mistake or don’t meet all of the conditions, you’ll have to start the procedure all over again, which will cost you time and money. To ensure that you’ve done everything correctly, you need to follow some specific steps. This procedure will be assisted by the following step-by-step instructions. Let’s get started with how to register an LLC in Utah.
Here are the steps you need to take to form an LLC in Utah which will get you started today:
1. Choose A Name For Your Utah LLC
The first step in forming an LLC in Utah is deciding on a name. You won’t be able to proceed without a name because it will appear on all of your formal formation documentation. Every LLC operating in Indiana is required to have a distinctive name. For branding considerations, your business name should be distinctive, as well as legal. The name of your LLC must be distinct from the names of other businesses registered with the Utah Secretary of State. For more information, check Utah Business Name Database.
If you search the company database and discover that a name is available, Utah allows you to reserve it for up to 120 days. The filing fee is only $70. Filling out this form ensures that the name you want will be available when you complete the other processes of incorporating an LLC in Utah.
The following are the Utah LLC naming guidelines:
- The phrase “limited liability corporation” or one of its derivatives must be in your name (LLC or L.L.C.)
- Your LLC’s name cannot contain any words that could be mistaken for a government department (FBI, Treasury, State Department, etc.)
- Restricted words (e.g., bank, attorney, university) may need additional paperwork and the inclusion of a licensed professional in your LLC, such as a doctor or lawyer
- Your business name must be distinct from any other limited liability company, corporation, limited liability partnership, or limited partnership in Utah.
- Check Name Availability: Do a name search on the State of Utah website to be sure the name you choose isn’t already used. Check Utah Naming Guidelines.
- Reserve Your LLC Name: It’s a great idea to reserve your LLC name with the Utah Secretary of State as it protects the name from being used by another company before your LLC is formally incorporated in the state.
2. Appoint A Registered Agent In Utah
Before you can legally file to form your Utah LLC, you’ll need to choose a registered agent in the state. Your LLC must maintain a Utah Registered Agent at all times in order to do business in the state. A Registered Agent in Utah is a person or business that receives legal mail and papers directed to your Utah LLC. You can act as your own registered agent or hire any professional registered agent service.
Legal documentation and tax notices will be accepted on your LLC’s behalf by your registered agent. When you submit your Certificate of Formation, you will identify your registered agent.
A Utah registered agent must meet the following criteria such as:
- The Registered Agent for your Utah LLC must have a physical address in the state
- If your LLC’s Registered Agent will be a single person, he or she must be at least 18 years old and a Utah resident
- If a person or company is based outside of the Utah business office
- A designated registered agent must provide an address of a registered office in Utah and must be found during normal business hours
- In order to be eligible as a registered agent in Utah, the business must already be operating in the state when the LLC is formed.
3. File Your Utah LLC Articles Of Organization
In Utah, a limited liability company (LLC) is founded by filing Articles of Organization with the Secretary of State. The Certificate of Organization is the paperwork you’ll submit to the Department of State to formally register your LLC. When you’re ready, submit Articles of Organization to the Utah Secretary of State to formalize your LLC.
The articles can be filed either online or by mail. The filing fee is $70.
The following information must be included in the Articles of Organization:
- Name of the LLC, address of the principal office, email address (optional), and phone number
- Name and address of the registered agent
- Articles that are out of date are no longer effective (if not immediate)
- Names and addresses of the Articles’ signatories
- A member’s, organizer’s, or their representative’s signature
4. Establish Company Records
Your LLC’s books and records must be accurate and comprehensive. The articles of organization you filed are the initial documents in your LLC’s file. Many more public documents will be created by your LLC, including:
- Minutes of the meeting
- Operating Agreement
- EIN Verification Letter
- Throughout the LLC’s existence, amendments and other filings are made
5. Receive a Certificate From the State
Articles of Organization have often been approved quickly in Utah. Approval applications are only accepted online. After the LLC’s creation paperwork is filed and approved, the state will provide you with a certificate confirming the LLC’s formal existence. The materials for approval will be forwarded to your email address.
