While corporations are one of the more complicated business types because they are treated as entities separate from their shareholders, there are many benefits to starting one.
Corporations fall into the following three categories:
- C corporations. These are owned by shareholders who elect a board of directors to oversee operations. They are taxed as a separate legal entity from anyone else involved and provide the greatest protection between businesses and personal assets.
- S corporations. Any earnings are split among shareholders and are taxed at that level only, not also separately as a business entity.
- Nonprofit corporations. Nonprofits can apply to be tax-exempt at the federal level (employees still pay taxes on their wages). However, this structure requires significantly more paperwork, and the business must adhere to strict regulations.
If you’re ready to form your Utah corporation, we’ve created this resource to help you get started today.
How do I form a Corporation in Utah?
Steps to form your Utah Corporation
- Name Your Corporation
- Appoint Directors
- Choose an Utah Registered Agent
- File the Utah Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit your Corporation’s first report
To start a corporation in Utah, you must file the Articles of Incorporation with the Department of Commerce, Division of Corporations and Commercial Code. However, there are several other steps to complete before and after this filing.
To simplify the process of forming a corporation in the state of Utah, we’ve put together 10 easy steps to form your business:
Step 1: Name Your Utah Corporation
Before you can file any paperwork, you need to decide on a business name. This might seem simple on the surface, but there are many factors to consider during the process and regulations to adhere to. And don’t overlook the importance of choosing a name for which you can reserve a matching website domain name that has not been taken. Additionally, you can consider any “doing business as” (DBA) names you may want. Here are some guidelines to help you through the naming process:
- Start by brainstorming a list of potential names. Names on this list should match your business’s purpose, and the more names you have, the better. The next several steps will begin to narrow down your options.
- The final version of any name you choose must contain the words or abbreviations of the words “Corporation,” “Company,” or “Incorporated.”
- Search your prospective business names on the state’s business name search page to eliminate any names that are too similar to existing businesses. (Corporate designators, punctuation, conjunctions, and special characters are not sufficient to make a name distinct.)
- Corporation names also cannot contain language implying they are organized for a purpose other than stated in the Articles of Incorporation.
- The name cannot suggest it is associated with any government agency or include anything indicating it will be engaged in illegal business.
- Once you’ve narrowed down your list based on the above, the next task is to search for available domain names to ensure you can secure a website domain that matches your business name.
- Before committing to a business name, check to make sure it isn’t trademarked. You can run your desired name through the United States Patent and Trademark Office (USPTO) trademark search engine to see if it’s federally trademarked. There are also trademarks limited to the state level. To see if your business name is free of Utah trademarks, contact the Utah Department of Commerce, Division of Corporations and Commercial Code at (801) 530-4849. Utah also has a trademark search engine you can check.
- If you would like to do business under a name different from your official business name (often called a “doing business as” or DBA name), you will need to file a DBA application and pay the associated $22 filing fee. This can also be done online. A Utah DBA needs to be renewed every three years.
Once you have settled on a business name, you may choose to reserve the name if you are not ready to register it. You can do this by submitting an Application for Reservation of Business Name with a $22 filing fee. Name reservations are good for 120 days before you need to renew the name reservation or register your business.
Step 2: Appoint Directors
The board of directors for a corporation oversees the operations of the business. For your business to get off the ground, a board of directors will need to be appointed.
The board of directors is often appointed by the initial incorporators — those involved in filing the initial paperwork for starting the business and who may or may not become shareholders. Note that only one incorporator is required, but in Utah, corporations need a minimum of three directors (with exceptions if they haven’t issued any shares). However, if the corporation only has one or two shareholders, the company only needs a corresponding number of directors.
Incorporators may be directors and also shareholders. But the three titles are distinct roles within the company. The incorporators are responsible for starting the business and filing the paperwork; the board of directors oversees the business; and the shareholders finance the business by owning shares in the company.
It is often advisable to hold a meeting with other incorporators to appoint directors and hold a directors’ meeting to approve corporate bylaws, determine the share structure, and so on before filing the Articles of Incorporation. That way, your business starts on the right foot with plans clearly in place.
