This post is for information only. You are responsible for reviewing and using this information appropriately. This content doesn’t contain and isn’t meant to provide legal, tax, or business advice. Requirements are updated frequently and you should make sure to do your own research and reach out to professional legal, tax, and business advisers, as needed. Businesses outside of Utah will have different steps and requirements. To sell products using the Shopify platform, you must comply with the laws of the jurisdiction of your business and your customers, the Shopify Terms of Service, the Shopify Acceptable Use Policy, and any other applicable policies.
The State of Utah offers a rich business environment in which to launch and run your LLC. Trade incentives, special development and enterprise zones, and favorable tax treatment are all attractive leverage points for any entrepreneur looking for a home. Utah was ranked the best state for doing business by Forbes six times between 2010 and 2016, and in 2022 was one of the fastest-growing economies in the US. The state is headquarters for companies like Overstock.com and Extra Space Storage and boasts office locations for large corporations, including Adobe, EA Sports, and Goldman Sachs. The state’s five national parks and proximity to ski resorts aren’t bad perks, either. This guide will walk you through the steps to building an LLC in Utah, which you might not be able to do entirely on a chairlift up the snowy slopes, but you can certainly get started.
How to start a Utah LLC
- Name your Utah LLC
- Create a business plan
- Get a federal employer identification number
- Choose a Utah registered agent
- File your Utah LLC Certificate of Formation
- Obtain Utah business licenses and permits
- Understand Utah state tax requirements
- Prepare a Utah LLC operating agreement
- Examine business insurance options in Utah
- Understand financial considerations
- Market your LLC
What is an LLC?
A limited liability company (LLC) is a common business entity that shields owners from personal liability arising from claims against their business. This means business owners won’t be held personally liable for legal and crediting claims against the company, and their non-business, personal assets are safe from litigants and creditors.
Tax treatment of LLCs is another advantage of the entity form. The federal government classifies the LLC as a “pass-through” business entity, meaning any generated income is taxed only once at their members’ individual tax rates. Corporations, on the other hand, pay federal taxes on the company’s profits, and once more at shareholders' personal-income levels—so-called “double taxation.”
LLC owners are known as “members.” An LLC with more than one owner is called a “multi-member” LLC, while an LLC with only one owner is a “single-member” LLC.
Is an LLC the right business structure for you?
There are a variety of types of business structures to choose from when building your small business in Utah. Whether you choose an LLC or some other format depends on your business goals and needs. An LLC might be the right choice for you if:
- You want to limit your personal liability. LLC members enjoy a degree of personal asset protection—meaning they are not generally held personally liable for business debts and legal damages the company incurs.
- You want to limit your tax liabilities. LLCs avoid taxation on business income at the federal level. Profits are only taxed once, at members’ personal income levels, which is less than most corporate structures.
- You don’t need to fundraise by issuing shares. LLCs are not able to issue stock or have shareholders, as C corporations can. While this limits your business’s ability to raise investment capital, you won’t be subject to the same complex regulations that C corporations are.
1. Name your Utah LLC
Selecting a name for your business is likely one of the first in a long line of essential decisions you will make as you build your Utah LLC. The two main Utah LLC naming guidelines are:
- Your name must be unique. Your LLC’s name must be unique from any other business in Utah. You can check to see if your preferred name is available by running a search through the Utah Division of Corporation’s website.
- Your name must include the entity type. All LLCs in Utah must have the phrases “Limited Liability Company” or “Limited Company” in their names, or an abbreviation thereof (LLC, L.L.C., LC, or L.C.). “Limited” may be abbreviated to “Ltd.,” and “Company” as “Co.”
- Your name can’t include certain words. The LLC can’t imply a false association with any government agency, and thus should avoid terms like “agency,” “commission,” “department,” “bureau,” or “board.”
2. Create a business plan
Building a solid business plan will help guide you and your business on your journey down the road to success. A business plan should include, at a minimum, your LLC’s name, and a concise mission statement. The plan should also offer a thorough market analysis, lay out an organizational structure for the company, describe the products or services it sells, identify one or more target customer profiles, summarize plans for marketing those products or services to those customers, and how you plan to finance the whole operation. If you’ve never written a business plan before, having a template to work from can help.
3. Get a federal employer identification number
To pay federal and state taxes, your Utah LLC must be assigned a federal employer identification number (EIN), which is like a Social Security number, but for a business. You can apply for an EIN, which identifies your business to both state and federal tax authorities, by applying through the US Internal Revenue Service (IRS).
4. Choose a Utah registered agent
A registered agent is required by Utah state law for every business unit in the state. Registered agents are authorized by the LLC to receive legal correspondence and official documents on its behalf. In Utah, a registered agent can either be an individual or a business entity. As long as an individual is older than 18 and has a street address in Utah, they can be your registered agent. You can even be your own registered agent. If you would like to engage a registered agent service, a company that acts as a registered agent for you, they must also be authorized to do business in Utah and have an address in the state.
