Starting LLC in Utah: Peculiarities & Detailed Manual
Want to start an LLC in Utah? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Utah, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Utah LLC: The Notion & Essence
Many Utah business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Utah puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Utah’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Utah obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Utah’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Utah and will help you to start an LLC. The agent can be an Utah resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of Utah notifies:
An LLC appoints a registered agent responsible for receiving papers on behalf of your company. The agent is in charge of handling legally qualified lawsuits, claims, or notices.
A registered agent guarantees an excellent reputation for your Utah LLC. Also, if your business gets worse, Utah can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Utah, you must file the Articles of Association with the Utah State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
You can submit the form here or print this form and forward it to the Secretary of State per post.
Cost to establish an LLC: Utah demands a $70 fee for grounding an LLC.
Processing Time: The state officials need 1-2 weeks to handle your mailed documents and dispatch the finalized papers. You’ll get a response on the online filings in 1-2 business days. Keep in mind that the procession won’t start until you’ve sent a full package correctly filed.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Utah, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
Utah assigns state-level taxes in reliance on the legal type of a business. Income taxes, which are based on individual tax returns, apply to a flow-through company. Contrariwise, corporations must pay the state’s corporate income taxes. It amounts to $100 or 5% of your taxable income if the amount received exceeds $100. You’ll access all-encompassing guidance on corporate income taxes and get the forms here.
LLCs connected to retail sales must cover the state’s streamlined sales tax. It currently amounts to 4.7%. An all-encompassing guide on the payment is available here.
LLCs with hired employees must cover several taxes dedicated to the labor force. Thus business proprietors must organize withholding taxes. These are extracted from gross salaries and forwarded to the state of Utah. You’ll access more information on the tax in question here.
Besides, employers must fund the state’s unemployment insurance. The payment doesn’t belong to the tax range still we point it out, as you are to arrange regular payments. Utah Department of Workforce Services offers further guidance on the payment.
Besides general taxes, Utah levies tax valid for certain industries. Thus it charges extra LLCs working with oil recycling and others. More information on Utah’s business taxes is offered here.
Local Tax Business Demands
The physical location of your LLC in Utah also influences your taxation. Thus, counties are entitled to levy extra sales taxes. The current rates are available here. We suggest you should consult local officials to get a full picture of local requirements.
Stage №6: Getting Business Licenses & Permits
Utah spares business proprietors from obtaining a statewide general business license. Still, the state obliges LLCs to receive permits expected by the federal government. These apply to certain industries like fishery, agriculture, wildlife, and others. We suggest you consult listings of federally-regulated industries with mandatory licenses provided by the Small Business Association.
Utah leans toward local permits rather than state-wide ones, so you should definitely consult your local municipality to estimate which licenses you’ll have to acquire. You’ll ease the whole process by registering at Utah’s OneStop.
As the state maintains specific taxation, Utah naturally issues business licensure, which applies to certain branches only. Still, the state officials provide plenty of specific permits, so you’ll quickly obtain the necessary license. We advise you should consult the database of business licensure offered by Utah here. Keep in mind that you must also check with a local municipality for area-specific permits.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
Business Insurance
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Utah Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Income reporting
All business proprietors must inform the state of profits they make by presenting an annual income report. Be aware the document must be filed, even if you’ve made no income. Utah provides resources on mastering income reporting here.
Referring to the services of a qualified accountant
The state obliges every LLC to submit an annual renewal (also called an annual report). You have an option of submitting the paper online here. The report must be sent 60 days prior to the day of your LLC establishment.
Be aware of a $20 fee. Also, don’t suspend the submission, otherwise, you’ll pay an extra $10 for the delay. An annual report informs the state of any vital data associated with your LLC and its development over a fiscal year.