Are you looking to form a limited liability company (LLC) in Utah, but you’re not sure how the process works? There are several important steps to create a compliant Utah LLC that can do business in the state.
To get started, please reference our 6-step guide below or hire an affordable online LLC formation service.
What is a Utah LLC?
The Utah LLC is one of the most popular business structures in the state. It’s a more casual and flexible type of business than a corporation, but includes the personal asset protection that’s lacking from sole proprietorships and general partnerships.
LLCs in Utah have simple formation and maintenance requirements, several options for how they can be taxed, and flexible management. From one-person businesses to multi-member LLCs with several owners, the LLC is a popular choice for a reason.
Setting up a brand-new Utah LLC in 6 Steps
For the first part of this guide, we’ll cover the 6 essential steps to setting up a Utah business that doesn’t have employees yet. These steps also apply to businesses with employees, but we’re keeping things streamlined to start. If you do have employees, make sure you complete these steps and the steps for employers (which we’ll cover later in the guide).
Step One: Choose a business name
Your LLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to consider when naming your business.
In the state of Utah, you’re required by law to meet several requirements for your business name. Here’s a quick glimpse at the rules for LLCs:
- Your name must include the phrase “limited liability company” or the abbreviation “LLC” (with a few permitted variations
- Your name must be “distinguishable…upon the records,” or unique from other entity names in use in the state
- Your name cannot falsely imply affiliation with a government agency, olympic committee, education group, or other group that requires external oversight
- Entity type identifiers for other business types are not permitted
For more information on naming rules in Utah, please consult the permitted names section Utah’s Revised Uniform Limited Liability Company Act.
Another aspect to consider is including language that explains what your business does ― for example, if you’re starting a coffee shop, put the word “coffee” or “brew” in your LLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.” This helps potential customers know exactly what to expect from your business.
Matching Business Domain
Behind every successful business is a user-friendly website, which means you need a URL. A website is not a legal requirement, but we highly recommend it, and the best URLs match or closely reflect their business’s name.
To register a URL, we recommend GoDaddy. They make it easy to build a website for your company, guaranteeing that no one else can use or take the URL you want.
Once you’ve picked the perfect name for your business, you don’t want to lose it to another aspiring entrepreneur. Thankfully, Utah allows you to reserve your business name if you’re not quite ready to register your business. To do that, you’ll need to file the Application for Reservation of Business Name form and pay the $22 filing fee.
Filing this reservation protects your chosen name for you for 120 days. If you need more time than that, you can submit a renewal for another $22. You can learn more about name reservations here.
Step Two: Appoint a Registered Agent
Every LLC in Utah is required to designate a registered agent, which is the individual or registered agent service that receives government correspondence on behalf of your business, then forwards those documents to you.
When you appoint a Utah registered agent, here are the state requirements to be mindful of:
- Every entity that files with the Secretary of State must appoint a noncommercial registered agent or a commercial registered agent
- The agent must be an individual resident of the state OR a business with authority to operate in the state
- A commercial registered agent is any agent that has registered to be included on the state database of agents
- An agent must be continuously maintained
You can find a full rundown of the state laws here.
Without a registered agent, you could lose your good standing with the state of Utah, and the state also has the right to dissolve your LLC if they decide to. In a worst-case scenario, you could miss the alert regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
Guru Tip: We recommend designating an online service to handle these requirements. This eliminates junk mail and keeps your personal and/or business address off the public record.
Step Three: File Formation Documents
Once you are ready to form your Utah limited liability company, you will fill out the Certificate of Organization. You can either do this on your own or hire a Utah LLC service. Some services, like ZenBusiness, even offer discounts on their service.
This is THE document that will register your LLC with the state. You’ll want to ensure all of the following information is correct on the form:
- Your chosen business name
- The principal office address
- Name and address of your registered agent
- Signature of the organizer
- Name and address of each member or manager (optional)
- Duration of the business (usually perpetual; optional)
- Purpose of the business (optional)
- Whether your business is women-owned or minority-owned (optional)
All told, Utah keeps this filing pretty simple; all you really have to do is fill out some basic information. Other states make this form much more detailed, but Utah makes it easy. The only thing to watch for? Signing the form after you print it. As long as you remember that, you should be set to go. If you’d rather, you can file the form online instead.
- Total cost: $70
- Processing speed: 7-10 business days
- Expedited processing: $75 for turnaround in 1-2 business days
Step Four: Draft an Operating Agreement
After you register an LLC in Utah, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for this document in order to open an account. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your Operating Agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your Operating Agreement or create one from a free template online. You can read more about Operating Agreements, but some of the basic information you’ll want to have includes:
- Individual members’ ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the LLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Step Five: Get Licenses & Permits
Utah law requires an LLC to obtain all necessary licenses and permits before starting operations. State law also decrees that an LLC can only provide one specific type of service. All owners of the LLC must be licensed or registered to provide the specific service under which the LLC was assembled.
The type and cost of the permits that your business may require varies depending on the nature of the services your LLC offers. All Utah businesses will need to get at least one business license: the general business license. However, this license is not administered at the state level. Instead, Utah has its cities and counties administer licenses. So you’ll need to check with your local government to learn what the procedure is in your area.
After that, there’s also a good chance that your business will need one or more industry-specific licenses; Utah has a variety of professional and occupational permits, from occupational therapists to dental hygienists and many occupations in between. You’ll need to do your own research to learn what licenses apply to your business, so we recommend consulting the Department of Occupational and Professional Licensing to start your research.
