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Last Updated on November 29, 2023 by Dr. Gabriel O’Neill, Esq.
Embarking on the journey of establishing an LLC often demands a comprehensive understanding of the financial commitments involved. As you set your sights on creating an LLC in Utah, it’s crucial to anticipate costs that extend beyond the mere filing of paperwork. While the prospect might initially appear financially daunting, there’s a silver lining – the process can be far more budget-friendly than you might imagine.
This article aims to dissect the various expenditures associated with LLC formation in Utah, shedding light on key insights and services like ZenBusiness that not only simplify the process but also empower you to make economically sound decisions.
Whether you’re a seasoned entrepreneur or a newcomer to the world of business ownership, the forthcoming knowledge will serve as your compass to navigate the intricacies of forming an LLC in the Beehive State.
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What Is the Cost of Forming an LLC in Utah?
The primary cost to form an LLC in Utah is the $54 charge, which covers the online submission of your LLC’s Certificate of Organization through the Utah Department of Commerce.
Here’s the LLC Cost Guide for all US States:
Utah Foreign LLC Formation Costs
If you possess an existing LLC registered in a different state and wish to extend your business operations to Utah, the necessary step is to enroll your LLC as a foreign entity in Utah.
The fee for enrolling a foreign LLC from another state in Utah amounts to $54. The process involves submitting a Foreign Registration Statement, which can also be carried out through mail submission.
Annual Cost for LLCs in Utah
When considering the establishment of an LLC in Utah, it’s essential to acquaint yourself with the continuous expenses linked to maintaining compliance and the legal standing of your LLC, as this understanding will facilitate effective budget planning for the long-term financial stability of your LLC.
The principal recurring fees for a Utah LLC encompass the annual report filing fee of $18, which is obligatory for updating ownership and management information with the Division of Corporations and Commercial Code. Additionally, businesses using a DBA/assumed name must renew their registration every three years, incurring an $18 renewal fee.
While there isn’t a state-mandated charge for maintaining a registered agent, designating a professional for this role comes with an annual fee, typically ranging from $100 to $300 through third-party services. Integrating these ongoing costs into your Utah LLC’s budgeting strategy is of paramount importance.
How Much Does It Cost to Start an LLC in Utah With the Best LLC Service?
ZenBusiness LLC Formation Cost
The initial basic expense for initiating an LLC registration in Utah is $54, with potential increments based on specific factors. In terms of processing timeframe, the standard duration is projected at 4 to 5 weeks. However, there are options for expediting this process, offering processing within 16 to 18 days for an additional fee of $50 or further accelerating it to 13 to 14 days at a premium of $100.
ZenBusiness provides three pricing options for their LLC formation services: Starter, Pro, and Premium.
- Starter plan: Opting for this is ideal if you have basic business formation requirements. This plan incurs a cost of $0, along with state fees.
- Pro plan: For those seeking more, this comes with added perks like expedited filing and registered agent services. This plan is priced at $199 in addition to state fees.
- Premium plan: This stands as the most extensive choice, encompassing all features from the Pro plan and adding unlimited Worry-Free Compliance. This feature ensures businesses adhere to both state and federal regulations consistently. The Premium plan carries a price tag of $349 plus state fees.
Furthermore, ZenBusiness grants a complimentary year of Worry-Free Compliance with the purchase of any of the plans.
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Additional Costs When Starting an LLC in Utah
Utah LLC Name Costs
Selecting a name for your Limited Liability Company (LLC) comes without any associated expenses. The Utah Division of Corporations doesn’t mandate the filing of an LLC Name Reservation or similar processes. The approval of your business name is included in the state’s approval of your Certificate of Organization without any additional charges.
If you wish to secure your chosen name for a span of 120 days preceding your LLC’s formation, you can achieve this by submitting an Application for Reservation of Business Name and remitting a filing fee of $22.
Utah Registered Agent Costs
The Utah registered agent Fee can either be $0 if you or someone you know will fulfill the role or $125 per year if you choose to enlist a service. Utah’s legal requirements dictate that an LLC must have a registered agent, who can be an individual or a company, responsible for receiving legal documents and state notifications for the LLC. The registered agent should possess a physical address within the state and be available during regular business hours.
