Licensed professionals own and operate professional corporations (PCs). Only those who perform services that require a state license can form a Utah professional corporation.
All businesses should consider a formal entity structure, but there are some that would do better as a corporation than other types. See the ZenBusiness entity guide to see what’s right for you. If a PC is the best fit for your needs, here’s a guide on how to form one.
Is a Utah professional corporation structure right for you?
Deciding between a professional corporation and a professional limited liability company
A professional corporation is a suitable business setup for professionals who wish to provide a service in their licensed line of work, such as doctors or lawyers who wish to set up a practice. A board of directors controls the company, and ownership is measured in shares. PCs are bound by state laws that require board meetings, annual reports, and detailed record keeping.
A professional limited liability company (PLLC) is another entity for licensed professionals. There’s no requirement for a board, and there aren’t as many filing requirements. The members of a PLLC can control the business, or they can appoint a designated business manager. One or more persons can form a PLLC.
While many Utah professionals choose PLLCs for their flexibility in terms of taxation and operations, professional corporations may provide greater legal protections.
It’s important to know that all officers, shareholders, and directors must be licensed in the designed profession. To create a PC:
- Only one incorporator is needed.
- There must be at least one officer.
- There must be at least three directors.
There can be any number of shareholders as long as it complies with the agreed structure when the business was first formed.
Management of the PC
The shareholders appoint the board of directors, who choose a chairman. The board elects the chief executive officer (CEO), chief operations officer (COO), and the chief financial officer (CFO).
Choose a name for your professional corporation
The most important part of choosing a new business name is to differentiate it from other companies. A professional corporation must add the words “professional corporation” or the abbreviation “P.C.” to the name. “Incorporated” or “Inc.” cannot be used.
Check the availability, and reserve your name
To be distinguishable, it’s important to make sure that the name isn’t already in use. The Utah government website has a search function that allows you to check whether the name is already taken. Once you’ve found an available name, you may want to reserve it until you’re ready to file to ensure no one else claims it. You can use our business name reservation service to hold your name for 120 days. You may also want to check into a business domain name for your website.
Select a Utah registered agent
Every PC in Utah is required to have a registered agent. This is a person or business entity responsible for receiving correspondence from the Secretary of State and legal notices on behalf of the business. The agent must have a physical address in Utah and always be available during normal business hours. Utah has two classifications for registered agents. The first is a registered agent, and the second is a commercial registered agent who is qualified to provide this service to other businesses.
Although you don’t have to go through a commercial registered agent, it’s a good idea to ensure that your organization receives Secretary of State notices, subpoenas, and other legal documents in a timely manner. With ZenBusiness, companies can use our service to partner up with a registered agent, which can save time and minimize the inconvenience of being on-site continuously during business hours.
Complete your Utah Articles of Incorporation
The incorporator is the person responsible for filing the documents needed to register a corporation, namely the Articles of Incorporation. This document details your business name, professional services, contact information, primary shareholders, and business structure. While the incorporator can hold another position in the business, they don’t have to.
You can file the Articles of Incorporation with the Utah Department of Commerce, Division of Corporations and Commercial Code. Filings can be submitted online, by mail, or by fax with the required $70 fee. Credit card payments are accepted with a separate cover letter, and expedited service is available for a $75 surcharge. Checks can be mailed with paper applications.
Establish a corporate record in Utah
Establishing a corporate record gives you easy access to important information that may be needed for annual reports and other activities. However, the storage system needs to comply with the standards for the particular industry your corporation is registered in.
Patient records, financial records, and sensitive documents need to be kept in safe storage that meets certain regulatory requirements. Cloud-based storage may also be permissible under certain conditions. Other documents to keep include company minutes of meetings.
Designate a professional corporation board of directors
Directors are required to be professionally licensed and competent before taking up the position. The director also needs to have a license related to the company they’re working for. For instance, an accountant can’t be a director in a corporation that offers legal services, unless the accountant has a dual qualification. An exception may exist if the accountant is the financial officer.
Create Utah corporate bylaws
Corporate bylaws are the rules that determine the operation of that particular corporation. Discussions about these rules take place at the meeting that precedes the Articles of incorporation. Corporate bylaws can include the following provisions:
- Your corporation’s statement of purpose.
- Rules regarding shareholders and stocks.
- Appointment of the board, and more.
Hold your first board meeting
Professional corporations are required by law to hold board meetings at certain intervals. The first board meeting should be held soon after the registration is completed to address important operational requirements. It’s important to keep minutes of these meetings to fulfill legal obligations and stay in compliance.
Handle Utah tax obligations
PCs pay federal taxes on their income. Usually, they’re taxed as C corporations, but they can also function as a pass-through S corporation if the business meets certain requirements set by the IRS. You’ll also need a federal EIN to complete your tax returns. You can get one through ZenBusiness or the IRS.
Each state has its own tax requirements, and in Utah, corporate income and franchise taxes average around 4.95%.
The local governments may impose additional taxes. Local taxes are around 0.61% in most municipalities.
Obtain Utah business licenses and permits
Each state and local government has its own requirements for business licenses and permits. It’s up to the business owner to ensure that they comply. While there’s no central database to check whether all the licenses are in place, the Utah government provides some guidance.
Bear in mind that each industry has its own licensing requirements. For specifics, try our business license report service.
Acquire insurance for your Utah professional corporation
Insurance is important, even if liability is minimized by the corporate veil. Workers’ compensation insurance is mandatory for nearly all employers. General business insurance is a wise addition to protect against accidents, injuries, or liability claims. Malpractice insurance is another helpful addition, although the state doesn’t have minimum coverage requirements.
Open a business bank account
Before your business can start operating, many professional bodies require proof of banking details. To open a banking account, have the documentation related to your professional corporation on hand, including your EIN.
Ready to start your business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain name for your website, our goal is to help you succeed. Check out our services and contact us today to see how we can help you grow your company.
Utah Professional Corporation FAQs
What are the filing fees for a Utah professional corporation?
It costs $70 to file Articles of Incorporation for a professional organization in Utah. You may pay by check or credit card when applying by mail. Electronic payments are accepted for online and faxed applications.
Do I need a lawyer to form a Utah professional corporation?
While the short answer is no, some entities may benefit from the assistance of a lawyer.
Does Utah have other professional entity types?
Yes. Professionals may establish professional limited liability companies (PLLCs) or partnerships.
Can professionals from different fields form a Utah professional corporation together?
Professional corporations are limited to professionals from the same field.