A Limited Liability Company (LLC) is a company that has a legal structure that gives owners the ability to limit their personal liability to debts and lawsuits.
LLCs not only provides liability protection but several tax advantages. For this reason, they are a great option for business owners who want to start their entrepreneurial journey in Utah.
Starting an LLC seems like a complex process, but that’s not the case. In this article, we give you a step-by-step guide on how to start an LLC in Utah.
|LLC Filing Fee||$70||$425||$50||$50||$130.38|
|LLC Annual/Biennial Fee||$20 (every year)||$350 (every year)||$10 (every year)||$0 (no fee and no information report)||$89.34 (every year)|
|Corporate Tax Rate||4.95%||0%*||4.55%||4.90%||5.60%|
|Nominal GDP per capita||$66,011||$61,375||$72,597||$56,511||$64, 773.08|
Before You Set Up An LLC In Utah
Like most US states, starting an LLC in Utah requires that you file the right paperwork.
Before creating an LLC in Utah, ensure that you have done enough research on the business niche you wish to invest in.
Outsource to professionals and agencies that may come in handy when registering your LLC.
How Much To Start An LLC In Utah?
The costs incurred while starting an LLC in Utah may include filing fees. Taxes are paid once the business is up and running. Filling fees include a $70 fee paid when filing for a Certificate of Organization.
Steps To Start Your LLC In Utah
Here is a guide on the steps to take when forming an LLC in Utah.
Pick A Name For Your LLC
This is the first step when you want to start an LLC in Utah. A good business name should be catchy and should set you apart from your competitors.
Nonetheless, your LLCs name should comply with Utah Business Name Conventions and Policies. According to Utah naming guidelines;
- The LLCs name should include the phrase Limited Liability company or any of its abbreviations which Limited Company, or L.L.C.
- The name should not be similar to a government agency such as the FBI, NASA, and Federal Trade Commission.
- There is a restriction on the use of certain names that may require additional paperwork, including written consent from the appropriate agency.
In addition to following the naming guidelines, the business name has to be unique. You can always conduct a name search to ensure your business name isn’t taken.
You also need to conduct a search whether your preferred name is in use as a web domain. Even if you don’t plan on creating a website, you may want to buy the domain name and prevent other owners from acquiring it.
Find a registered agent in Utah
The law requires that all businesses in Utah appoint and maintain a registered agent. A registered agent will be responsible for receiving any legal documents, tax forms, or any notice of lawsuits.
The appointed registered agent must have a physical address in Utah, while corporations must have a permit to conduct business in the state. You can choose to hire professional services or choose a member of the company who meets the minimum requirements.
If you are planning to outsource, here’s our review of the best-registered agent services.
|ZenBusiness – $49 + state fees to register your LLC (read review)|
|Incfile – $0 + $50 state fees to register your LLC (read review)|
File Certificate of Organization
Now that your business has a name, the third step is filing the Certificate of Organization, also referred to as Articles of Organization in other states.
The document is filed with the Utah Department of Commerce and can be done online or via mail.
On this form, you will need to include:
- The company’s business name
- The physical address of the business
- Your registered agent’s name and other relevant information such as their address
- The names of all the members of the LLC
For mail applicants, a completed form is sent to the
Utah Division of Corporations and Commercial Code
P.O BOX 146705
Salt City, UT 84114
Alternatively, you can log in to the Utah Department of Commerce and create an account then complete the registration through the One-stop Business Registration option.
The filling cost is $70 paid to the state of Utah and is non-refundable.
Create an Operating Agreement
A Utah LLC operating document is not a legal requirement, but it is an important document. The document helps manage the internal affairs of the business and is also a good reference point in case of any conflict.
An operating agreement outlines how the business operations run, including all the terms and conditions.
A good operating agreement should address the following issues;
- Who the members are and the division of ownership
- Whether the LLC will be member-managed or will appoint a manager
- Capital contributions plus how profits will be shared out
- How roles and membership will be transferred in case a member leaves
- Dissolution of the LLC
You can use templates to create an Operating Agreement for your Utah LLC.
Get an Employer Identification Number (EIN)
Also known as the Federal Employer Identification Number, EIN is a nine-digit code that is assigned by the Internal Revenue Service. You can submit your application online, via fax, or by mail.
The primary purpose of this code is taxation. It allows you to file your tax documents when needed. In addition to this, EIN allows you to open a separate bank account for your business, allowing you to sort out your finances and hire employees.
The Forms You Need To Register An LLC In Utah
LLC Taxes In Utah
Like most states, you will need to pay federal and state taxes to conduct business in Utah.
