Utah provides a template Certificate of Organization you can download online, or you can use one provided by your lawyer or by one of the many company formation services that are out there. (In our view, the one provided by the state is cheapest, simplest and works just fine for most small businesses). Follow the instructions on the template to mail or drop off your filing, including a filing fee of $70. Once you receive a file-stamped copy back from the state, you know you are good to go. You can also do this all online.
To operate a business in Utah, you may need a business license (see http://corporations.utah.gov/pdf/buslicguide.pdf), but with respect to the care and feeding of your legal entity, the only other corporate filing needed is the annual report you are required to file each year, along with a $15 fee. The first annual report is due one year after you file the Certificate of Organization. You can make this filing online, too. The Division of Corporations will send your registered agent a reminder about 60 days before the LLC's anniversary date.
Forming a Utah corporation is very similar to forming an LLC. You file "Articles of Incorporation" with the Utah Division of Corporations and Commercial Code. The Articles of Incorporation include somewhat more information than does the form for LLCs. You will need to include the corporation's name and address, who the registered agent is, and their address, the purpose of the corporation, the number of shares the corporation is authorized to issue, the name and address of the incorporator and the name and address of the board of directors. The filing fee is also $70, and it can also be done online.
For a Utah corporation, the next required filing, unless you need to obtain a business license, or there is a change as to the names and addresses of those previously disclosed, is also filing an annual report, and paying a $15 fee, which is due one year after you file the Articles of Incorporation. The Division of Corporations sends your registered agent a reminder about 60 days before the Corporation's anniversary date.
It all seems pretty simple.
What else is there to do?
Very little of what is needed to properly run and manage a Utah LLC or Utah Corporation is accomplished via the filing of your charter document. All that does is register your company with the state. You still need to adopt bylaws (if you are a corporation) or an operating agreement (if you have an LLC) to set out how your company will be managed and operated. For example, who will be your managers (for an LLC) or your directors (for a corporation)? How much capital will be invested into your company? Who will the shareholders or members be, and who will own what percentage of the company? These are key decisions to think through and then agree on with your partners.
Even after you have worked through all of these organizational steps, the work is not over. Adequate and accurate records are essential to making sure you are in fact operating as you intend. To take a simple example, let's say you plan to use your new legal entity to operate a snow cone stand. You file your Certificate of Organization with the state, but how do you then connect the dots so that it is clear that the snow cone business is "inside" your legal entity? Is the title to the snow cone stand in the name of the company? When you buy supplies, are you using the bank account of your company? When you sign agreements, is it clear from the way you sign that you are signing on behalf of your company and not on your personal account? Care needs to be taken or the protection you hope to receive by using a company in the first place could be lost. For instance, if your snow cone business is sued, you will argue that you personally should not be liable, just the business. But if the records are unclear as to the line between your personal assets and your snow cone business, then you may have a tough time limiting your personal liability. This is what the documentation you will create and record on After Incorporation is all about.
As mentioned above, to operate properly a Utah LLC needs to have an "Operating Agreement." Corporations need bylaws. Another key step in both cases is to open a separate bank account. More information on how to go about doing these tasks in Utah is covered here. Finally, both an LLC and a corporation then need to keep an updated minute book to record their key decisions and approvals. There is a post on the After Incorporation blog with more information about why minutes are important and what they do.
Utah Corporations have more hoops to jump through than Utah LLCs (which is the main reason Utah LLCs tend to be much more popular than Utah corporations for small businesses). The initial Incorporator must prepare and sign an "Incorporator's Statement" indicating the names and addresses of the initial directors. To be properly formed, a Utah corporation then needs to hold an initial meeting of its directors at which they appoint officers, issue shares, adopt bylaws, and take other steps. How a Utah corporation goes about doing these tasks are explained further here. Even after formation, Utah corporations will be more complicated to operate than an LLC, with requirements to have at least three directors and at least one officer. Also, Utah corporations are required to hold annual meeting of the shareholders and regularly keep minutes.
After Incorporation was created by a Utah lawyer with fifteen years of experience helping companies of all sizes, from small businesses and startups to public companies, stay compliant with corporate requirements in order to preserve the benefits of limited liability. He was previously an editor of the business column of the Colorado Lawyer, the official publication of the Colorado Bar Association.
Next Steps after Forming a Utah LLC
Records required to be kept by a Utah LLC
Next Steps after Forming a Utah Corporation
Records required to be kept by a Utah Corporation