Starting a Utah LLC is the right decision for any start-up. With a favourable work environment and diverse tax benefits, it is cost-effective to start any business here. Those who are newly setting up their business must know about the procedural steps to start a Utah LLC.
By following the steps below, one can easily form an LLC. However, it is recommended to seek help from professional services to start your LLC in Utah to handle financial statements and other legal documents. Meanwhile, if you are thinking of setting up an LLC in another state, then do check out Start My LLC.
On this page, you’ll learn about the following:
- How to Start an LLC in Utah
- Why Set Up an LLC in Utah?
- Requirements for Setting up LLC in Utah
- Utah LLC Formation Summary
How to Start an LLC in Utah
The following guide is simple but essential for all entrepreneurs, especially for start-ups. All these procedures are to be followed according to the state’s government guidelines. Make sure to be careful while moving forward with the steps.
Step 1: Decide a Name for Your LLC
The first step in your application for an LLC is to decide the name you want to give to your LLC. You have to choose a name that should be related to your business and should also be approved under the state government’s naming norms.
You should check the name you are thinking of giving to your LLC on the Secretary of State online services website or visit the Business Entity Search to check the name’s availability through the list of names.
Here are some of the pro tips that will help you keep a name that will help you grow.
- You should keep the name simple and try not to add some difficult words to the name. It can confuse the audience, and they won’t remember your name for a longer period.
- There are some words like bank, attorney, and university, which you should avoid if not required. This is because such names are going to require an extra set of paperwork through a lawyer.
- The name should also be available for making a website as you should keep the name of your business the same everywhere. Check if the name is still available for use with NameCheap and for web hosting, which is best to get now, check out Kinsta, and Google Suite, for your professional email account.
For more requirements on naming your LLC, see other requirements.
Step 2: Assign a Registered Agent in Utah
After you have decided the name, you must choose a registered agent in Utah. The agent is going to work on your behalf. Agents are professionals and can be a person or a business entity. They will be responsible for receiving all documents. The documents consist of the tax forms, lawsuit notices, legal documents, and internal documents on their registered office in Utah.
Some of the professional service providers that can be your agent and also, are able to handle all your official notices are:
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The best LLC services that would help you ease into operating an LLC or even other business structures in Utah. From handling business license searches and filing to tracking upcoming filing deadlines and acquiring business insurance or professional liability insurance, an agent will answer all your questions and conduct all activities you need to set up your LLC.
It would be so much time saved on your end if you avail of a registered agent’s service. You will have more time to focus on other business matters, not to mention you are guaranteed to meet every state requirement as you have experts handling everything.
Step 3: File Certificate of Formation in Utah
The certificate of formation is the legal document that you are required to start your LLC in Utah. It establishes the type of LLC you are setting up, if member-managed or managers-managed.
Before you file the formation document, you need to attach documents such as name registration certificate, registered agent’s details, and/or employees’ details. The filing fee one has to pay is $70.
- Go to the Secretary of State online services website.
- Choose the option of non-subscriber and then start filling the online form.
NOTE: But in some states, you are not allowed to fill the online form. For such people, there is a second option of sending the form through the mail.
File by Mail:
- Download the original form from the Utah Limited Company Certificate of Formation site.
- Fill out the form and send it through an email to the Secretary of State Office or county judge’s judge.
- With this form, the legal document to be attached will be the above-mentioned formation documents along with your cheque.
Utah Division of Corporations & Commercial Code
P.O. Box 146705
Salt Lake City, UT 84114
More Certification of Formation filing requirements in Utah is mentioned below.
Step 4: Create Your Utah LLC Operating Agreement
There are some major outlines and rules, regulations, and powers of attorney that become the LLC’s foundation. All of these rules and operational procedures are mentioned in the liability operating agreement. Also, when the agreement is formed, all the LLC members should agree with these rules. It will ensure that the limited liability company works smoothly and every person related to the company is on the same page.
If you want to start an LLC in Utah, it is not required legally to form a limited liability operating agreement. But if you want to save your business from any future conflict, it is advised that you should make this effective operating agreement.
