How to Form a Utah LLC in 10 Steps
An LLC or Limited Liability Company is a typical structure of business and quite common. Profits that an LLC earns are passed through to all members. This structure of business also allows one or more persons to own a portion of a business. Finally, an LLC reduces the owner(s) exposure to liability from company activities, and LLCs do not need to file their tax returns separately (like corporations).
Forming a Limited Liability Company is a straightforward process, but there are several steps you'll want to follow.
1. Choose Your Company Name.
Choosing your LLC’s new name is one of the most important steps in the entire LLC creation process. Essentially, you just need to worry about your name being taken by another business. Most importantly, no other business in the state of Utah should have the rights to use the name you've chosen. We also recommend checking to make sure there is not a registered trademark on the name you have chosen.
You can run your own name search, but we would also be happy to run your name search or reserve your LLC name at SunDoc for a nominal fee.
2. Understand the LLC Organizer Requirement.
All LLCs need to have an LLC organizer. The LLC organizer will be named on your Certificate of Organization form. Many people assume the LLC organizer has to be a member or manager, but it can actually be anyone.
An organizer is the person or company that drafts your LLC. By preparing on-line with us, SunDoc Filings will be your organizer. If you choose to prepare and upload your filing with SunDoc, you can name your own organizer.
3. Designate a Registered Agent.
On the certificate of organization form, you must also choose a registered agent for your new LLC. It can be confusing to understand exactly what the registered agent does and why you need one, so we've created this article to help you out: Registered Agent Service. Remember that your registered agent can be a firm, but it can also be an individual.
4. Decide Your Ownership and Management Structure.
The next decision that you’ll need to make is how you will manage your new LLC. Do you want one or multiple managers to manage your LLC? Or alternatively, would you prefer that all members manage your LLC?
5. Create an Operating Agreement.
It's possible your company might require that you have an operating agreement. This agreement will outline functional decisions of your business as well as financial decisions. It is a key document needed by many LLCs. Each operating agreement will suit the unique needs of your own LLC’s owners. It governs all of your internal operations and includes provisions, regulations, and rules.
Many people think of the Operating Agreement as the engine that moves your company. For example, it manages working capital, forms your governance, and pays out all profits to members. Important things like how you handle voting, money, fiduciary constraints, liability, and more are all within your Operating Agreement.
It might be a good idea to speak with a lawyer about the formation of your LLC’s Operating Agreement.
6. File the Certificate of Organization.
Nearly all companies need to file what’s called the Certificate of Organization. You’ve heard this mentioned before. Once the SOS of Utah accepts your company’s Articles, your official LLC will be created.
When filing your Certificate of Organization, you will need several bits of information, including the address and name of your company, who your registered agent is, who your LLC organizer is, and the method of management you've chosen. In some cases, member names may need to be filed with the Articles as well.
If you'd like assistance with filing your Certificate of Organization, SunDoc is a filing service who can handle this paperwork for you.
7. Obtain an Employer Identification Number and Open a Business Account at the Bank.
Congratulations! You are now a registered Utah LLC. Any LLC with more than one member must file with the IRS for an EIN, Employer Identification Number, whether or not you have employees. You can file with the IRS yourself, or SunDoc can file for you.
Now is also a good time to set up the fiscal management of your new company. First, locate an accountant who can assist you with business financial matters. Next, make sure you have a business expense account. In order to create this account, you'll need to have your EIN set up beforehand.
Once this account is open, make sure to reimburse yourself or any other members for any payments you’ve made out of pocket (using receipts, of course). You should use your business account for all business expenses from now on.
8. Pay Utah State Taxes.
Find everything you need to know about paying Utah State taxes on the State of Utah’s tax web site.
The most important thing you need to know about paying state taxes is that you absolutely must pay them every year, including the first year that your LLC is in operation. Additional taxes may have to be paid if you plan to sell goods within Utah state lines. In this case, you will need to collect sales tax.
9. Determine Necessary Licenses and Permits.
Most states require companies to have one or more business licenses or permits to operate at the city or county level. Use your state's business website to find the requirements for your business. It’s important to check this website even if you think your business is exempt. You may be surprised to discover what’s required. Operating without the proper license or permit can result in expensive fines.
10. File an Annual Report (Biennial Report or Initial List).
Most of the time, your company will need to file a yearly report as well. This may be a Biennial Report, an Annual Report, or a similar document. Generally speaking, every one or two years after that, another report will be needed as well (an updated version).
This Annual Report is a basic form. It simply gives the state of Utah updated information about your company. Later, if you end up making changes to your company, it will probably be among the forms you’ll need to file again with the state.
It is very important to file within the required time. It can cost you as much as ten times the normal filing fee if you file late! If you prefer, SunDoc can file your Annual Report/Biennial Report and other routine filings for you, reliably and on time. All LLC forms, including the report form, can be found on the Utah business web site.
Important Notice: It is beyond the scope of this article to discuss your potential insurance needs, or matters relating to employees. You should consult an attorney or accountant with any questions about legal or financial matters. Please note that nothing in this article can be construed as legal, tax or accounting advice.
For additional learning, please visit our LLC FAQs.
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