Cost of Forming an LLC in Utah – Complete Guide for 2024

Sections of this topic

    Starting your own LLC in Utah can seem like quite a financial mountain to climb. But as you consider the costs beyond just paperwork, you might find it’s more wallet-friendly than expected.

    This piece aims to unpack the costs associated with setting up an LLC in this country, illuminating services like Tailor Brands that simplify the endeavor while helping you keep your dollars in check.

    Whether you’re a business veteran or stepping into this world for the first time, the insights here will guide you through the Utah LLC maze.

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    What Is the Cost of Forming an LLC in Utah?

    The primary cost to establish an LLC in Utah is a $54 fee for electronically filing the Certificate of Organization with the Utah Department of Commerce.

    Utah Foreign LLC Formation Costs

    If you want to extend your business from another state to Utah and already have an LLC, register it as a foreign entity in Utah. The cost to register a foreign LLC in Utah is $54. To do so, you must submit a Foreign Registration Statement, which can also be sent by mail.

    Annual Cost for LLCs in Utah

    When setting up an LLC in Utah, familiarizing yourself with the ongoing costs that keep your LLC compliant and legally recognized is crucial. This knowledge helps with effective long-term financial planning for your LLC.

    Key recurring costs for a Utah LLC include an annual report filing fee of $18. This LLC cost is necessary to update your ownership and management details with the Division of Corporations and Commercial Code additionally, if your business operates under a DBA (Doing Business As) or assumed name, you must renew this business registration every three years for $18.

    Although Utah doesn’t require a state fee for maintaining a registered agent, hiring a professional for this role usually costs $100 and $300 annually through third-party services. Incorporating these ongoing expenses into your Utah LLC’s budgeting strategy is essential for smooth operations.

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    How Much Does It Cost to Start an LLC in Utah With the Best LLC Service? 

    Tailor Brands LLC Formation Cost

    Tailor Brands plans and pricing

    The starting cost to register an LLC in Utah is $54, which may increase depending on certain variables. Usually, the process takes about 4 to 5 weeks. If you’re in a hurry, you can expedite the process. For an extra $50, your registration can be processed in 16 to 18 days. A faster turnaround of 13 to 14 days will cost you an additional $100.

    Tailor Brands’ Lite LLC plan offers an affordable way to form an LLC, charging only the state filing fee for basic services and standard processing. For added features, consider the Essential LLC plan, priced at $199 plus state fees. This plan provides faster processing, annual compliance support, and an operating agreement, with a recurring annual fee of $199 to maintain services. 

    For an even more comprehensive package, the Elite LLC plan, at $249 plus state fees, includes everything in the Essential plan along with a suite of business tools: a free domain for a year, a website builder, an online store, eight stylish logos, a digital business card, a business card tool, and a social media post maker, with a $249 annual renewal to continue these advanced services.

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    Additional Costs When Starting an LLC in Utah

    Utah LLC Name Costs

    Choosing a name for your Limited Liability Company (LLC) in Utah is free. The Utah Division of Corporations does not require you to file an LLC Name Reservation or any similar process. Your business name gets approved as part of the state’s approval of your Certificate of Organization, with no extra fees.

    However, if you want to reserve your selected name for 120 days before forming your LLC, you can submit an Application for Reservation of the Business Name and a $22 filing fee.

    Utah Registered Agent Costs

    Every LLC in Utah needs to designate a Registered Agent to manage legal documents and state notifications. This agent can be an individual or a company, but they must be physically present in Utah and available during regular business hours. 

    There’s no extra fee if you or someone you know serves as your Registered Agent. However, hiring a professional service usually costs about $125 annually and can provide additional business services and privacy advantages.

    Using a Registered Agent service can be particularly beneficial if you don’t have a Utah address or prefer to keep your personal address confidential. Depending on your chosen provider, some services may also allow you to use their address for greater privacy.

    Utah Operating Agreement Costs

    Creating a Utah LLC Operating Agreement comes at no cost. This document specifies key aspects of LLC ownership, management protocols, and how profits are shared among LLC Members. It’s suitable for both Single-Member and Multi-Member LLCs. 

    It’s advisable to create an Operating Agreement, keep it with your business records, and distribute copies to all Members. Although many online services charge between $50 and $200 to draft LLC Operating Agreements, such expenses are not required for Utah LLCs.

    Utah EIN Cost

    Getting an EIN Number, also known as an Employer Identification Number (EIN) or Federal Employer Identification Number (FEIN), for your LLC is free.

