Business Formation

Pricing: Depends on specific circumstances, but common range from $300-$2500

Choosing a Business Entity and Formation Documents

Before you register a new business in Utah, you must decide what business entity you want in order to carry on your trade or business. Choosing an entity type for your business includes a variety of considerations. For example, will you be running your business by yourself as a sole proprietor or will you have a partnership, a corporation, or others with an ownership interest in your business? How will your taxes be impacted if you form a Limited Liability Company compared to a Corporation? Will you need Utah business or occupational licenses? Do you need to register for a Utah Sales Tax License? Should you incorporate as a corporation and issue stock to raise capital, or do you need the flexibility of an LLC?

A Utah business attorney will walk you through the different types of entities available for your business, advise you regarding which may best fit your specific needs, and then legally form the entity on your behalf.

What Business Entity Do I Need?

There are a handful of business entities that you can choose from when you are starting a small business in Utah. Each entity type can have different tax, liability, and governance rules that impact how your business will operate. Understanding the differences between the entity types and deciding what type will be best for your business is a very important part of starting a business.

Utah Limited Liability Company (LLC)

A Utah Limited Liability Company or LLC is one of the most common and popular business entities when starting a new business in Utah. The LLC is often used for businesses because it gives the owner(s) protection from liability that the LLC incurs in the course of business (subject to some limitations and requirements). The other benefit to LLCs is that it is taxed as a pass-through entity at the state and federal level. The income of the LLC is passed through to its members and is taxed on the member’s individual tax returns. The LLC is common used for types of asset protection plans, certain real estate transactions and rentals, and pretty much any other trade or business you can think of.

LLCs issue membership interests (as compared to stock or a partnership interest)

Partnership

Partnerships are another very common type of business entity. A general partnership is a pass-through entity for taxation purposes just like an LLC, but partners in a general partnership are liable for the liabilities of the partnership. There are also different types of partnerships, such as Limited Liability Partnerships (LLP), Limited Partnerships (LP), and Limited Liability Limited Partnerships (LLLP). The differences between these is beyond this article.

Partners have a partnership interest (as compared to stock or a membership interest)

Corporation (C or S)

A Corporation is an entity that provides its owners protection from liabilities incurred in the course of business but its income is taxed at the corporation level and then again when the corporation makes distributions to its shareholders. This is often called corporate double taxation, because the income from the business is taxed twice in total—once at the corporate level and then again at the shareholder level. Corporations are also very popular entities. Many startups will choose a corporation.

A Corporation may elect to be treated as a pass through entity for tax purposes. A Corporation that makes this election is called an S-Corporation or S-Corp. There are shareholder and stock class limitations for a corporation that make this election.

What Business Formation Documents Do I Need?

Required Documents for Utah Business Registration

Depending on the type of entity you are forming, you will need different formation documents. Utah’s online business registration process is fairly straight forward and there are many resources on the Utah Division of Corporation’s site that can help you learn more about the different entities and the Utah business registration forms that are needed.

Articles of Incorporation

The Articles of Incorporation are used to form a corporation. These can be very simple or very complex. You can take a look at what is required for a basic Utah corporation from the form that Utah publishes.

Certificate of Organization

The Certificate of Organization is used to form a LLC in Utah.

Partnership Application

Although not technically required to form a partnership in Utah (general partnerships can be formed without applying to the state of Utah), but it is a good thing to do. Take a look at the Utah General Partnership Application.

Recommended Documents for Utah Business Registration

You can register a new business entity with only the minimum documents that Utah requires for business registration, however, you will need to consider having other formation and operational documents for your business. These documents are particularly important if there are multiple partners, shareholders, or members of your business.

All of the documents listed below perform a similar function—to govern the operation of the business entity, including the share of profits and losses, contribution requirements, what happens when a partner retires, and really any other business relevant provision that someone may want to have written at the outset of a business venture. These documents may not seem important at the beginning of a new business, but they can have very significant effects down the road and they are often worth the time and money to make sure they done correctly.

Corporation Bylaws

Operating Agreement

Partnership Agreement

If you are starting a new business in Utah and need a Utah small business attorney, then please send me a message, give me a call, or schedule a initial advice session.