Follow our free guide to form an LLC in Utah:

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

utah llc

Pros

Positive Regulatory Climate
According to Forbes, Utah is ranked #3 in the nation for their annual “Best States for Business” list. The feedback about Utah’s low regulation is based on the law-friendly nature of business in Utah. 

Privacy of LLC Owners
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 Cost of Living
Another reason Utah was chosen as one of the top states to start a business is the affordable lifestyle. Utah is the #6 most affordable city to live in the U.S., and their residents spend an average 25.02% of their income on household spending.

Cons

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
  • No corporate/franchise tax

Phase One: 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 Utah LLC

The first step in forming your Utah LLC is to choose a name your business. Both the state and federal government regulations exist concerning the use of certain words in business names.

Tip: Use a free business name search tool to ensure your company’s desired name is available. If the name is unavailable, try a free business name generator to help ideate alternative names.

Business Name Guidelines

  • 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

Restrictions

  • “Lottery” and “Bank” are ineligible for use (any state)
  • Terms that represent educational or Veterans’ organizations are restricted
  • Terms related to the Armed Forces or civil servants (police, EMT, fire)

LLC business names associated with government and/or financial entities are not always restricted - it depends on the state. Additional paperwork may be required.

URL Availability
In addition to choosing a name for your LLC, you also need to establish an online presence for your business by creating a website. Check domain name availability at a number of online web services sites.

Step 2: Establish Ownership

The owners of an LLC are known as members and managers. All LLCs will have members, but not every LLC will have managers —  it depends on the chosen management structure.

LLC Management Structures:

  • Member-managed: All members participate in operating and making decisions for the LLC
  • Manager-managed: An appointed manager oversees the LLC and the members are not actively involved in daily operations. 

Utah LLC Member Guidelines

Required Number of Members
There must be at least one member or manager to form an LLC in Utah.

Member Disclosure Requirements
An organizer/authorized representative may sign and file the Certificate of Organization in place of the LLC members.

Age Requirements
There are no age requirements to form an LLC in Utah.

Residence Restrictions
There are no residency restrictions imposed on LLC members in Utah.

Step 3: Find a Registered Agent in Utah

LLCs in Utah are obligated to select a registered agent. Your business cannot be official without filling this position.

What is a registered agent?
A registered agent is a person or business who receives all official mail and service of process notices for the LLC.

Why do you need a registered agent?
Your business is required to appoint a registered agent so that the state government has a consistent contact person for your LLC.

What are the main requirements for a registered agent?

  • The registered agent must have a physical address — not a P.O. Box
  • The registered agent must be available during business hours

Who can be a registered agent in Utah?

  • A state resident with a physical address in Utah
  • An LLC or corporation that is licensed to conduct business in Utah

Is the registered agent’s contact information publicly accessible?
The name and contact information of the LLC’s registered agent is a matter of public record.  

Can I be my own registered agent for my business?
You are legally allowed to be your own registered agent as long as you have a physical address in Utah.

Is being my own registered agent discouraged?
LLC business owners who choose to be their own registered agent risk compromising their personal information.

Tip: Avoid the hassles 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

The most important step in creating your Utah LLC is filing the Certificate of Organization with the Secretary of State.

What is the Certificate of Organization?
The Certificate of Organization is a legally binding document that is filed with the state government to officially and legally form your LLC.

Why do I need the Certificate of Organization?
Your LLC business in Utah will not be legally recognized by the Secretary of State without filing this document.

What information is included in the Certificate of Organization?

  • The name and address of the LLC
  • The name and address of the registered agent
  • Definition of LLC management structure
  • The duration of the LLC
  • The statement of purpose

Additional Utah Filing Information — Professional LLCs

Utah allows professional service businesses to form what is called a Professional Limited Liability Company (PLLC). Utah does not specify a list of allowed professional services professions. Example businesses are listed below.

Example Professions for PLLCs:

  • Accountants
  • Attorneys
  • Physicians  and Medical Professionals
  • Professional Counselors and Psychologists
  • Architects and Engineers
  • Veterinarians
  • Social Workers

A few points to consider:

  • All members of the PLLC must be licensed in the profession of the business.
  • The PLLC is only allowed to provide services for which the business was formed.
  • The members are still subject to whichever licensing boards govern the PLLC’s profession.

