Utah is one of the most favorable states for businesses to get their LLC registered. According to various ease-of-doing business indices, Utah is ranked among the top ten states in the United States. For instance, it has a very high rating in the small business survival index because Utah laws are extremely conducive to new businesses. Similarly, the tax and regulatory environment in the state is also on par with the best in the country.
Overall, thousands of new businesses in the state are a testament to the quality of the business climate.
This guide will offer readers an overview of how they can easily register their LLC in Utah. For a better understanding of the procedure, we have divided this mini-guide into four sections.
- Benefits of Starting an LLC in Utah: It highlights many advantages of forming a Utah LLC compared to other types of businesses. If you are aware of these advantages, you may skip this and fill the next section.
- How to set up an LLC in Utah: This section highlights seven important steps to register your LLC in the state. The section is designed to give you a brief overview of each step.
- Create an LLC in Utah (Full details): While the preceding section offers details regarding the registration process, this section provides an in-depth discussion on the topic.
- Important Requirements (Post-Registration): After registering the business, you will need to open bank accounts, file tax, and develop trade partnerships. This section explores important documents that you need to successfully run your business.
Benefits of starting an LLC in Utah
Following are just some of the benefits that you will get when registering your limited liability company in Utah:
1. A Utah limited liability company does not require its member to conduct and report the minutes of the annual meeting. Instead of focusing on sending the minutes of the meeting, you can focus on operating your business.
2. An LLC in Utah is not restricted to a maximum number of members. Since there are no restrictions on members, an LLC can have an unlimited number of members enabling it to get funding from a variety of sources including the capital raised by each member of the team. For a small business, multi-member LLC can be a lucrative idea as profits are shared according to the capital contribution of each member. In addition, small businesses do not have to look for loans from banks and financial institutions.
3. As opposed to a limited partnership, members of LLC enjoy a lot of flexibility in making corporate decisions according to the bylaws of an operating agreement, which is usually drafted by members according to their roles, duties, and contribution.
4. Members of LLC are not personally liable for the debts and obligations of the company. In an unfortunate event of bankruptcy or a legal proceeding against the company, personal assets, and properties of each member of LLC Utah are protected by law. It means that no one can claim anything from the personal assets, bank accounts, cash, and property of individual members. This protection is not granted to other business types such as general partnership and limited partnership organizations.
5. LLC is perhaps the most flexible structure as anyone can become a member. Members can include other corporations, trusts, limited partnerships, associations, general partnerships, and even managers of other companies.
6. An LLC Utah may comprise of members, managers, and employees. Usually, members control the affairs of the company and share profits and loss according to a specified capital contribution. These members can also designate an experienced individual as the company manager to run the business on their behalf. Similarly, LLC allows the company to employ as many workers as required.
7. Utah LLC registration is governed by the state-friendly laws of Utah, which means that state laws are given precedence over other states if someone residing in another state or a foreign entity submits a legal claim against Utah LLC. Courts in Utah are known to favor LLCs in a matter of regional and state jurisdictions.
8. It’s easy for an LLC in Utah to disband or discontinue operations by filing a certificate of dissolution. Unlike other state, LLC owners do not have to file a heap of paperwork if they want to discontinue their business.
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How to set up an LLC in Utah?
In order to register a company in Utah, you will need to file a certificate of organization with state authorities. The certificate of organization is a simple form, which requires the filer to answer questions related to the company formation. Once filled, you can submit it to the state authorities along with the prescribed fee.
Before filing the certificate of organization, it is important to understand the initial process and questions that you will need to answer. At this step, don’t worry about the details as we will touch everything in detail in the following section.
The steps to forming an LLC in Utah are described below:
Select a Company Name: This is the initial step before filing a certificate of organization. You should brainstorm a name and check it online at Utah LLC Search Directory to ensure that no one is using the name that you’ve selected for the company.
Principal Office Address: After you have confirmed and finalized a name, you are required to choose a principal office address. As per the law of Utah, your principal office address should be a physical address in Utah. If you don’t have an official address in the state or you are an online entity, we will discuss how to select a principal office address in greater detail in the next section.
Registered Agent: Besides a physical address, a company in Utah is required to select a registered agent who will receive legal documents from you. The person or the entity receives lawsuits, legal documents, and important communication from the state.
