Follow our free guide to form an LLC in Utah:
- Pros and Cons of Forming an LLC in Utah
- Starting Your Utah LLC
- Maintaining Your Utah LLC
- Additional Utah Resources
This step-by-step guide tells you everything you need to know about forming your LLC in Utah, including the pros and cons and requirements for each step.
Pros and Cons of Forming an LLC in Utah
Positive Regulatory Climate
According to Forbes, Utah is ranked #3 in the nation for their annual “Best States for Business” list. Since 2009, the government eliminated or amended over 400 business regulations that restricted business operations in the past. This encouraged a growing start-up culture and investment, as there are now fewer legal risks associated with businesses.
Privacy of LLC Members and/or Managers
As a result of the 2014 New LLC Act, Utah no longer requires initial public disclosure of the members of an LLC. This is beneficial for those who want to keep their identities private from competitors, vendors, and the general public.
Low Unemployment Rate
As of August 2018, Utah unemployment rate is 3.1%, which is lower than the U.S. national average of 3.9%. Although Utah’s job growth rate grew 3.9% year-over-year to in July 2018, compared to the 1.6% U.S. job growth rate YOY in that same month, there are more jobs created than there are qualified people to take new jobs.
Low Minimum Wage
Although Utah is home to some of the youngest and most vibrant individuals, its low minimum wage of $7.25 discourages the youth to stay in Utah. Naturally, people will want higher-paying jobs to afford a comfortable living condition.
Cost of Doing Business
$70 Filing Fee / $20 Annual Report
Starting Your Utah LLC
From naming your LLC to obtaining your EIN, starting an LLC in Utah has specific requirements. The process is that much easier when you have assistance. Here are the steps to ensure that your Utah LLC comes together correctly:
- Step 1: Name your LLC
- Step 2: Establish ownership of your LLC
- Step 3: Decide on a Registered Agent
- Step 4: File the Certificate of Organization
- Step 5: Create your Operating Agreement
- Step 6: Fill out the paperwork for an EIN
Step 1: Name Your Utah LLC
LLC Naming Guidelines
The first step to form your Utah LLC is to find a name for your new business. As you narrow down the list of possible company names, there are a few guidelines to keep in mind:
- The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C
- Your business name cannot be intentionally misleading to consumers
- The name of your new LLC must not be similar to another organization’s name/trademark
LLC Name Restrictions
A few restrictions are applied regarding the name of your LLC, and depending on the state you start your business in.
A few examples include:
- “Lottery” and “Bank” are ineligible for use (this applies to every state)
- Terms that represent educations or Veterans’ organizations are restricted
- Terms related to the Armed Forces or civil servants (police, EMT, fire)
Depending on the state, LLC business names associated with government and/or financial entities are not always restricted. Additional paperwork may be required.
In addition to choosing a name for your LLC, creating an online presence might be necessary in the current business climate. You can easily check domain name availability at a number of online web services sites. Prices of the domain may vary depending on the competitive nature, branding standards, etc.
Tip: Use a free business name search tool like what Swyft Filings provides to ensure your company’s desired name is available. If your requested LLC name is unavailable, try our free business name generator to help ideate alternative names.
Step 2: Establish Ownership
The owners of an LLC are not called owners — they are instead referred to either as members or managers. The difference depends on the management structure of the business.
LLCs generally have two management structures:
- Member-managed (ownership of business is divided among the members and all parties receive portions of the profits)
- Manager-managed (the appointed manager is the main operator and the members are passive investors who are not actively involved in the daily business operations)
After you have selected a name for your business, you then need to choose a management structure and designate the members of the LLC. Key points regarding Utah rules concerning LLC ownership include:
Required Number of Members
Utah LLCs must have at least one member or manager to form an LLC.
Member Disclosure Requirements
In filing your LLC, you have to disclose whether the organization is member-managed or manager-managed, but it is not required to disclose the members or managers of the LLC. However, within a year of formation, LLCs must file an annual report, listing a manager, member, or top-level executive as the “Governing Person.”
There are no age requirements to form an LLC in Utah.
There are no residency restrictions imposed on LLC members in Utah.
Step 3: Find a Registered Agent in Utah
All LLCs in Utah are obligated to choose a registered agent and include the agent’s contact information, including a physical address within the state. According to state law, the registered agent is the LLC’s primary contact person for the state, and must be accessible during the listed business hours.
What is a registered agent?
A registered agent is a person or business who is authorized to accept official government notices (including the Secretary of State) and service of process notices on behalf of the LLC.
Why do you need a registered agent?
Whenever you start an LLC in Utah, the law requires you to appoint a registered agent so that the state government has a consistent contact person for your business. This position is beneficial for LLCs that do not have a physical address.
Who can be a registered agent in North Carolina?
The requirements to be a registered agent are as follows:
- A resident with a physical address in Utah
- An LLC or corporation that is licensed to conduct business in Utah
It is also possible for you to be your own registered agent as long as you use a physical address.
Why you may not want to be your own registered agent
Because the registered agent’s name and address are a matter of public record, LLC business owners who choose to be their own registered agent risk compromising their personal information.
