Utah LLC Requirements

There are several requirements to forming and maintaining an LLC such as paying state fees, filing an annual report, and paying taxes. If you want to form an LLC to maximize asset protection, it's a good idea to go above and beyond what’s strictly required and follow best practices. For example, drafting an operating agreement gives many great benefits such as adding clarity to management obligations and adding legitimacy to your entity, especially if you have a single member LLC.

A limited liability company (LLC) is a company in the United States that can have anywhere from one to an unlimited number of owners referred to as “members”. Limited liability means that the owner’s assets are shielded from lawsuits and debts the LLC may one day encounter. Owners also gain anonymity from the separation of their personal info from that of the company. If any of these perks interest you, we also provide general information on forming an LLC.

LLCs have different business structures you can choose to operate as including sole-proprietorship, partnership, or a series.

Sole-proprietorship: An LLC with only one owner.

Partnership: Has many partners, who act as co-owners. In an LLC, partners have liability protection from each other.

Series: A series LLC is a new structure that only a few states recognize, including Utah. The series LLC has a master LLC that controls a bunch of other LLCs called cell LLCs. All of these LLCs are separated for liability purposes.

A corporation’s ownership is strict in that there can only be one owner. However, as stated above, an LLC can have an unlimited number of owners. These members don’t even have to be people, and can include corporations, other LLCs and foreign businesses as well.

In conclusion, LLCs free up some rigid constrictions that corporations have to deal with.

In order to create an LLC, there are a few requirements to hash out first. Most of these requirements are mandated by state law, and are not optional information. The following information below is what you’ll need:

1. Business Name - First order of business is the business name. There are only a few limitations involved when choosing a name.
   1. The name must be unique, and not easily confused with another business
   2. The name must include “Limited Liability Company” or one of its abbreviated forms (like LLC) in its title.
   3. It cannot include any prohibited terms unless it has received authorization to do so. Typically these restricted words comprise legal and financial subject matter. Examples of specific words that need permission to use are “Bank”, “Trust”, and ”Insurance”.
   4. There are additional forbidden words in Utah that require permission to use that you also must be aware of. “Olympic,” “Olympiad,” or “Citius Altius Fortius.” are not allowed in your name unless you receive permission from the U.S. Olympic Committee. This is the same for the Division of Consumer Protection when applying to use the words “University”, “College”, or “Institute”.
   5. You can reserve an available LLC name for just a $22 fee, and the reservation lasts for 120 days.
2. Registered Agent - You are required to have a registered agent represent your business for handling the sending and receiving of all legal paperwork. This agent must be at least 18 years old and a resident with a physical address of the state your LLC will do business in. Click here for more information on choosing a registered agent.
3. Operating Agreement - Full disclosure, the operating agreement is rarely required to form your LLC. However, it is extremely integral for owners to plot out the internal rules and procedures before doing business. The operating agreement is designed to detail various functions like the rights and responsibilities of members, management structure, and how to split up dividends of the LLC. It can be as simple or complex as the owners need it to be, and will be needed by a multitude of establishments (eg. courts and banks).
4. Articles of Organization - This is a legal document that is filed with the state that can have alternative names such as certificate of organization, or certificate of formation. There is usually a cost associated with submitting this file, and for Utah it is $70. This Article contains your LLC name and address, the name and address of your registered agents, and the names and signatures of the LLC Owners. Your registered agent should hold onto this article of Organization.
5. Business Licenses and Permits - Depending on the nature of your business, you might need additional licenses and permits in order to operate. There are licenses regulated by both federal and state levels to be aware of. A few examples of federal imposed licenses are on businesses that deal with agriculture, alcohol, or firearms. Other possible items you may need are general business licenses, tax registrations, health permits, zoning or land-use permits, and state-issued occupational licenses. Be sure to double check all the extra authorizations that you will possibly need with a professional advisor.
6. Tax Forms - You would need form 1065 to file a tax return on partnership income. If you elect to be taxed as a different entity, then you will need to use tax form 8832. Typically, these forms should be submitted on your personal tax return because LLCs are a pass-through entity and do not pay federal taxes themselves. States may also require a fee for the renewal report that is due annually. Utah’s renewal fee is $20.

LLCs are best for business owners who are looking for benefits to grow their business. One major perk would include liability protection where the personal assets of the member would be protected from being seized for debt or lawsuits targeting the company. LLCs also have simpler record keeping as opposed to a corporation, and in some scenarios have lower tax rates as well.

On the other hand, business owners who make a considerable amount of income should consider electing their LLC to be treated as a corporation for more favorable tax savings. However, corporations are subject to double taxation, so the profits should be great enough to offset the loss.

Getting all the requirements and paperwork in order to create an LLC can be challenging. That’s why it is recommended to work with your lawyer when settling all this information. They are your professional guide in making sure all your company’s details are filed correctly with the state.