Member Profile: You will also need to identify at least one member or anyone who will manage the company. If you are the sole owner, you can name yourself as the only member of the company. On the other hand, some LLC appoint a manager to operate the business. If so, you will also need to identify the manager who will control the business affairs.
Duration of Business: If you are a franchise or you are doing business on a contractual basis, you will also need to disclose the time-frame of doing business. Most businesses skip this step because they want to do business, indefinitely.
Permits and License: If you require specific permits and license to operate a business, you will need to disclose the purpose and nature of your business. Examples of businesses that require permits and licenses are doctors, architects, and lawyers, etc.
Payment: After answering all the above questions in a certificate of organization, you should pay a $70 fee to register your business. You can submit the form and pay online, by fax, mail, or online.
Creating an LLC in Utah (Full Details)
Once you have decided the name, it’s time to fill the certificate of organization. The certificate of organization is a relatively simple form, which requires you to fill the information discussed in the preceding section. Here is an in-depth discussion on how you can easily fill these details and set up your company in Utah:
Name Your Company
In the first step, the certificate of organization will ask you to name your company. If you have used the Utah LLC Lookup online Business Search Database, you are now ready to name your company. If the business name can is available to use, you should always try to use a unique name. A unique name is better because it will not cause undue legal issues once you set up a branch of a business in another state.
Similarly, avoid using names that infringe on the copyrights of other companies. Names similar to trademarks are also a bad idea as you will definitely get a legal notice soon after opening a company. To avoid such situations, give your company a unique name or ask a professional agent to help you with these matters.
If you have a brick-and-mortar company or you own physical space, you can just give your office address as the principal office. A lot of new companies that are just starting to establish themselves provide a physical address of the owner to fulfill these requirements; however, the owner must have a real street address.
For online companies and foreign entities, it’s not possible to provide a physical office address. As you cannot give P.O. Box address, it is prudent to use a registered agent.
Anyone requiring an office address in Utah can contact a registered agent. The main duty of the registered agent is to allow their clients to receive legal notices from the state. Accordingly, a lot of LLCs use a professional company that can act as their registered agent and offers them a physical office address.
In Utah, you can find a lot of reputable professional companies that will act as your registered agent for a very reasonable cost. In addition to getting someone to handle your legal mails, you can also get an office address at a very desirable location.
A professional company acting as your registered agent will also help you with a variety of other business tasks. These can include taking phone calls, setting up a meeting space, providing phone numbers, and offering a private secretary. In the long-run, your professional agent can theoretically save you thousands of dollars in additional setup costs.
Utah doesn’t require companies to list names and address of every member of the company. You can also skip this field if you wish to; however, many professional companies want to keep an official record by sending the names of the members. A member is anyone who owns a stake in the business. If there is only a single owner of a business, it is better to provide your name and your address.
If there is more than one member, you can write the name of each member and their address. Likewise, if your company is controlled by a general manager, you should write the particulars of the manager. Generally, you are required to disclose your name or the name of the manager. Under certain circumstances, you can write the names of members and names of managers.
If confused, just ask your professional agent to help you. Despite the fact that this is an optional field, it is recommended to fill it as it can prove useful if there are any lawsuits or legal proceedings.
Duration of Business
Most businesses will skip this section as they want their businesses to operate indefinitely. If you are a franchise, a business on contract, or a foreign entity, you may be required to disclose the end of your business.
Purpose of Business
Disclosing the nature of your business is another optional field in the certificate of organization. You should disclose the purpose if you are a professional company that requires a professional license or permit to operate. If you own such a business, its optional to disclose details. Instead, you can just write the title of your business such as pharmacy, building contractor, architect, and doctor. Mostly, this is sufficient to satisfy the requirements.
If you are not satisfied, you can write details as per your liking.
After preparing the certificate of organization, you can submit the documents online or send these through registered mail. If submitting online, you can pay using a major credit. When using registered mail, you will need to enclose a cheque of $70. You can also submit the documents using fax or email if required. When using an official agent, the fees of business registration, registered office address and other services are usually included in the package.
