To form an LLC, especially a single-member LLC, you will need to meet requirements such as drafting an operating agreement. Additionally, you will need to pay all of Utah’s state fees including annual report fees and taxes. Though these fees and requirements can feel burdensome, we find the benefits of an LLC outweigh the costs.
Like other entrepreneurial ventures, the formation of an LLC needs funding to get the proverbial business ball rolling. LLC state filing fees range from as little as $40 to $500. In 2022, $132 is the average cost for filing a fee for an LLC in the U.S. Besides this fee, there are other expenses to be mindful of when creating your LLC. Besides start-up costs, there are other recurring fees and expenses to submit to keep your LLC in good standing with the government.
Initial Filing Fee: When forming your limited liability company, there is a one-time filing fee when you submit your Articles of Organization to the state. It is $54 to file an LLC in Utah.
Reserve an LLC Name (optional): You will need to choose a unique name as part of creating your business, and file it with the Secretary of State. It can be as difficult as picking a username for an online game, and so in most states, you can reserve a name that you like by filling out a name reservation application. There is a fee to submit the information and it can range from $10 to $140. In Utah, the name reservation fee is $22. A fairly reasonable price compared to other states like Pennsylvania, where the same service costs $70.
Business License Fees: Before operating your business, check to see what business licenses you will need to stay in compliance. Failure to have a business license for the products and services you offer could have serious repercussions. You could face heavy fines, or worse, your business could be shut down. The absolute worst scenario would be to illegally operate as an unlicensed business incurring a jail sentence as well as extra fines. A few examples of business licenses would be a seller’s permit, liquor license, and basic business license, among others. Coordinate with a professional when planning the permits your business requires.
DBA Fee (optional): DBA stands for “doing business as” and what that means is that business can operate under a different name than its legal name known as a fictitious business name or a trade name. LLCs would want to do this to localize their marketing name while still utilizing the liability protection an LLC grants them. Total Cost can range from $10 to $200+. Utah’s fee is $22, and is still on the cheaper side for pricing as compared to the other states..
Annual Fee: To keep your business in compliance with the Secretary of State, there is also an annual fee to be paid (usually every year, but sometimes every 2 years) when filing your LLC’s yearly reports. Additional fees are tacked on if you are late submitting these reports. Paying the annual fee is mandatory, otherwise your business will be shut down. These annual fees are also called renewal fees, or reporting fees. It is $18 to file your annual report in Utah, and an additional $10 fee if your submittal is late.
Franchise Taxes: Depending on the state that your LLC resides in, you may have to pay a special annual tax that you have to pay regardless of the amount of income your LLC generates. Utah does not have a franchise tax on LLCs that are classified as partnerships or sole-proprietors. However, if the LLC elects to have itself classified as a corporation, then it will be subject to Utah’s franchise tax. This tax is 5% of the LLC’s net income. The LLC would need to submit a TC-20 tax form to the Utah State Tax Commission Office.
Business License Renewal Fees: Any local or state licenses will need to be renewed periodically, typically every year. Renewal fees range from $20 to $100. You can apply for state level business licenses online at your state’s Department of Commerce website. Local licenses can be filed with the county that your LLC is doing business in. Similar to as mentioned above regarding the filing for business licenses, not maintaining the license puts your company at risk for fines, closing of business, or jail time for illegal operations.
Registered Agent Fees: It is required by law for your business to have a registered agent to facilitate communication from the state, and to receive all service of process. An owner can choose anyone that meets the requirements of being 18 years or older, and who has a street address in the state their LLC is located or will do business with. However, most companies hire someone from a professional registered agent service to ensure that their documents are being sent and received with competence and efficiency. Depending on who you work with, the annual fee for hiring a registered agent is usually between $100 to $300.
To reiterate, the costs of starting and maintaining an LLC differ depending on the state your business resides in. As a quick recap, below is a list of fees specific to Utah:
Most initial start up fees and renewal fees can be paid to the State’s Department of Commerce. Federal taxes would be paid to the IRS. State taxes are handled by the State Tax Commission.
It is beneficial for most owners to create an LLC for their business, especially if the LLC is located in Utah. Utah is on the cheaper side for paying fees compared to other states. An LLC in Utah would have lower start-up costs and have lower tax rates, while providing extra perks you can’t get from a corporation. Having limited liability, unlimited members, and anonymous privacy are just a few favorable qualities of being an LLC.