5. File your Utah LLC certificate of formation
To officially establish your LLC in Utah, you’ll need to file a Certificate of Organization, known as Articles of Organization in some states. This documentation is filed with the Utah State Department of Commerce. Your filing should include:
- Your LLC’s name
- Your LLC’s primary address
- The name and address of your Utah registered agent
- The signature of the filer
- The names and addresses of members and any managers
It costs $54 to file your LLC’s certificate of organization in Utah. Once this filing is accepted by the Department of Commerce office, your LLC will officially be authorized to conduct business.
6. Obtain Utah business licenses and permits
There is no general statewide business license in Utah. However, some cities and counties may require businesses to be licensed locally. Salt Lake City, for example, requires all local businesses, including LLCs, to acquire a license from the city Business License Office. The cost will vary depending on the type of business being operated. LLCs offering certain services may also be required to obtain certain professional licenses. LLCs offering accounting, electrician, handymen, hunting guides, or landscaping services will need these. A full list of the applicable fields can be found on the Utah Division of Occupation and Professional Licensing website.
7. Understand Utah state tax requirements
Owners or members of a Utah LLC must pay self-employment tax on profits earned from the business, which is 16.75% as of 2022. They must also pay state and federal income taxes on those profits (minus deductions), which is a flat 4.95% for individuals in Utah. LLCs with employees also pay payroll tax on wages to employees, at a flat rate of 4.95%. Utah also requires businesses that sell products or services at retail to pay a sales and use tax, which is 6.1% statewide. But certain cities and counties collected sales tax with a combined average of 7.19% in 2022.
8. Prepare a Utah LLC operating agreement
An operating agreement is a document that outlines your LLC’s ownership structure, org chart, and standard operating procedures. Utah LLCs are not required to file operating agreements with a government agency, but they are useful for goal setting, delegating responsibilities, and managing ownership of the LLC. A solid operating agreement includes:
- How ownership interests are shared between members if there is more than one
- Members’ roles and responsibilities in running the business
- Procedures for when a member wants to pull out of the LLC, or for when the LLC terminates
9. Examine business insurance options in Utah
Purchasing insurance for your Utah LLC is an important part of managing business risk, and can free up your mind to focus on growing the company. Standard insurance plans for businesses in Utah include:
- Workers’ compensation insurance. Workers’ comp is an insurance policy that covers injuries and illnesses employees may incur on the job (even if they die). LLCs with any employees in Utah are required to purchase workers’ comp.
- General liability insurance. General liability is a type of insurance policy that protects your LLC more broadly from legal costs and some financial losses resulting from damage to the LLC’s property, as well as some injuries on the job (a customer slip-and-fall on your property, for example). You’re not obligated to buy general liability insurance under Utah state law, but if you want to rent an office or storefront, many commercial leases will require it as a condition of the contract.
- Commercial auto insurance. If your LLC operates commercial vehicles, such as delivery trucks, semi-trucks, or food trucks, Utah state law requires that you purchase commercial auto insurance to cover the vehicle(s) for damage and theft.
- Professional liability insurance. Although not required by state law, some professions are more liable to possible legal action than others, requiring a heftier investment in insurance. Law firms, accounting firms, and health care offices are among the types of businesses that may require professional liability insurance.
10. Understand financial considerations
Aside from buying insurance, you will likely have to make other investments into your Utah LLC. These might include rent toward a lease on a brick-and-mortar storefront or warehouse, paying for a professionally designed web presence, purchasing equipment, or licensing software. In addition to paying employees, you also may wish to hire other professionals to support the business, like lawyers and accountants. Shopify offers resources for startup funding.
11. Market your LLC
Filing and forming your Utah LLC is only the beginning of your journey as a small business owner. Once you’ve filed your certificate of LLC formation and paid various startup costs, it’s time to market your business. To make it stand out from the competition, you’ll need to engage with:
- Market research. You must really get to know your target customer(s) before you devise how to best market your LLC. Some solid market research will help you understand how to get the word out about your new business.
- Advertising. Promote your LLC through paid advertising, such as print ads, a TV commercial, or some digital banners on a website. You might have the time and expertise to do this yourself, or you could hire an advertising agency to handle it for you, freeing you up to work on other aspects of your business.
- Social media. A strong social media presence can act as an amplifier for your company and its brand—showing off what you do to a (potentially) large audience. To reach as many customers as possible, your Utah LLC should have active profiles across a wide variety of platforms, including Facebook, TikTok, Instagram, and YouTube. Try to tailor your content to each platform and its different demographics so your message resonates with your different audiences.
Starting an LLC in Utah FAQ
How much does it cost to start an LLC in Utah?
Starting a Utah LLC costs, at minimum, $54 to set up, and an additional $18 a year to maintain (covering your annual report fee).
Do you need a registered agent in Utah?
Yes, all Utah LLCs must appoint a registered agent to receive legal correspondence on the business’s behalf. Your registered agent can be an individual (you, an employee, or another third party), or a registered agent service.
How do state taxes work in Utah?
Utah has a straightforward, flat-rate tax system. Individuals and corporations are both taxed at a flat rate of 4.95%. State sales tax in Utah is 6.1% but cities and counties may add their own sales tax on top of that.