    This unique number is crucial for filing income taxes, opening an LLC bank account, and hiring employees (if applicable). Although some websites charge a fee to help with obtaining an EIN, you can acquire it at no cost.

    The Internal Revenue Service (IRS) provides a free option to secure an EIN for your LLC, and you can complete the online application quickly.

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    Utah LLC Taxes

    Annual costs for Utah LLC owners can vary significantly due to the wide range of taxes they must handle. Some examples of these taxes include:

    Federal Income Taxes

    Regarding federal income taxes, the IRS might use different approaches to decide how your LLC should be taxed.

    Single-Member LLC Taxes (Default Status)

    The IRS considers Single-Member LLCs as Disregarded Entities for tax purposes. This status exempts the LLC from filing its federal income tax return. Instead, the sole owner is responsible for filing the tax return and paying any owed federal income taxes.

    The method of paying federal income tax for the LLC varies based on who owns it:

    • An individual owning an LLC is taxed like a Sole Proprietorship.
    • If another company owns the LLC, it is taxed as a branch of the parent company.

    Multi-Member LLC Taxes (Default Status)

    When several members own an LLC, it operates under partnership taxation. This setup necessitates the submission of a 1065 Partnership Return. Each partner receives a Schedule K-1 highlighting their share of the earnings. The members then report these profits on their personal tax returns using Form 1040.

    Husband and Wife LLC Taxes

    In regions enforcing community property statutes, a husband and wife running an LLC can choose to be taxed as a Single-Member LLC by opting for a Qualified Joint Venture setup. Yet, this choice only exists in states lacking community property laws, like Utah.

    Electing Corporate Taxation for Your LLC

    Unlike the default tax treatments discussed previously, a Limited Liability Company (LLC) can be taxed as a corporation. It is recommended to seek advice from an accountant before making this decision.

    The two corporate tax status options available are:

    • S-Corporation
    • C-Corporation

    S-Corporation Taxation for an LLC (Elective Status):

    An LLC can be taxed as an S-Corporation by filing Form 2553 with the IRS. This election can reduce self-employment taxes for profitable businesses, although it brings additional costs. 

    This choice is typically most advantageous for established businesses with steady revenue, usually when the annual net income per LLC member is at least $70,000.

    C-Corporation Taxation for an LLC (Elective Status):

    An LLC can choose C-Corporation taxation by submitting Form 8832. This option may benefit larger employers looking to save on healthcare fringe benefits. However, it’s important to note that this election is relatively rare.

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    Utah State Income Tax for Utah LLCs

    In Utah, Single-Member LLCs usually don’t file a state-level tax return on their own. Instead, the owner reports the LLC’s profits or losses on their personal state tax return.

    Multi-Member LLCs in Utah might have to file a state-level partnership return, with each owner reporting their share of the LLC’s profits or losses on their individual state tax returns. Given that additional Utah business taxes may apply depending on the industry and type of business, consulting with an accountant for tax preparation and filing is recommended.

    Local Income Tax for Utah LLCs

    Depending on your location, you or your LLC may need to file and pay income taxes at the local level (town, city, or county). To ensure you comply with these requirements, it is advisable to consult an accountant to assist with preparing and filing local income taxes.

    Utah Sales Tax

    If you sell products to consumers in Utah, you may need to collect sales tax and secure a Seller’s Permit. Issued by the Utah State Tax Commission, this permit authorizes you to collect sales tax on retail sales within the state. It’s also referred to as a resale license, wholesale license, or sales tax permit.

    Consulting resources from the Utah State Tax Commission can provide more information about Utah’s sales tax requirements.

    Utah LLC Payroll Taxes

    If your Utah LLC has employees, you need to manage payroll taxes. This responsibility covers federal and state income tax withholdings, Social Security tax, Medicare tax, and unemployment taxes. 

    Properly setting up payroll, handling tax withholdings, and ensuring accurate filings to the relevant government agencies are crucial. Given these tasks’ intricate nature, many businesses hire a payroll service or consult their accountants to sidestep possible penalties and mistakes.

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    Utah LLC Cost FAQs

    Conclusion – Cost of Forming an LLC in Utah

    Setting up an LLC in Utah reveals a financial picture beyond the initial formation fee. This journey involves more than the upfront costs.

    This involves gathering essential documents, selecting registered agents, and handling key components such as operating agreements and obtaining an EIN. Careful financial management is crucial in these areas. 

    At this juncture, the expertise of LLC service providers like Tailor Brands becomes invaluable. With a clear understanding of these detailed expenses and supported by Tailor Brands’s guidance, prospective entrepreneurs are well-equipped to start their Utah LLC journey confidently.

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