Step 5: Filing a Utah LLC EIN
The E.I.N. is also known as the Employer Identification Number, which Internal Revenue Service provides. It is a nine-digit unique number given to the businesses, and it is for tax purposes. When you are filing your limited liability company’s taxes, you need this number for the government official and taxation agencies; this is your identity.
You can file for the EIN online through the Utah Internal Revenue Service website under Register an Entity section. Why do you need an EIN? The EIN will help you contact a business bank and will help you process your bank application.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
To know more details about the documents required, you should jump to the ‘requirement section‘ below.
Why Set Up an LLC in Utah?
What is an LLC in the first place? It is a type of business that protects you and your assets from issues like debts.
Foreign Trade Zone (FTZ)
The government of Utah decides some foreign trade ones, and if you choose that area, then there are some benefits to your LLC. Some of them are:-
- The time constraint on the storage of products is removed under this zone.
- The insurance costs in the FTZ are meager, and the product lying is given high security.
- The supply chain delays are removed.
Recycle Market Development Zone (RMDZ)
If your LLC is somehow related to recycling old products and using them or selling them, some of the benefits are provided. These are given to you in the form of tax credit described below.
- The government waives off 5% of your cost of equipment.
- You will get a 20% return on your operational expenses, which can be equal to or less than $2000.
- The business license fees are waived off, and you are provided with zone assistance.
Pros of LLC
- LLC does not have detailed formalities like minutes of shareholders’ and directors’ meetings like other corporations.
- No restriction on LLC regarding the members and shareholders. One can structure the company as one are willing to.
- Unlike corporations, the cash method of accounting is easy as LLCs don’t use the accrual method.
- In an LLC, due to personal liability insurance, no shareholder and investor can possess the personal asset of the member.
- Tax benefits such as unemployment insurance taxes on any coverage for employees, and have different tax classification options.
Cost of Starting an LLC in Utah
The detailed step-wise costs that an entrepreneur has to bear when they want to form an LLC in Utah are discussed below.
- First of all, the entrepreneur should be ready to file the fees for the reservation of their Utah LLC name. It is around $22 and is given to the Utah Division Of Corporations.
- You need to give $70 to the state for filing your articles of formation.
- There is an agent cost also, which is variable and depends on the choice made by an entrepreneur. The list of best agents and their charges should be checked out before hiring.
Top Businesses of Utah State
You should thoroughly study the economy of Utah before you start the process of formation and operation of your limited liability company in the state. Some of the top businesses and their contribution are discussed below in detail.
Farming and Its Manufacturing Businesses
Despite being a dry land state, cropping of barley is extensively focused on in the state. The rearing of livestock is also done in the state, due to which the total contribution made by farming businesses directly is $3.5 billion. But the manufacturing of agriculture products and its value addition businesses is contributing $10.7 billion to the state.
Utah has catered more than 136,000 tourists in 2018-19, which has helped them gain $9.75 billion. If we look at the tourist attractions, then there are 7 national parks, 6 national forests, and 2 recreational centers present in the state. They are the reason behind the visit of most people to Utah.
The state mines have a massive deposition of metals like copper, zinc, lead, and gold. Due to this, many people immigrate to the state and be a part of these mining businesses. With the help of these metals mining and oil extraction, the mining businesses can contribute a sum of $2.1 billion to the state.
Low-Investment Businesses in Utah
Small Investment businesses that are housed in Utah are:-
- Baby Proofing Services
- Bill Auditing Services
- Building/home inspection services
- Computer Bulletin Board
Requirements for Setting up LLC in Utah
When you are setting up your LLC in Utah, then there are some basic requirements that you have to fulfill. They are mentioned below in detail.
First of all, you have to think of a name for your LLC. When you think of the final name, you should get it registered through Utah state’s official web portal. Before finalizing the name, it would be better that you check the availability of the name and also that it is feasible for your business or not. It would help if you thought from the customer’s perspective that you would attract with such a name.