The LLC will be able to obtain an Employer Identification Number (EIN), business licenses, and a business bank account with the help of this certificate.
6. Obtain An Utah Business License
In order to operate in Utah, certain sectors will require a company registration. You may require one or more types of licenses, including:
- Licenses issued by your city or county.
- Certain skilled vocations require professional licenses.
- Environmental permits.
- Licenses for health and safety.
- Permits are required by zoning.
- Liquor licenses, for example, are regulatory permits.
- Sales tax exemptions are available.
7. Prepare Utah LLC Operating Agreement
Although preparing a detailed LLC operating agreement is not a legally required step for incorporating an LLC in Utah, it is strongly suggested for all emerging limited liability businesses. You should consider developing an operating agreement as part of your LLC strategy. The purpose of this paper is to establish how your firm will operate.
The operating agreement is the basic document that spells out the members’ rights, powers, responsibilities, debts, and obligations to one another and to the LLC. The agreement is strictly internal and has not been lodged with the Secretary of State.
If an LLC does not establish an operating agreement, the articles of organization, rules, and/or member control or limited liability company agreement will serve as the operating agreement.
The following should be included in the operating agreement:
- Define the business structure of the LLC.
- Determine each LLC member’s particular roles and obligations.
- Describe how the LLC will be managed.
An LLC may suffer substantial legal and operational challenges if it does not have an operating agreement that spells out the precise responsibilities of its members.
8. Hold The Organizational Meeting
The organizational meeting is the LLC’s initial gathering of members. To hold this meeting, you’ll need your filed articles of incorporation and your operating agreement. This meeting’s minutes should be kept and filed in your company’s record book.
9. Get An Utah LLC EIN
In the United States, all newly created LLCs must get an Employer Identification Number (EIN) from the Internal Revenue Service. The nine-digit EIN is a company’s equivalent of a social security number, and it’s required to pay income taxes, submit tax returns, open corporate bank accounts, and do a variety of other activities. Your Utah LLC’s “social security number” is a Federal Tax ID Number. For taxation and reporting purposes, the IRS uses it to identify your LLC.
You can apply for EIN online, by fax, or by mail. Federal tax ID numbers are free and don’t charge anything.
You will need an EIN number for the following:
- Open a business bank account
- Register for business licenses and permits
- Transact business with other companies
- Taxes are filed and managed at the federal and state levels
10. Comply With Utah Employer Obligations
In addition to the steps outlined so far, Utah LLCs with employees must also comply with the following requirements:
- Employers are required by state and federal law to report new employees to the Utah Department Of Employment Security within 20 days of their hire date.
- Employers in Utah are required to withhold state and federal income taxes from their employee’s paychecks. Employers must remit withheld taxes to the state on a regular basis.
- Employers are liable to compensate unemployment taxes in Utah. Every firm is allotted a tax rate depending on its age, industry, and history of unemployment insurance claims.
- A small-business owner in Utah is required to acquire workers ’ compensation as soon as they recruit their first employee. Employers can self-insure or obtain workers’ compensation coverage from a private insurer or the state insurance fund.
11. Comply With Federal Requirements
In Utah, LLCs must follow both state and federal regulations. Most LLCs are treated as pass-through entities under federal law, just as they are in most states. On their personal income tax returns, LLC members disclose their portion of LLC income. The LLC does not have to pay federal income taxes.
An LLC’s members can choose to have it taxed as a C-corporation at the federal level, in which case the LLC will pay a flat federal corporate tax of 21%.
Important Steps After Forming The Utah LLC?
After registering your Utah LLC, you need to follow some important responsibilities. Here are some important steps you need to consider, after forming an LLC in Utah:
- Open a business bank account: A business bank account lets you keep personal and business costs separate, which is necessary to keep your LLC’s corporate entity intact. In the event that your LLC or business is sued, a corporate veil shields your personal assets from creditors. Also read, How To Open A US Bank Account As A Non-Resident?
