The state of Utah has a diverse and growing economy with a low cost of doing business which makes it one of the best states to start a corporation. Additionally, business owners will enjoy a supportive regulated environment.
The following step-by-step guide will show you how to start a corporation in Utah.
1. Select a name for your corporation
Prior to forming any corporation, you’ll need to decide on a business name. The business name should also comply with and adhere to naming requirements in the state of Utah.
General corporate name guidelines
The following naming guidelines will help you choose a business name for your Utah corporation:
- Your Utah corporation name must not suggest that it was formed for any other purpose other than what is stated in the Articles of Incorporation
- Your Utah corporation name must not suggest that it’s affiliated with any government agency or a state agency
- Your Utah corporation name must not mislead the public into believing that your corporation is a government or state agency or any of its political subdivisions
- Your Utah corporation name must include the word Inc., company, corporation, or at least an abbreviation of these terms
- In the event you plan on using certain restricted words in your business name, you need prior consent from the following agencies:
- United States Olympic Committee: Olympiad, Olympic city, Citius Altius Fortius
- Utah Division of Consumer Protection: university, college, Institute, institution
- Department of financial institutes: banker, banking, bank, bank corporation, savings Association
- Additionally, ensure that your Utah corporation name is significantly different from existing business entities in the state, including reserved names
The Utah state statute contains additional guidelines for naming a Utah-based business entity.
Once you have decided on a suitable business name for your Utah corporation, it’s time to think about protecting your corporation name. One of the ways to do this is to register your business name as a trademark. The trademark will ensure that no one else tries to conduct business under the same or similar name as your business name.
So essentially, you have a legal precedent on your side in the event that anyone tries to infringe on your business name. Ultimately, a trademark protects your business name from intellectual property misuse and theft.
There are two ways to trademark your business name. The first way is to register the trademark with the federal government. In this case, you need to register your trademark with the United States Patent and Trademark Office. The benefit of trademarking your name on a federal level is that you will have nationwide protection.
Alternatively, you may trademark your Utah corporation name with the Secretary of State itself. However, when registering the trademark with the state, you’ll only receive trademark protection within the state of Utah.
To put it simply, an entity name is your business’s legal name. This is the name that you use when completing formation documents and is also the name that the state will use to identify your business.
DBA (Doing-business-as) name
A DBA is short for (doing business as) name. It’s also known as an assumed or fictitious name in some states. It’s recommended that you register a DBA if you intend on doing business under any other name aside from your corporation’s entity name.
This way, you’ll be allowed to legally operate and transact using a DBA. A DBA simplifies the process and helps avoid complicating business operations by allowing your company to operate under a DBA name.
The first step in registering a DBA is to conduct a DBA name search on the Utah business search website. Once you’ve determined that the name is indeed available to be registered as a DBA, then complete the DBA name registration application Form or file it online on the state office’s website.
2. Nominate a registered agent
Registered agents go by the names of resident or statutory agents as well. However, the role that they fulfill is all the same. The primary role of a statutory agent is to receive compliance documents, and government correspondence as well as service of process in the event that your corporation is sued.
Therefore, the individual that you nominate to serve as your corporation’s resident or statutory agent must meet a few key criteria such as:
- The Utah statutory agent must be of the legal age
- The Utah statutory agent must remain available at the office address to accept legal documentation during business hours
- The Utah statutory agent must consent to the appointment
- The Utah statutory agent must have a Utah address where business activities are conducted
3. Appoint initial directors at the organizational meeting
The organizational meeting is a compulsory part of forming a Utah corporation. Therefore, you need to call an organizational meeting where a few formalities are concluded, such as:
- Executing an incorporator’s statement
- Determining your corporation’s share structure
- Selecting a Board of Directors
- Creating and approving bylaws
The minimum number of directors that you are required to nominate at the organizational meeting is one. So your corporation should have at least one corporate director to oversee the operations of the company until you hold the initial shareholder meeting.
The corporate director has a responsibility to adopt, amend and repeal operational bylaws as well as elect, supervise and remove corporate officers.
4. File Articles of Incorporation
Your Utah corporation is not legally or officially formed until the Articles of Incorporation have been filed. The articles must be filed with the Division of Corporations, which will then stamp the articles with an agency seal and assign a corporate file number.
Since the articles is the document that officially creates the corporation, it will need to contain some basics like:
- The name of your Utah corporation
- The purpose of your Utah corporation
- The number of shares your Utah corporation is allowed to issue
- The address and name of each of the Utah corporation’s incorporators
- The Utah corporation’s initial registered office address, as well as the name of the initial registered agent, at the said address
- The signatures of each of the corporation’s incorporators
The Articles of Incorporation Form provided by the state’s office allows you to state whether the corporation will issue more than one authorized share series or class.
Additionally, it’s required that you indicate whether the share classes are common or preferred. Once you gather the relevant information, go ahead and file the Articles of Incorporation Form online with Utah One-stop Business Registration.
Alternatively, you may download the Articles of Incorporation Form and have it mailed to the below address:
Utah Division of Corporations & Commercial Code
P.O. Box 146705
Salt Lake City, Utah 84114-6705
5. Create and approve bylaws
Corporate bylaws are required for all organizations and corporations in the state of Utah. Bylaws are basically the rules that outline how the organization will be operated and overseen. Essentially, it clarifies the priorities as well as the operating rules for all members of the corporation.