Step 3: Choose an Utah Registered Agent
A registered agent is the point of contact for anything legal having to do with the business. The registered agent has to be available during normal business hours and to receive any tax documents, legal forms, and so on that might be sent to the business.
You are required to name a registered agent when you file the Articles of Incorporation. In Utah, a registered agent may be an adult individual who legally resides in the state or a business entity, like a registered agent service, with a street address in the state.
While Utah allows you to be your own registered agent, this isn’t typically advisable. You don’t want to face embarrassing situations with clients or customers by having legal papers served in your place of business, for example.
Step 4: File the Utah Articles of Incorporation
Now that all the details have been sorted out, you can file your Articles of Incorporation. This document officially registers and establishes your business with the state. In this document, you will need to include:
- The name of your business
- The purpose for which the corporation is organized
- The number of shares of stock (this is often determined by the board of directors or the incorporators)
- The name and street address of your registered agent
- The name and address of all incorporators
- The principal address of the business
- The names and addresses of the directors and officers
- An indication as to whether it is a female- or minority-owned business
Utah Division of Corporations & Commercial Code
PO Box 146705
Salt Lake City, Utah 84114-6705
A filing fee of $70 is required.
Step 5: Create Corporate Bylaws
The creation of corporate bylaws by the board of directors should happen as soon as possible. The bylaws establish all of the rules and functions of the corporation. While Utah does not explicitly require corporations to have bylaws, without them, your corporation will be subject to the default laws, which might not be consistent with what you want for your business.
Your corporate bylaws may include:
- A clear statement of your business purpose
- A list of founders and the rights, responsibilities, and qualifications of each
- A list of the board of directors and the rights, responsibilities, and qualifications of each
- Details of your management structure and the duties of each officer
- The annual meeting scheduling and goals for directors and shareholders
- How shares are distributed and how stocks are sold or transferred
- How changes are made or voted on
- Details of any committees and their responsibilities
- How conflicts of interest are to be handled
Since the bylaws are legally binding, it is a good idea to seek assistance when creating them. However, you can find a customizable template online via ZenBusiness to get yourself started.
Step 6: Draft a Shareholder Agreement
The shareholder or stockholder agreement is a document that outlines the rights and responsibilities of all shareholders in the company. It may include the following:
- Shareholders and their contact information (addresses, phone numbers, etc.)
- Shareholder responsibilities, including any actions that shareholders are allowed to take on behalf of the business
- Shareholder voting rights, including whether a simple majority or higher percentage may be required for certain decisions
- How changes to the original shareholder agreement may be made
- How stock can be sold or transferred
- The financial obligation and time commitment for each shareholder
- A clear outline of how dividends are distributed
- A plan for the distribution of assets should the business close
Again, this agreement can be drafted from a template, but you may want to utilize professional assistance. Your shareholder agreement should be kept with your other important corporate records.
Step 7: Issue Shares of Stock
One of the requirements for starting a corporation is issuing stock. When you filed your Articles of Incorporation, you stated the number of stock shares authorized. The number of shares you issue should always be less than or equal to this number.
It’s a good idea to determine how much capital you need before issuing shares of stock so that you can determine a reasonable value for each share. Shares of stock may also be issued in exchange for services or other noncash value and capital contributions.
Each share is only issued once. However, after being issued, it can be traded and sold. All issued shares must be documented in the company’s annual report. Although it is not typically required, most corporations issue certificates to shareholders, indicating their shares.
Stock may be issued publicly or privately. Privately issued stock is usually issued to the founders, employees, or a private group of investors. A public corporation makes a portion of its stock shares available for public purchase.
Companies that issue public stock need to file quarterly statements with the Securities and Exchange Commission (SEC). They must also track how many shares are issued and to whom. You should also check with the Utah Division of Securities for their record requirements.
Step 8: Apply for Necessary Business Permits or Licenses
In addition to registering your business with the Department of Commerce by filing the Articles of Incorporation, you must also obtain a license with the local municipality in which you are doing business. Check with your city or county clerk’s office for exact requirements.
If you provide professional services, you must maintain a professional license with the Division of Occupational and Professional Licensing. You can check to see if one is required on their website.