Opting to serve as your LLC’s own registered agent or designating someone you’re familiar with incurs no extra charges. Alternatively, you can decide to utilize a registered agent service for an annual fee of approximately $125, which can also offer additional business services and safeguard your privacy.
Engaging a registered agent service becomes advisable if you lack an in-state address or wish to keep your address confidential from public records. Some service providers might allow you to use their address to maintain your privacy, depending on the company you select.
Utah Operating Agreement Costs
There’s no charge associated with the creation of a Utah LLC Operating Agreement.
This written contract outlines crucial details regarding LLC ownership, management procedures, and profit distribution among LLC Members, applicable to both Single-Member and Multi-Member LLCs. It’s recommended to draft an Operating Agreement, retain it as part of your business documentation, and provide copies to each Member.
While many online platforms typically demand $50 to $200 for LLC Operating Agreements, this cost isn’t mandatory for Utah LLCs.
Utah EIN Cost
Obtaining an EIN Number, also referred to as an Employer Identification Number (EIN) or Federal Employer Identification Number (FEIN), for your LLC isn’t associated with any fees.
This unique identifier is essential for income tax filing, opening an LLC bank account, and employee recruitment (if relevant). While several websites may impose a service charge for assisting with the EIN acquisition process, it’s entirely possible to obtain it for free.
The Internal Revenue Service (IRS) offers a no-cost option to acquire an EIN for your LLC, and the online application can be completed within a matter of minutes.
Utah LLC Taxes
The annual expenses for Utah LLC owners fluctuate significantly due to the diverse array of taxes they’re obligated to cover. A few examples of these taxes are:
Federal Income Taxes
When it comes to federal income taxes, there are different approaches that the IRS might take with regard to how your LLC is treated for taxation purposes.
Single-Member LLC Taxes (Default Status)
For Single-Member LLCs, the IRS designates them as Disregarded Entities in terms of taxation. This signifies that the IRS doesn’t require the LLC to submit its own federal income tax return. Instead, the individual owner of the Single-Member LLC is responsible for filing the tax return and making the necessary federal income tax payments.
The method of federal income tax payment for the LLC depends on its ownership:
- If the LLC is owned by an individual, it’s taxed akin to a Sole Proprietorship
- If the ownership belongs to another company, the LLC is taxed as a subdivision of the parent company
Multi-Member LLC Taxes (Default Status)
When an LLC has multiple owners (members), it’s treated in terms of taxation like a Partnership. This mandates the LLC to file a 1065 Partnership Return and distribute a Schedule K-1 to its owners. The Schedule K-1 outlines each owner’s share of profits, and this income is passed through to the individual owners. Subsequently, these owners pay their respective income taxes on this income via their personal tax return (Form 1040).
Husband and Wife LLC Taxes
In specific states like those with community property laws, a husband and wife-operated LLC can choose to be taxed as a Single-Member LLC, known as a Qualified Joint Venture. However, this option isn’t available in non-community property states like Utah.
Electing Corporate Taxation for Your LLC
In contrast to the default scenarios mentioned earlier, a Limited Liability Company (LLC) has the flexibility to opt for corporate taxation.
Note: It’s advisable to consult an accountant before making such an election.
There are two types of corporate tax elections:
- S-Corporation
- C-Corporation
S-Corporation Taxation for an LLC (Elective Status):
By submitting Form 2553 to the IRS, an LLC can choose to be taxed as an S-Corporation. This choice can be beneficial for profitable businesses, as it can lead to reduced self-employment tax burdens. However, becoming an S-Corporation entails additional costs. This election is usually best suited for established businesses with consistent revenue, typically when the annual net income per LLC member reaches at least $70,000.
C-Corporation Taxation for an LLC (Elective Status):
Via Form 8832, an LLC can opt for C-Corporation taxation. This choice might be advantageous for larger employers aiming to save on healthcare fringe benefits. However, it’s worth noting that this election is relatively uncommon.