Directors or members
When you start an LLC, you must be some people in your mind that you want to do work with as members. You should have the current list of all those members with their approval to be a part of your LLC venture. Some points that you must always have in your mind when working for the list of directors is:-
- The LLC can be started with one or more members. There is no restriction on the business owners.
- It is not required for the member to have a permanent residence in Utah to be a part of the LLC.
- The minimum age of the member should be 19.
- The complete legal name and address of the member must be required for Articles of Incorporation.
The articles of formation should be ready when you are forming an LLC. In these articles; you should mention the details about the business services, the members who are going to be part of the business, and the profit division structure. The last one should be approved by every member so that there is no future conflict.
Along with that, there should be the agent certificate that you have appointed to help you with the step guide. The last thing that should be attached with the certificate of formation will be the services list. There must be some offering of your business which should be mentioned in detail.
Also, there should be a fixed value of stock required to be mentioned in articles of formation and address of the registered agent mentioned below. While selecting the business agent, you should ask them to always be available during office hours or not because they have to handle all the legal and tax documents.
Utah state’s demand is a bit different from the other states. Here the business entity needs to submit the form to the Judge of probate instead of the state’s secretary.
The Utah LLC has to different corporate reports before setting up. This included the initial reports that include the initial business privilege tax filing returns and annual reports. Both of these reports should be filed within two and one-half months after they start functioning. The next is the county filing that the business has to file before its incorporation. They must be submitted to the principal office for reference. With time, the requirement increases, which is discussed below.
- If any member has taken any action without a meeting, it must be added to corporate records.
- A copy of the original by-laws and the amendments that are made in them, later on, should also be added to the records.
- The complete communication of shareholders over three years should also be submitted.
- The recent annual report should be added to the corporate records.
Taxes and licenses
The taxes of the LLC should be filed on time, and for that, E.I.N. is important. This should be applied when all the formalities are completed. Also, according to the service you are willing to provide, you have to look at whether the service requires an annual license to operate or not. If required, then you should go through the procedure of any license formation for your LLC office.
The taxation requirements are:-
- Utah requires the annual report that you file with the Department of Revenue. In the annual report, the taxes added are Business Privilege Tax Return and Annual Report, and Schedule AL-CAR.
- You should need a complete detail of every small to large state and center tax.
- There is a state tax identification number that a business must procure.
It is always recommended to get professional help to understand more about the LLC requirements. Check out the top 5 LLC services to look for today. Below is the list of Best LLC services,
Utah LLC Formation Summary
Time needed: 30 minutes.
To summarize, here are the simple steps for creating an LLC in Utah. To learn more about the steps in this list, simply click on them.
- Choose a name for your Utah limited liability company.
The first step is to come up with a business name that includes the word “limited liability corporation” or one of its abbreviations (LLC or L.L.C.).
- Select a registered agent for your company.
Selecting a registered agent for your LLC is needed in Utah. Check out our list of the top five LLC services in the United States.
- Create a certificate of formation.
When forming an LLC, you must file a formation certificate. It may be referred to as any of the following, depending on the state: Articles of Organization, Certificate of Formation, or Certificate of Organization.
- Make an operating arrangement.
When forming an LLC, an operating agreement is not a legal necessity, but it is strongly recommended.
- Obtain an EIN
The Employer Identification Number (EIN), also known as the Federal Tax Identification Number, is used to identify a corporation in the same way that a social security number is used to identify a person.
The C Corp’s structures are very complex compared to the LLC, which offers a flexible and easily changeable structure. Also, the LLC is saved from the disadvantage of double taxation that a C Corp has to bear, but the LLC has a privileged taxation system due to pass-through entities.
The major difference that the businessman will notice among the LLC and S-Corp is the flexibility. In LLC, you can allocate income according to your rules and change them according to your will. Also, there is a different LLC interest class that can be considered a downside of S Corp.
In the limited liability partnership and sole proprietorships, the owners are responsible for their debts, but the LLC facilitates owners. The LLC members’ assets are saved, and they are not considered the reason behind the debts that a company has with the help of limited liability protection. Moreover, the member’s liability is only limited to the investment that they have made in the LLC, unlike the sole proprietorships and solo partnership firms.