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Important Requirements Post-Submission
After receiving your certificate and the registration number from the state authorities, there are a few equally important things to do to streamline your business affairs. While your registration is complete, you will need to open business accounts, pay tax, and open trade accounts. Following are some important guidelines to help you with these procedures:
a) Prepare an Operating Agreement
b) Obtain Employer Identification Number
c) Open a Commercial Bank Account
d) Get License and Business Permits, if required
Prepare an LLC Operating Agreement Utah
An operating agreement is a legal agreement between members, managers, and stakeholders of a company outlining the responsibilities of each person or the entity. Most multi-member LLC will prepare an operating agreement, which defines the role and contribution of each member.
While there is no obligation to submit a formal agreement, LLC like to submit it because it can prove useful in case of a dispute. The court of law usually decides cases based on provisions of the operating agreement. If LLC does not submit an operating agreement, the decision is always based on the local state laws. To be fair to each member, you need to prepare a formal agreement as per the desire of each member.
While most operating agreements are available online, you should always consult a professional company to write the operating agreement. Once written, it should be submitted to state authorities to serve as an official record.
If you are the only one handling company’s affairs, the operating agreement is still necessary because such documents are required to open a bank account and get a loan. A single-member can create a basic draft explaining the duties and day-to-day operations. In the future, the operating agreement may be edited if employees are hired or new partnerships are formed.
Obtain an Employer Identification Number
After registration, you should get an EIN by filing form SS-4 on the IRS website. The form is very simple, and it requires only very basic information about your company. Anyone can fill the form online and get EIN within minutes.
The irs employer identification number is critical to operations of a business as it is used to identify tax accounts of employers and individuals who have no employees. It is a nine-digit number, which you will need when filing different business tax returns.
Sometimes, single-member company owners are told that they can operate without EIN. While it is theoretically possible to operate without EIN, you will likely need EIN at a later stage. Therefore, it is better to spend a couple of minutes on IRS websites and get your employer identification number.
Open a Bank Account
For a business transaction, you will need to open a commercial bank account. While there is no obligation to open a business account, you should not use a personal account for business transactions as mixing personal and business records is surely a recipe for disaster. Moreover, your trade partners, sellers, and vendors will likely ask you for a commercial bank account before proceeding with any transaction.
To open a bank account in Utah, you should call your bank because every bank has different requirements. However, most bank officers will like to see three official bank documents. These are:
- Certificate of Organization
- Employee Identification Number
- Operating Agreement, if any
Take these documents with you to the bank to convince the bank officer that you have done your homework. Since it is common for bank officers to open personal accounts, some bank officers may not know the exact procedures of opening a commercial bank account. This is true if your bank is a local bank dealing mainly with personal accounts or if the bank officer has recently joined the organization.
To avoid such a situation, always call your bank ahead of time and let them know that you are coming for opening a bank account. If you have a scheduled appointment, the bank officer will be ready to open a bank account and answer relevant questions.
Get Work Permits and License
A lot of businesses require special permits and licenses before they can start offering specific services. For these businesses, registering their LLC is not enough to operate because there are certain liabilities and business risks they must face. Examples of these businesses include doctors, health professionals, construction companies, and lawyers, etc.
If you require such permits and licenses, it is often a good idea to identify and call the local trade organizations or business associations. Normally, these organizations can offer guidance on how you may get your license. If there is a confusion regarding the entire process, ask the professional agent who is representing your company. Usually, professional companies are aware of such licenses and permits because they deal with a variety of business on a daily basis.
Instead of calling the lawyer who will likely charge a hefty consultation fee, a professional company is your best choice to get a full-fledged business package that may also contain helping you get relevant business licenses and permits.
Overall, it’s much easier to register and start your limited liability company than you may think. If you follow our guide, you can be on your way to starting the first business transaction in a matter of days. If you want to take a do-it-yourself approach, this is the best time to do it as Utah has an extremely favorable climate that is non-restrictive and free of red-tape.
On the contrary, if you want someone else to take care of the entire registration process including help with creating operating agreements, getting an office address, and related business services, it doesn’t hurt to ask a professional company about their services. Most often, professional companies can offer a variety of services at an extremely reasonable cost. The low cost of these services makes it a great value compared to completing everything yourself.
Whatever method you chose, just make sure to diligently follow the business process. Don’t avoid practical steps such as creating operational documents and applying for EIN. Initially, these tasks may not look important but you will need to complete these at a later stage. This is the right time to get everything in-line as things can quickly spiral out of control once you are up and running. Please visit our guide on starting an LLC in Vermont.