- Get a business credit card: A company credit card will help you separate personal and business costs while also creating a credit record for your firm.
- Hire a business accountant: An accountant for your business can help you save money on taxes and prevent penalties and fines. Accounting and payroll are made easier with the help of an attorney.
- Get Business Insurance For Utah LLC: Risk management is aided by business insurance. General liability, professional liability, and workers’ compensation are the most prevalent types of business insurance.
Keep Your Company Compliant
- You need to research and get a Utah license and permits
- File your Utah annual reports statement online with the Utah Department of State at the end of the month in which the LLC was formed
- In the next step, you need to understand Utah sales tax requirements and seller’s permits
- Understand the federal tax requirements to report income to the IRS each year using Form 1065 Partnership Return
LLCs are easier to set up than other business structures. Small businesses, especially start-ups, can easily incorporate an LLC in Utah for a very low cost. LLCs have a tax advantage known as “pass-through taxation,” which allows them to avoid having to pay some taxes. To start a limited liability company, you’ll need considerably less paperwork and legal processes.
Forming an LLC in Utah takes time and effort, but once you have everything in place, you can rest comfortably so that your business is ready to thrive. Several ambitious entrepreneurs may have pondered how to form a limited liability business in Utah (LLC). You must go through a multi-step process that includes everything from naming your company to hiring a designated individual, as well as signing a multi-member operating agreement.
We strongly recommend Incfile, a popular business formation service that makes starting and operating your own private limited company simple. It’s completely free to form an LLC with Incfile, and it only costs $125 to file the formation and recruiting application. If you’re seeking a quick and easy LLC formation, ZenBusiness is the way to go.
Are you ready to start an LLC in Utah? If you have any questions just leave them in the comment section below! Our experts will reach you soon!
Frequently Asked Questions (FAQs)
1. What does it take to start an LLC in Utah?
You just follow these six steps, and you’ll be on your way:
1. Name Your Utah LLC
2. Choose Your Registered Agent
3. Prepare and File Certificate of Organization
4. Receive a Certificate From the State
5. Create an Operating Agreement
6. Get an Employer Identification Number
2. Does an LLC need a business license in Utah?
All Utah businesses must incorporate with the Utah Department of Commerce as a “DBA,” corporation, limited liability company, or limited partnership, according to state law. Businesses must also apply for a business license from the state or municipality where they are located.
3. How are LLCs taxed in Utah?
The corporate tax in Utah is normally calculated as a flat 5% of taxable income, with a $100 minimum tax. This tax must be paid if your LLC is treated as a corporation. The Utah State Tax Commission receives the state’s corporate income tax return (Form TC-20).
4. Does Utah require a registered agent?
For companies doing business in Utah, having a registered agent is a legal requirement. The goal is for every company, LLC, and other business entity in Utah to have an address where a lawsuit may be served properly. It also serves as a dependable address for legal notices from the state.
5. How much does it cost to form an LLC in Utah?
The cost of filing the Articles of Organization with the Utah Division of Corporations is $70. The Utah Division of Corporations will charge you $22 to reserve your LLC name.
6. Do I need an operating agreement for my Utah LLC?
Although operating agreements are not required in Utah, they are strongly recommended. An operating agreement will assist protect your limited liability status, eliminate financial and management misunderstandings, and ensure that you, not state law, choose the rules that govern your company.
7. How do I get an EIN number in Utah?
Decide the type of company or entity for which you are requesting to receive a Tax ID (EIN) Number from the Utah State Tax Commission. You will obtain your Tax ID (EIN) Number via e-mail once you have completed the application.
8. Can you be your own registered agent?
A registered agent is a person or entity designated to take service of process and official mail on behalf of your company. You can nominate yourself as your own registered agent, or your business can do so in several states.