Utah State Income Tax for Utah LLCs
For Single-Member LLCs in Utah, the LLC itself typically doesn’t file a state-level return. Instead, the owner includes the LLC’s profits or losses in their personal state-level return.
In the case of Multi-Member LLCs in Utah, the LLC may need to file a state-level Partnership return, and the owners include the LLC’s profits or losses in their individual state-level returns. Additional Utah business taxes might apply to specific industries and business types, making it advisable to engage an accountant for the preparation and filing of state income taxes.
Local Income Tax for Utah LLCs
Depending on your location, you or your LLC could be obligated to file and pay income taxes at the local municipality level (town, city, county, etc.). To ensure compliance, seeking assistance from an accountant for the preparation and filing of local income taxes is recommended.
Utah Sales Tax
If you’re engaged in selling products to consumers in Utah, it might be necessary to collect sales tax and obtain a Seller’s Permit. This permit, issued by the Utah State Tax Commission, grants the authority to collect sales tax for retail transactions in the state. It’s known by various terms, including resale license, wholesale license, and sales tax permit.
Acquiring more details about Utah sales tax from the Utah STC resources can be beneficial.
Utah LLC Payroll Taxes
In the event that your Utah LLC has employees, payroll taxes must be submitted. This entails a range of taxes and filings such as federal and state income tax withholdings, Social Security tax, Medicare tax, and unemployment taxes. Establishing payroll, managing tax withholdings, and submitting filings to relevant government entities is crucial.
Given the complexity, most businesses opt to use a payroll company or seek guidance from their accountants to prevent potential penalties and errors.
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Utah LLC Cost FAQs
How Much Does It Cost to Open an LLC in Utah?
Starting an LLC in Utah involves a fee of $54, which includes the cost of submitting the LLC’s Certificate of Organization.
Depending on the industry and where the LLC operates, some Utah LLCs might need to acquire a business license. The fees associated with local business permits vary depending on individual factors.
How Much Does an LLC in Utah Cost Per Year?
Every year, all Utah LLCs are required to pay an annual fee of $18 for the Annual Report to the Division of Corporations, which is the sole mandatory state fee for LLCs. This payment is vital to keep your LLC in good standing. If you use a registered agent service, there’s an additional yearly fee, usually around $125.
Depending on the industry and location of your LLC, you might also need a business license in Utah, and any associated annual fees would depend on your local municipality, often requiring annual renewal for professional licenses.
Should I Hire an LLC Formation Service?
While it’s not obligatory to enlist a professional service for creating your Utah LLC, you have the option to personally undertake the formation process. Nevertheless, for efficiency and accurate filing, it’s advisable to consider hiring ZenBusiness.
ZenBusiness boasts exceptional customer support and provides a complimentary first-year registered agent service. Additionally, it extends other beneficial services such as an Operating Agreement and assistance with Annual Report submission.
Conclusion
To conclude, delving into the process of establishing an LLC in Utah illuminates a financial landscape that goes beyond the initial formation fee. Navigating this journey involves more than just this upfront cost.
It requires obtaining essential documents, enlisting registered agents, and effectively managing critical components such as operating agreements and obtaining an EIN. It’s vital to exercise prudent financial management across these facets. This is where the specialized expertise of LLC service providers, such as ZenBusiness, becomes evident.
Armed with insights into these nuanced expenses and empowered by the guidance of ZenBusiness, prospective business proprietors can confidently embark on their Utah LLC endeavor.
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About the author
Dr. Gabriel O'Neill, Esq., a distinguished legal scholar with a business law degree and a Doctor of Juridical Science, is a leading expert in business registration and diverse business departments. Renowned for his academic excellence and practical insights, Dr. O'Neill guides businesses through legal complexities, offering invaluable expertise in compliance, corporate governance, and registration processes.
As an accomplished author, his forthcoming book is anticipated to be a comprehensive guide for navigating the dynamic intersection of law and business, providing clarity and practical wisdom for entrepreneurs and legal professionals alike. With a commitment to legal excellence, Dr. Gabriel O'Neill, Esq., is a trusted authority dedicated to empowering businesses within the ever-evolving legal landscape.