Step 5: Create an LLC Operating Agreement

Utah does not require an LLC Operating Agreement, but it is considered a vital necessity for any successful business because it adds professionalism and structure to your LLC.

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?
The LLC Operating Agreement ensures stability and prevents disputes within the company by providing direction for members and managers and protecting business assets from creditors.

Do I need to file the LLC Operating Agreement?
The Operating Agreement does not need to be filed anywhere since it is for the benefit of your LLC.

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

Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.

Step 6: Obtain an EIN

Most businesses formed in Utah must register for an EIN. Your Utah LLC will not be able to conduct business without this ID.

What is an EIN?
The EIN is a nine-digit number that is assigned to your business by the Internal Revenue Service (IRS) and identifies your business much like a personal Social Security number.

What does EIN stand for?
EIN is an acronym for Employer Identification Number. It is also known as a Federal Tax ID.

Are all businesses required to have an EIN?
Federal law dictates that certain types of business entities register for an EIN:

  • Any business with employees (even if owned by one person)
  • Any business with more than one member
  • A partnership (LLC or C-corp)

Please Note: A sole proprietorship is not required to have an EIN, but it is still recommended.

Why does my LLC business need an EIN?
The more common reasons you would need an EIN are:

  • To hire employees
  • To open a bank account in the U.S.
  • To file your company’s taxes
  • To pay independent contractors

In short, if your business makes money and has employees, you must get an EIN.

Is the EIN publicly listed?
The EIN for your LLC will be part of public record.

Can I use my Social Security Number as the EIN?
If you are a sole proprietorship who wants an EIN for your business, you can elect to use your social security number; however, your EIN is part of public record.

Swyft Filings offers EIN services for small businesses in Utah. Find more information here.

Phase Two: Maintaining Your Utah LLC

The initial process of setting up your Utah LLC is done, but there are still requirements to keep your LLC compliant with the Utah government:

Step 1: Register for Utah State Taxes

Utah does not impose a corporate or franchise tax on LLCs. Members are still required to pay state and federal income taxes on their earnings.

State Income Taxes
The state income tax for Utah was recently lowered from 5% to 4.95%.

Corporate Tax Information
You can also choose to have your LLC taxed as a corporation; if so, you will be responsible for paying the 5% corporate franchise tax rate on your business’s earnings.

Additional Tax Information
Other taxes your LLC may need to pay:

  • Sales and Use Tax at 4.7%
  • Employee Withholding Tax
  • Unemployment Tax

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:

  • Fuel
  • Tobacco
  • Alcohol

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

Utah does not impose a corporate or franchise tax on LLCs. Members are still required to pay state and federal income taxes on their earnings.

State Income Taxes
The state income tax for Utah was recently lowered from 5% to 4.95%.

Corporate Tax Information
You can also choose to have your LLC taxed as a corporation; if so, you will be responsible for paying the 5% corporate franchise tax rate on your business’s earnings.

Additional Tax Information
Other taxes your LLC may need to pay:

  • Sales and Use Tax at 4.7%
  • Employee Withholding Tax
  • Unemployment Tax

Step 4: Obtain a Certificate of Existence

After your Utah LLC has been formed and is ready for business, there is still one last step — securing a Certificate of Existence for your business.

What is a Certificate of Existence?
The Certificate of Existence, also known as Certificate of Good Standing, is an official notification that confirms your business is properly formed and is in compliance with all state regulations.

Who issues the Certificate of Existence?
The Certificate of Existence is generally issued by the Secretary of State.

When can I request a Certificate of Existence for my business?
You will be able to request a Certificate of Existence after your LLC is officially formed through the Secretary of State.

Why do I need a Certificate of Existence?
Having a Certificate of Existence adds a measure of credibility to your new LLC for banks, financial institutions, and other businesses. Some companies may not even agree to a business deal if your LLC does not have this certification.

Additionally, some states require a Certificate of Existence before a business can apply for Foreign Qualification.

Does the Certificate of Existence have an expiration date?
The Certificate of Existence does not expire/does not need to be renewed.

Swyft Filings can create a Certificate of Good Standing for your Utah LLC. Click here for more information.



Additional Utah Resources