Corporations are one of the more complicated business types because they are treated as entities separate from their shareholders. Most corporations fall into the following three categories:
If you’re ready to form your Utah corporation, we’ve created this resource to help you get started today.
To start a Utah corporation, you must file Articles of Incorporation with the Utah 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 steps to form your business:
Before you can complete any paperwork, you need to decide on a company 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:
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 company name is free of Utah trademarks, call 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 filing fee. This can also be done online. A Utah DBA needs to be renewed every three years.
Once you’ve settled on a company name, you may choose to reserve the name if you’re not ready to register it. You can do this by submitting an Application for Reservation of Business Name with a filing fee. Name reservations are good for 120 days before you need to renew the name reservation or register your business.
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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 named by the initial incorporators — those involved in filing the initial paperwork for forming the business and who may or may not become shareholders. Note that only one incorporator is needed, 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’s a good idea 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 Utah Articles of Incorporation. That way, your business starts on the right foot with plans clearly in place.
A registered agent is the point of contact for legal matters having to do with the business, such as service of process if the corporation is sued. The registered agent has to be available during normal business hours and to receive any legal notices that might be sent to the business.
You’re 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 Utah 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. And, being your own registered agent legally obligates you to be at your place of business during all normal business hours, which is obviously a problem if you have a sick day, go on vacation, or meet up with a client elsewhere. Our registered agent service can take this off your plate.
Now that those 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:
This filing can be completed online through the state’s OneStop Online Business Registration portal or submitted by mail. The address is:
Utah Division of Corporations and Commercial Code
P.O. Box 146705
Salt Lake City, Utah 84114-6705
A filing fee must be included.
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 Utah 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:
Since the bylaws are legally binding, it’s a good idea to seek assistance when creating them. However, you can find a customizable template online via ZenBusiness to get yourself started.
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:
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.
One of the requirements for forming a Utah 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 decide on 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.
In addition to registering your business with the Department of Commerce by filing 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.
Corporations are generally regarded as distinct entities separate from the people who own them. 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. There’s no charge for this. 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.
Remember that corporations must pay taxes separately from any taxes paid on shareholder earnings. This must be done at the federal and state levels by submitting the appropriate returns each year.
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.
Corporations in Utah must 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 required 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 small fee.)
The exact cost of starting a Utah corporation will vary depending on the size and type of business and where it is located. You will need to pay the fee for filing the Articles of Incorporation at a minimum. Additional fees may include:
We 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.
Some advantages come with starting a Utah corporation. As a business type, the benefits of a corporation include:
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’s a lot more red tape and paperwork involved than other structures, such as limited liability companies (LLCs).
How your corporation is taxed in Utah depends on whether it is a C corporation, an S corporation, or a nonprofit corporation.
A C corporation is treated as a separate entity and must file its own tax returns. Also, 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.
An S corporation is viewed as a pass-through business entity exempt from corporate taxes at the federal level. Technically, an S corporation isn’t a business entity, but a tax status. A C corporation or an LLC can apply to the IRS for S corporation status.
A nonprofit corporation can apply with the IRS to be exempt from paying federal taxes, provided it stays within the rules for nonprofit activity. However, anyone drawing a salary from a nonprofit will be responsible for the usual income taxes on that salary.
Visit the Utah State Tax Commission website for more information.
If you’re ready to start a Utah corporation today, our experts at ZenBusiness can help make everything easier by using technology and automation to provide you with fast, convenient, and low-cost expert support.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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