There’s a reason Utah is known as “The Beehive State”. Utah houses the spirit of perseverance and industry, and it’s no surprise that the state strives to attract new business owners. The fees involved with forming a Limited Liability Company (LLC) are fairly low, with a $70 starting cost to file the articles of organization. There are many excellent benefits to forming an LLC over a corporation or a sole proprietorship, including simpler and potentially more favorable taxes. Especially for single member LLCs, the state offers robust asset protection and the option for an anonymous LLC, making it an attractive choice for those looking to keep their involvement private.
It’s important to keep in mind the requirements of setting up an LLC such as conducting a business search to find a unique name. Additionally, there are several parts to maintaining your LLC such as filing an annual report and drafting an operating agreement to codify the processes for dissolving and how to reinstate an LLC if necessary. Another consideration is your process for amend your articles of organization if needed as a company evolves. Utah's regulations on whether an LLC is manager vs member managed provide further customization for business owners, and those interested in more complex structures might explore a series LLC.
An LLC is a legal business structure that combines the limited liability protection a corporation provides with the flexibility to operate without complex formalities one would expect when running a business. LLCs also often enjoy lower tax rates than bigger corporations do, on top of avoiding the hassle of having shareholders meetings and setting up company bylaws. With an LLC, you can have your cake and eat it too.
If you intend to create a business, there are some risks you may not be aware of when operating as a sole proprietorship, or a partnership. If you’re already providing a service of some kind as one of these types of entities, then taking that next step can provide you with plenty of extra benefits. Here are the main reasons to create an LLC:
Doing business in this country can be a risky venture. Citizens can sue anyone for any reason, which means it’s near impossible to provide a service without putting your assets at risk. Limited liability protection is a safety net you can obtain by separating the assets of your company from your personal ones. As long as everything you do is legal and not fraudulent, creating an LLC provides you with personal asset protection.
The default tax position of an LLC is as a sole proprietorship, meaning the taxes owed by the company pass-through to the owner(s). Sometimes this isn’t the best option for you, but thankfully, LLCs have more options. Should it prove more beneficial, you can elect to be taxed as a C corporation instead, taking advantage of all of the pros and cons that come with it.
Running a corporation can come with a limit on the amount of owners associated with it. LLCs operate under a different set of rules, expanding the amount of owners they can have indefinitely. LLCs can be single-membered or multi-membered companies, and members can be individuals, corporations, or even other LLCs.
If you have an idea and you need to bring in investors, having a formal business entity can be more attractive than being a sole proprietorship. Having a company is much more appealing and secure in the eyes of potential partners and shows your intent as legitimate.
After you form an LLC, you can start building credit history for it. Having this history can help you acquire loans and establish lines of credit, providing you with more options and resources for growing your business.
Having corporate meetings and establishing bylaws is part of the incorporation process. There are several legal documents to file and processes to follow that aren’t involved when forming an LLC. All of the technical decisions and mission goals for an LLC can be handled by constructing an operating agreement.
If you have an idea for a company and you want to gain all the securities that come with creating an official business entity, then the simplest way is to form an LLC. We provide a service to make it as easy as possible to create one. Here are the main steps involved with the formation process:
The most important step towards starting a new company is to come up with a name. The right name can inform customers and investors what your business is all about at a glance. You can check if the name you want is available by using a Utah business entity search tool online . A business name must also:
Make sure that you’re following all of Utah’s Business Name Conventions and Policies.
When you form an LLC in Utah, it’s required to have an agent for service of process. This registered agent is a person or business who is responsible for accepting tax and legal documents, notices of lawsuits, and other official government correspondence on behalf of your company. If you purchase a company through us, we cover your registered agent needs for the first year.
Submitting the Certificate of Organization marks the official establishment of your new company. You can submit this document online at the Utah Department of Commerce website. It will cost $70 to file and you’ll need the following information prepared ahead of time:
It’s a good practice to have an operating agreement. This is a written agreement between owners outlining ownership and operating procedures for an LLC. It also ensures that each member or manager of said business agrees to the same procedures for handling internal conflicts within the company, reducing the impact such a conflict might have.
Now that your business is an entity that can pay taxes, you’ll want an Employer identification Number (EIN) to make it easier to manage federal and state taxes, open business bank accounts, and hire employees. If you happen to have an EIN as a sole proprietorship, you’ll need a new one when you convert to an LLC. Thankfully, the IRS hands out EINs like candy, and you can get one for free online or by mail.
An LLC is the perfect business entity to create if you want to protect your personal business assets from those seeking to take as much as they can from you in a lawsuit. If you’re motivated to create a company and you want as much flexibility, security, and professionalism as you can get, then consider an LLC to serve your needs!