When it comes to starting a business, there are a lot of factors you have to consider. Even before you launch your company, you would have to make big decisions. Among the most important ones is the location of your business.
Laws governing businesses vary, depending on the state. So the state that you choose will determine the regulations you would have to follow and the obligations you need to comply with.
For many entrepreneurs, their place of residence is the most obvious choice. However, that is not always the case. The best option is the one that offers the most benefits to your company.
Reasons To Start A Business In Utah
If you are still undecided regarding the next course of action you should take, consider forming a Utah LLC. The state is well known for its business-friendly environment. Additionally, you can expect a lot of advantages, such as the following:
- Confidentiality – Unlike other states, Utah does not require LLCs to submit a list of the names and addresses of the owners. Any person can form an LLC as long as you follow the registration process.The state does not limit the definition of a person to an individual. It can be a business or any legal entity. You can also appoint another entity or individual to file formal paperwork on behalf of your LLC.
- Company Duration – As the owner of the business, you can choose the length of existence of your company. The LLC Act allows perpetual duration. That means your company can have an unlimited life, and it can even outlive the members.
- Easier Way Of Dealing With Business Partners – Generally, the LLC Act of Utah offers members the freedom to choose how to contribute and distribute the LLC’s profits and losses. You can also customize the duties and responsibilities of each party. The law sets a default rule that limits the duty of loyalty and care of the members of a member-managed LLC and the managers of a manager-managed LLC to the following:
- Not compete with the company or take any business opportunity from the LLC
- Not deal with the LLC on behalf of other parties that have an interest that is unfavorable to the company
- Act as a trustee of the company
- Refrain from engaging in any grossly negligent conduct, intentional misconduct, or intentional violation of the law
The state also allows LLCs to opt out of some default rules as long as they do not go against the state’s public policy. So you can create an LLC agreement that includes restrictions or the elimination of the duty of loyalty. Your LLC agreement can also alter the duty of care and expand the duties and liabilities of a member or manager.
- Passive Rights For Creditors – Creditors of an LLC will not have control rights. If a judgment creditor of a specific member gets a charging order against the said member, they only have a claim against the said member’s membership interest.The state also allows member dissociation for certain cases. For example, a person can cease to be an LLC member if they make an assignment that is for the benefit of creditors, become a debtor in bankruptcy, or fail to contest a petition that seeks the appointment of a receiver, trustee, or liquidator of their property.
- Economy – Utah is among the fastest-growing states in the country in terms of economy. It has an increasing presence in major business sectors, including technology, life sciences, and aerospace. The unemployment rate in the state is also low.
- Regulations – The state has a flat tax system. Additionally, the government continuously reviews laws and state regulations to eliminate any unnecessary restrictions that affect residents, especially the ones that contribute to the local economy.
- Programs And Incentives – Utah has launched various programs that are beneficial to LLCs. If you form a Utah LLC, check if you qualify for any of these:
- Foreign Trade Zone
- Recycle Market Development Zone
- Enterprise Zone Program
How To Form A Utah LLC
The process of forming an LLC in Utah includes several steps. Make sure you understand and complete each one.
- Choose an appropriate name for your company. The state has naming regulations you have to follow. You have to include the phrase “limited company” or “limited liability company.” You can opt to use any of their abbreviations. You also have to make sure that the LLC name is distinguishable. You can check this by conducting a business name search.
- Appoint your registered agent. All LLCs in Utah have to nominate a registered agent to receive all services of process, legal correspondence, and other business mailings on behalf of the company. You can either choose an individual resident who is at least 18 years old with a physical street address in the state or you may also opt for a commercial registered agent that is authorized to transact in Utah. Make sure your registered agent is always available during normal business hours.
- File your Certificate of Organization. Once you are 100% ready to start a business, you will have to register it with the state. You can do this by filing a Certificate of Organization with the Division of Corporations and Commercial Code. It comes with a $70 filing fee.
- Create an operating agreement. This formation document is internal. However, the state requires all LLCs to have one. It will govern the affairs and processes related to the company. Read more about this topic in this article.
- Comply with ongoing obligations. The responsibilities of your company do not end once you have successfully registered it with the state. You will have to ensure business compliance as long as your LLC exists. Check the licensing, tax, and reporting requirements set by state and other local agencies.
Once you have decided to form an LLC in Utah, you will have to go through the registration process. If you find this time-consuming and overwhelming, you can get help from a reliable third-party organization like DoMyLLC. Contact us now to find out more about our services.
Business Filing Section