State Taxes For LLCs In Utah
These are taxes paid to Utah’s Department of Revenue and include income tax and sales tax.
Utah’s Income Tax
Utah has a flat tax rate of 4.95% for all income levels. As a business owner in Utah, you will need to pay your income tax on any money you earn. However, you will be eligible to apply for allowances and deductions.
Utah’s Sales Tax
For businesses that sell physical products or certain types of services, you will have to pay a sales tax to Utah State Tax Commission. Utah’s tax rate is listed at 4.85%, but different cities and municipalities might have additional charges resulting in a tax range of 6.01% to 9%. To find out your exact tax rate, click here.
Federal Taxes For LLCs In Utah
Federal taxes to be paid in Utah include the self-employment tax and federal income tax.
This caters to Social Security, Medicare, and other benefits. The current rate is 15.3%. However, you may be able to reduce how much you pay to the IRS by treating your LLC as an S Corporation. This will be possible by treating some of your income as salary and the rest as withdrawals and deductions.
Federal Income Tax
You will be required to pay federal income tax on your earnings, depending on the income tax bracket, the amount of money you earn plus deductions. The earnings, in this case, are profits taken from the business.
Employer And Employee Taxes
As an employer, you will need to pay insurance for your employees which may include employee compensation insurance and unemployment tax.
Looking at the taxes imposed on businesses in Utah, it is clear that the state is a great place to start a business.
The state has a flat tax rate system with the government working on providing a good business environment. Utah has had noteworthy economic growth since 2018, as seen by its GDP growth rate of 3.8%. In addition, the state has a willing workforce, as seen by its unemployment rate coupled with a talented labor supply.
How Long To Form An LLC In Utah?
This will depend on how you have made your registration application. Online applications take 2 working days, while mail applications take 2 to 3 weeks.
How Much Does It Cost To Run An LLC In Utah?
Running an LLC requires business owners to adhere to all tax requirements. The state has a corporate tax rate of 4.85% payable to the State of Utah plus an annual filing fee of $20.
What To Do After Formation?
Having your LLC successfully registered is only the first step in establishing a viable business.
A lot still remains to ensure you position your LLC in the right direction in terms of marketing, protect your personal assets and safeguard your business from unnecessary lawsuits. Here is a list of some things to do to achieve this.
Create A Logo
In a highly competitive world, a logo is the visual presentation of a brand that makes a brand recognizable. As a new business, you need to explore your options in order to create the perfect logo that stands out in your customer base.
For businesses, logos create lasting impressions while providing your brand with an identity. With such importance, you also need to consider trademarking your logos.
Before trademarking, conduct a search to ensure your trademark is unique and not already in use. You can do that by visiting the United States Patent and Trademark Office.
Build A Website
As more people turn to the internet for information, creating a website is crucial for your business. A website increases your company’s credibility and acts as an information base hence improving customer experience. Also, the website improves your marketing efforts by helping you generate leads and increase sales.
There are several website builders you can use. Just ensure you represent your brand correctly. Alternatively, you can opt to hire a professional developer.
Open A Business Bank Account
This is essential to ensure that your personal assets are protected in case your LLC is sued. Apart from protection, business accounts allow you to accept credit card payments while easing the tax preparation process.
Business insurance is critical in covering property damage and liability claims for your LLC. To keep your business up and running, it is important to pick the most relevant insurance covers tailored for your business.
For an LLC, the best insurance covers include:
- General liability insurance
- Professional liability insurance
- Workers’ compensation insurance
- Cyber liability insurance
- Commercial property insurance
File Annual Renewals
Also known as annual reports, annual renewals are legal requirements for all LLCs operating in the state of Utah. The annual report is due a year after your LLC was formed and is filed at a cost of $20.
Resources To Start A Successful LLC In Utah
Start Marketing Your LLC In Utah
To set up your business for success, marketing is essential. It helps create visibility while generating leads and sales. Here is how to get started.
- Create a strong business brand
- Choose your marketing avenues
- Conduct market research
- Promote your products
- Create a social media presence.
You can refer to our ultimate guide to business marketing to learn more about setting the right marketing strategy for your business.
How To Dissolve An LLC In Utah?
Dissolving an LLC in Utah requires that you file the Articles of Dissolution. This will require all the members to agree with the dissolution. In addition, the business owners need to pay any outstanding debts and taxes to the state.
We covered everything you need to know to start an LLC in the state of Utah. Starting an LLC is easy and you can have your business running in a few short days.
Make sure you prepare all the forms we mentioned and that you file annual reports.