Your corporate bylaws will need to include the following information:
- How the corporation will be operated
- The process of storing corporate records
- How annual meetings will be held
- How voting procedures will be conducted
- The process of electing corporate officers and corporate directors
- The roles and responsibilities of officers and directors
- The process of adding and amending bylaws moving forward
- The date that the annual shareholder meeting will be held
- The process of negotiating company contracts
It is recommended that you make use of these bylaws templates and adapt them to suit the requirements of your corporation.
6. Select a share structure
Authorized shares refer to the sum of shares the company is permitted to issue. Issued shares are the total sum of shares that are, in fact, issued to stock owners or shareholders.
Share class is a term that describes a group of shares that has a customized set of privileges and rights.
As a Utah corporation, you need to decide on a share structure bearing in mind that the share of stock is a unit of ownership of the company.
Therefore, if your Utah corporation issues stock to a stockholder in the form of one share of stock, then a hundred percent of the corporation is then owned by that individual.
7. Obtain an EIN
Every business entity in the state of Utah will need to apply for and obtain an EIN, which is short for Employer Identification Number. This number is a social security number for your corporation.
It is assigned by the Internal Revenue Service or federal government and is used as a way of identifying business entities in every state.
In order to apply for an EIN, you need to complete the online application on the IRS website. The application is free of charge, and they are no fees involved.
Alternatively, suppose you would prefer to download the EIN Application Form and have it mailed instead of completing an application. In that case, you can go ahead and download IRS Form SS-4 and have it mailed to the following address:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Having an EIN allows you to complete several tasks such as opening up a business bank account, submitting paperwork for tax purposes, hiring employees, etc.
8. File Utah state taxes
Depending on the type of business you’re running, your Utah corporation may be liable for one or more corporate taxes:
The state of Utah has a couple of related corporation taxes referred to as income tax and franchise tax. Both of these state taxes pertain to the income of traditional C corporations.
The franchise tax pertains to the corporation’s net income, which is taxed at a flat rate of 5%.
- Employer Taxes: Every Utah corporation that intends on hiring staff will need to register for Utah employer taxes via the Utah One-Stop website.
- Sales tax: Corporations that are selling physical products will need to register for a seller’s permit via the Utah One-Stop website. After the application, you’ll receive a certificate allowing your business to collect sales tax on applicable goods.
9. Utah business licenses and permits
Depending on the type of corporation you’ve formed, your business may need one or more licenses and permits to operate in the state legally:
While a general business license is not a requirement in the state of Utah, there may be other county or municipality licenses you need prior to conducting business in the state.
- Professional license: If you’ve formed a professional corporation and are offering services such as a barber, athletic trainer, acupuncturist, or funeral service director, then you need to obtain a professional license before offering your services in the state of Utah.
10. Annual report requirements in Utah
All Utah corporations are required to file an annual report by the end of each year of the corporation’s registration month with the Department of Commerce. Annual reports may be submitted online.
11. Costs of starting a corporation in Utah
The filing fees below apply to all Utah corporations:
- Name reservation: $22
- DBA name: $22
- Articles of Incorporation: $70
- Annual report: $20
- Utah Certificate of Good Standing: $25
Next steps after forming a corporation
Once you’ve set up your Utah corporation, it’s time to think about managing your new business and ensuring that it runs efficiently for as long as possible:
Obtain a business bank account and business credit card
One of the best ways to ensure that you have personal liability protection or that your personal assets are protected is to separate your business and personal finances. Ultimately, this also ensures that you streamline your business’s tax filing and accounting processes. In order to obtain a business bank account for your Utah corporation, you will be required to present its Employer Identification Number along with your company’s formation documents. Additionally, consider getting a business credit card to help build your Utah corporation’s credit score and ensure that you apply or qualify for the relevant loans and credit limits as and when needed.
Get business insurance
After obtaining a business bank account and business credit card, you should also think about insuring your Utah corporation. Business insurance helps you manage the risks that your corporation may be presented with and also allows you to focus on growing your Utah corporation above all else. The three main types of business insurance are general liability insurance, workers’ compensation, and professional liability insurance. Each of these types of coverage comes with its own set of advantages. Ensure that you speak to a business insurance consultant to find out which is the best option for you.
No, and EIN or Employer Identification Number is not a business license. It is a unique nine-digit code issued by the IRS to identify and keep track of businesses in every state.
The main benefits of an LLC or limited liability company are that members are not personally liable for the actions of the company. Additionally, they enjoy federal pass-through taxation on profits, management flexibility, and easy startup and upkeep.
Some of the advantages of a sole proprietorship include easier tax setup, less paperwork, fewer business fees as well as straightforward banking. Additionally, sole proprietorships include simplified business ownership as there is only one owner.
A C corporation or C corp. is the only business structure that experiences double taxation.
Some of the advantages of a nonprofit corporation include perpetual existence, access to grants, tax-exempt status, limited liability protection, and U.S. Postal Service discounts. Additionally, a nonprofit corporation is considered a separate legal entity.