Tip: Avoid the hassles that come with being your own registered agent and choose Swyft Filings to fill the registered agent needs for small businesses in Utah. Find more information here.
Step 4: File the Certificate of Organization
One of the most important steps involved in officially (and legally) forming an LLC in Utah is filing the Certificate of Organization with the Secretary of State. This vital document includes the following:
- The name of the LLC
- Street and mailing address
- The name and address of the registered agent
- Definition of member-managed or manager-managed
- The statement of purpose
Additional Utah Filing Requirements
Professional LLCs (PLLCs), or companies that are formed around a professional and licensed service, may need to be disclosed in your LLC filing. For professional LLCs, Utah does not provide a list of professions that specifically need to form as a PLLC.
Step 5: Create an LLC Operating Agreement
Although the document should be in written form, Operating Agreements may be established orally, implied, in a record, or in any combination of the members of an LLC. Utah does not require an LLC Operating Agreement, but it is considered a vital necessity for any successful business because it adds structure to the company.
What is an LLC Operating Agreement?
The LLC Operating Agreement is an in-house legal document that defines the rights and responsibilities of each person involved in the business and lays out the details involving how the business will operate.
Why do I need an LLC Operating Agreement?
Because the LLC Operating Agreement clarifies the roles of the business’s members. The document also prevents disputes within the company by providing direction for daily operations and ensuring stability and structure of the business.
What goes into an LLC Operating Agreement?
Most LLC Operating Agreements include the following the information:
- Designation of the members/managers
- Initial capital contributions of the members
- Voting designations and percentages
- Member transfer/addition rules and restrictions
- Distribution of profits
Tip: Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.
Step 6: Obtain an EIN
What is an EIN?
A Federal EIN (Employer Identification Number) is also known as a Federal Tax ID and is a nine-digit number that is assigned to your business by the Internal Revenue Service (IRS). The EIN identifies your business for government purposes. EINs can be applied for via online, fax, and mail. If you have no legal residence and are considered an international EIN applicant, you can also apply by telephone, fax, and mail.
What business entities need an EIN?
The types of business entities that need an EIN include:
- An LLC with employees (even if owned by one person)
- An LLC with more than one member
- A partnership (LLC or C-corp)
Please note: A sole proprietorship is the only business entity that is not required to have an EIN.
Why is an EIN necessary?
The more common reasons you would need to apply for an EIN are to do the following:
- Hire employees
- Open a bank account in the U.S.
- File your company’s taxes
- Pay independent contractors
- Withhold taxes on income, other than wages, paid to a non-resident alien
Please Note: If you collect revenue of any kind through a business entity, you will need an EIN.
Swyft Filings offers EIN services for small businesses in Utah. Find more information here.
Maintaining Your Utah LLC
Now that you completed the initial process of setting up your Utah LLC, there are still requirements to keep your LLC compliant with the Utah government:
- Step 1: Register for the necessary taxes in Utah
- Step 2: Apply for the required permits and licenses
- Step 3: File the Annual Report for your LLC
- Step 4: Request a Certificate of Existence
Step 1: Register for Utah State Taxes
All states have their own specific taxation requirements. Utah has a flat rate personal income tax of 5%. Before you collect sales tax, it is also recommended for the LLC to register for a sales and use tax permits.
Step 2: Obtain Business Licenses and Permits
The business licenses and permits required in Utah vary wildly depending on the county or municipality where your new LLC is located.
A few examples of taxes that require specific licenses include:
Tip: If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.
Step 3: File an Annual Report
LLCs formed in Utah are required to file an annual report with the Secretary of State. The purpose of the annual report is to keep your business’s information and status compliant and up-to-date with the state.
Due Date: Annually by the end of the month of initial registration.
Implications of Late Filings: If the company does not file the annual report by this date, the government Secretary of State will deem your company “delinquent.” From delinquency, the LLC will be granted 30 days for an extension to file the annual report. Utah will add a $10 late fee for the missed deadline.
Swyft Filings helps you stay compliant by providing stress-free solutions. File your annual report with us today.
Step 4: Obtain a Certificate of Existence
After your Utah LLC has been formed, you must obtain a Certificate of Existence. Obtaining a Certificate of Existence provides your LLC with a “seal of approval” from the Secretary of State.
What is a Certificate of Existence?
The Certificate of Existence is an official notification from the government agency that confirms your entity has been properly filed and is fully compliant in that state of jurisdiction. Financial institutions and businesses may require proof that your new business is in good standing with the state before conducting any business with your LLC.
Why should I obtain a Certificate of Good Standing?
If you are a foreign entity, it is likely that you need a Certificate of Existence to prove your company’s existence in the state you conduct business in. There may be times when you will need to prove that your business is properly filed and fully compliant with the state. Many banks and businesses will request a Certificate of Existence as part of due diligence (especially during large transactions).
For the most part, any time you need to show your business is properly filed and fully compliant, you will likely need to present a Certificate of Existence.
Swyft Filings can create a Certificate of Existence for your Utah LLC. Click here for more information.