Check at the local level for any additional permits or licenses required by your city, depending on your business type and activities. You’ll have to do some research to determine all the federal, state, and local licensing your corporation needs.
Step 9: File for an EIN and Review Tax Requirements
Corporations are generally regarded as distinct entities separate from the people involved. As such, you will need to acquire an Employer Identification Number (EIN). This number acts like the corporation’s Social Security number for tax purposes.
To apply for an EIN, you need to visit the IRS website and fill out the online form. It only takes a few minutes and is free. Afterward, you will receive your EIN. You should keep track of this number, as you will need it for future documentation and filing your business’s tax returns.
Utah has a combined Corporate Franchise and Income Tax, the forms and instructions for which can be found here. The tax rate for corporations is 5%, and the minimum tax is $100. You can register your business with the Utah State Tax Commission through the OneStop Business Registration Portal.
Step 10: Submit Your Corporation’s First Report
Corporations in Utah are required to file an annual report. This lets the state know you are still in business and allows you to update any information. If there are no changes, you simply file the form with the $20 filing fee.
If you need to make changes, you will need to include a Registration Information Change form. There is no additional charge for this form when it is included with the annual report. (At any other time during the year, the change form requires a $15 fee.)
How much does it cost to start a corporation in Utah?
The exact cost of starting a corporation in Utah will vary depending on the size and type of business and where it is located. You will need to pay the $70 fee for filing the Articles of Incorporation at a minimum. Additional fees may include:
- Registered agent service fees
- $22 for a DBA name
- $22 to reserve a business name
- Fees assessed for amendments or other business filings
- Fees associated with licenses or permits
- $20 annual report fee
ZenBusiness can help prevent headaches associated with getting your corporation off the ground by assisting with many of the required steps for a low annual fee.
What are the benefits of a corporation in Utah?
Many benefits come with starting a corporation in Utah. As a business type, the benefits of a corporation include:
- Protection of personal assets
- Legal recognition as a separate entity in and outside the U.S.
- The ability to issue stock (which can help with funding and capital)
- Does not dissolve if owners leave or pass away
There are disadvantages you should be aware of, however. Among these are the tax structure (profits are taxed at both the corporation and personal income tax levels), and there is a lot more red tape and paperwork involved than other structures, such as limited liability companies (LLCs).
How is an Utah corporation taxed?
How your corporation is taxed in Utah depends on whether it is a C corporation, an S corporation, or a nonprofit corporation.
C corporations are treated as separate entities and must file their own tax returns. In addition to this, all shareholders file tax returns for earnings and dividends. This results in double taxation; however, there are some benefits to this tax structure, including more flexibility in what can be deducted.
S corporations are pass-through entities. All profits are passed through to the owners, who must pay on their individual income taxes.
Nonprofit corporations can apply with the IRS to be exempt from paying federal taxes, provided they stay within the rules for nonprofit activity. However, anyone drawing a salary from a nonprofit corporation will pay income tax on that salary.
Visit the Utah State Tax Commission website for more information.
Utah Corporation FAQs
- Does running a corporation in Utah involve more paperwork than running other types of businesses?
Corporations are known for requiring a lot more paperwork and record-keeping. This is not surprising, considering they tend to have more laws to comply with and more people involved. Consider bylaws, shareholder agreements, keeping track of all stock issuances, meeting notes, etc., and the paperwork can add up pretty quickly.
- What is the difference between an LLC and a corporation in Utah?
LLC stands for limited liability company. This type of business structure is a pass-through entity for tax purposes, and it is useful in keeping the owners’ assets separate from business assets. However, LLCs do not have a board of directors and do not issue shares.
- How do I change my corporation’s name in Utah?
You can change the name of your corporation in Utah by visiting the Division of Corporations and Commercial Code website.
- How many people are needed to form a corporation in Utah?
A single person can form a corporation in Utah.
- Can I form my Utah corporation online?
You can form a Utah corporation online by using the OneStop Online Business Registration System portal.
- How do I dissolve my Utah corporation?
To dissolve your corporation, you will need to file the Articles of Dissolution with the state.