Obtain a Business Bank Account
One of the most important aspects of running an LLC is ensuring that your business funds remain separate from your personal finances. And to do that, you’ll need a separate bank account for your business.
Obtaining a business bank account is pretty simple, and you can choose the financial institution you like best. Some banks will ask to review your LLC’s operating agreement, and some also ask to see your EIN (see the Employers section below). Once you have your account, you’ll be able to get checks, make payments using your business card, and so on.
If you failed to get a business bank account, you would technically be blurring the line between your personal accounts and your business accounts. That compromises your personal asset protection.
Next Steps for Newly-Formed LLCs
1. Prepare for tax time
Regardless of how far away April 15th is, it’s never too soon to prepare for tax time and setting up accounting software. As an LLC owner, the exact tax rates you’ll pay depend on the taxation structure you choose for your business. If you choose to be taxed as a corporation, the LLC itself will pay taxes from its own funds. Meanwhile, LLCs taxed as pass-through entities don’t technically pay taxes; its members do. The profits are distributed to the LLCs members, and each member reports that income on Schedule C of their personal taxes.
If you choose to be taxed as a corporation, you’ll pay the following rates:
- Federal: 21%
- State: 4.95%
Meanwhile, LLCs taxed as pass-through entities pay these rates:
- Federal: 10-37%, rising on a fixed-bracket scale
- State: 4.95%
In order to compliantly file and pay your taxes, you’ll fill out a complete copy of federal Form 1065 including all federal K-1s, statements, and attachments. Utah is one of the few states that charges a flat rate for both corporate and pass-through entities (and the same rate, no less). But you will use different forms to handle either tax. Businesses taxed as corporations use form TC-20, while pass-through entities use form TC-40. If you’re anticipating these filing requirements, they’ll be much easier to manage when their due date comes.
Besides that, if you’re involved in retail sales, you’ll have to collect and pay the state sales tax (4.7%). Then there are industry-specific taxes and fees that might apply to you, such as Utah’s taxes for restaurants, transient rooms, grocery foods, and more. To learn more about taxes (and which ones you’ll be subject to), check out the Utah State Tax Commission.
Because taxes can be incredibly complicated, we highly recommend consulting with a business attorney or accountant to ensure that you cover all requirements on the state and federal levels.
2. Be ready to file your annual report
All business owners operating in Utah must complete an annual filing, called the business renewal. Not only does this document demonstrate that your business is still open, but also updates the state regarding some information of your business that may have changed over the course of the year.
It’s easiest to file this renewal online, and there is a $20 filing fee. The report is due every year on your LLC’s anniversary date.
3. Consider business insurance
The big advantage to the LLC is that it offers you personal asset protection. But that doesn’t mean that mishaps won’t happen along the way. We highly recommend obtaining a general liability policy with the right coverage for your business.
In the event of a mishap or natural disaster, an insurance policy can help you navigate unexpected expenses. Be sure to compare your different options to get the best coverage for your particular type of business.
Extra Steps for Businesses with Employees
When you’re operating as a one- or two-person show, operating a business is relatively streamlined. Things get more complicated when you bring employees into the picture, but employees also help raise your business to new heights. But to reach those heights, you need to comply with employee-related legal requirements.
Step One: Address employee-related taxes
Any business with employees must obtain an EIN, or an Employer Identification Number. This is a free registration with the IRS, and the number acts a lot like a social security number for a business. Obtaining the number also lays the groundwork for other taxes, such as social security and withholding taxes. For example, you’re required to withhold income taxes from employee paychecks, make social security and medicare tax payments, and pay unemployment fund taxes. For more information on employer taxes at the federal level, look here.
There are similar taxes on the state level. For example, Utah requires withholding taxes, contributions to the unemployment tax fund, and more. We recommend consulting with the Utah State Tax Commission and the Department of Workforce Services to learn what taxes apply to you and your business.
Step Two: Obtain additional insurance
Almost every Utah business with employees is strictly required to get workers’ compensation insurance (there are a few limited exceptions). For more information on this policy requirement, check out the Workers’ Compensation page by the Utah Insurance Department.
If you haven’t already obtained a general liability policy, we highly recommend that you do so when you bring employees into the business. The more people you have involved in a business, the higher your risk of needing general liability insurance.
Of course, proper care and discretion will eliminate most problems, but incidents happen—from faulty products to an employee slipping and falling and theft and many places in between. And in some cases, insurance can be the difference between a minor hiccup and a budget-breaker.
Step Three: Enlist Help
For some entrepreneurs, part of the fun of running a business is the opportunity to wear lots of different hats: accountant, manager, marketer, quality control expert—it’s a near-endless list. And if your business is still pretty small, you might be able to handle many of these tasks yourself, especially if you’re prepared with a business administration degree.
But if you aren’t (and it certainly isn’t a prerequisite), some of these tasks may leave you feeling overburdened or out of your depth. For instance, navigating employer-related taxes might steal valuable time that you’d rather spend promoting your business or developing a new product. An accountant or tax attorney, however, knows those tasks like the back of their hand. You may decide it’s worth the added expense to enlist their help.
Ultimately, it’s your decision whether to bring in professionals or DIY. But in our opinion, it’s often worth it to get help from specialized pros.