Utah allows professionals seeking to incorporate a business to offer their services to form a professional limited liability company (PLLC). Utah defines professional services as those provided by:
ZenBusiness has prepared a guide for the requirements and characteristics of Utah PLLCs to help you determine if this structure is right for you.
The person responsible for filing the Certificate of Organization with the Secretary of State is referred to as the “organizer.” The organizer must provide his or her name and signature on the Certificate of Organization form.
Utah also offers the option of forming a professional corporation (PC) to provide professional services.
Professional corporations have to comply with the rigid formalities of Utah’s corporate law, including:
The board of directors of a PC is responsible for managing the corporation. A PLLC, on the other hand, may outline the management structure and operations of the PLLC through its operating agreement.
PLLCs can be member-managed or manager-managed. In a member-managed PLLC, the members are authorized to exercise the power of the PLLC and manage the activities and affairs of the PLLC, subject to the operating agreement. In a manager-managed PLLC, the managers are authorized to exercise the power of the PLLC and manage the activities and affairs of the PLLC, subject to the operating agreement. By default, PLLCs are considered member-managed unless the operating agreement expressly states otherwise.
In a PLLC, members and managers have to be authorized to provide a similar professional service as the one offered by the company, unless the applicable licensing or registration authority allows individuals to practice the profession without authorization.
PLLCs, generally, are taxed the same as LLCs, meaning they receive “pass-through” taxation treatment. That means that the profits of the LLC are taxed only on the individual income tax returns of its members.
PCs, on the other hand, are taxed as C corporations by default, just like general corporations. Under C corporation tax status, the corporation itself pays taxes on its corporate tax return, and the profits of the corporation are taxed again on the individual income tax returns of its shareholders. This is often referred to as being “double-taxed.”
In certain circumstances, PCs can elect to be taxed as an S corporation, which grants them pass-through status similar to a PLLC. PLLCs can elect for C corporation status, but it’s very rare.
Your PLLCs name is often the first thing potential clients will see when deciding whether to employ your professional services, so it’s crucial to choose a name that accurately and positively reflects your business.
PLLCs are subject to Utah’s naming rules for LLCs in addition to the rules for PLLCs specifically. To comply with state law, your PLLC’s name must be distinguishable from the actual, reserved, fictitious, or assumed name of any other entity and any trade name, trademark, or service mark registered with the Utah Secretary of State. Utah prohibits PLLC names from including certain words without the consent of the United States Olympic Committee, including:
Additionally, PLLCs are prohibited from including words that imply your PLLC was formed for purposes other than providing the professional service you’re authorized to perform. The name must include one of the following in its Certificate of Organization:
Your PLLC name doesn’t have to include the corporate designation when advertising to the public, though the name must comply with other state requirements.
If you have the right name selected for your Utah PLLC but aren’t quite ready to file your business formation documents, someone else could register their Utah business under the same name. You can prevent this by taking advantage of ZenBusiness’s name reservation service.
Once you’ve chosen the preferred name for your PLLC, you’re ready to advertise your brand to potential customers. Many clients search for products and services online, so securing an online presence is crucial to operating a competitive business. A business domain name is a unique name claimed through the domain registrar to represent a company’s brand online. With ZenBusiness’s domain name service, we can help secure your domain name before anyone tries to take it.
Utah PLLCs are required to designate and maintain a registered agent who physically resides in the state of Utah to receive service of process and other important documents. The agent must be available during normal business hours to receive any documents served on the PLLC.
Utah allows individuals and business entities to serve as registered agents. The organizer provides the name and address of your registered agent on the Certificate of Organization for your PLLC.
ZenBusiness provides a registered agent service to help you find a registered agent in Utah that satisfies the state’s requirements.
Next, you need to register your business with the state by submitting a Certificate of Organization. The State of Utah Department of Commerce provides an instruction guide for completing the Certificate of Organization for your PLLC. The following information must be included in the Certificate of Organization:
The form must be submitted to the Utah Department of Commerce, Division of Corporations and Commercial Code.
An operating agreement (OA) outlines the rules and regulations of a PLLC’s operations. You’re not legally required to adopt an operating agreement, but it’s recommended. Having an OA signals to other businesses and potential customers that your business is legitimate and professional. Additionally, without an OAt, your PLLC is governed by the default rules of Utah’s LLC legislation. A typical operating agreement usually includes:
If you’re not sure where to start, we offer operating agreement templates to streamline the process of creating your own.
As mentioned above, PLLCs usually aren’t taxed at the federal level. Instead, the profits of the PLLC are taxed on the individual income tax returns of the PLLC’s members. PLLCs can choose a C corporation or S corporation tax election if they want, but must file all the right paperwork with the IRS.
PLLCs are treated as partnerships for tax purposes in Utah. Utah imposes a withholding tax on all Utah business income attributable to pass-through entities. PLLCs complete the same state tax return form as Utah partnerships, which must be filed with the Utah Tax Commission.
If your PLLC elects to be taxed as a corporation, Utah imposes a corporate income tax.
Once you form your PLLC, you can register with the Utah Tax Commission through Utah’s OneStop Business Registration System, the Utah Taxpayer Access Point, or by mail.
Sometimes, counties and cities require businesses operating within their boundaries to pay extra taxes. Check with your local tax commission to determine if you have additional tax obligations.
Unlike some states, Utah doesn’t require businesses to obtain a general state business license. However, businesses in Utah are required to obtain business licenses from the city or county in which they operate. The Department of Commerce provides a business licensing guide for businesses operating within Utah.
Because your PLLC provides professional services, it’s critical that all the PLLC members keep their professional licenses active. Check with the licensing authority for your industry to determine how to keep your license valid and up to date. The Division of Occupational and Professional Licensing provides resources to help determine what industries need which licenses.
ZenBusiness can provide you with a list of the licenses and permits you might need for your particular business at the local, county, state, and federal levels. This can save you the time and effort of compiling your own license and permit checklist and help you maintain legal compliance.
Almost all Utah employers must provide workers’ compensation insurance to their employees. Employers can purchase insurance through a private insurer or the Workers’ Compensation Fund of Utah, or they can obtain approval to be a self-insured employer.
Utah businesses may purchase general business insurance that combines business property insurance and business liability insurance. General business insurance can protect your business from costs associated with damage to your business and against claims from other parties alleging property damage or a personal injury caused by your business. Utah doesn’t require businesses to have general business insurance, but is strongly recommended to protect your business assets.
Utah doesn’t require physicians to carry medical malpractice insurance, nor does it require attorneys to obtain legal malpractice insurance. However, obtaining malpractice insurance for your Utah PLLC is still recommended in these industries, as it can protect your business from serious liability issues in the event of a malpractice lawsuit.
Opening a business’s bank account is an important step to keeping your business and personal funds separate. To open a business bank account, you will likely need to provide an employer identification number (EIN). ZenBusiness can retrieve an EIN for you with our EIN service. EINs are issued by the IRS and operate as essentially a social security number to identify your business.
ZenBusiness offers services that can assist you in operating your Utah PLLC. Some of our services include:
Allow ZenBusiness to provide the assistance you need to simplify operating your business.
The most up-to-date fees for Utah business registrations are provided in a Schedule of Fees document maintained by the Department of Commerce.
Utah offers a PC to professionals wishing to incorporate a business in addition to the PLLC.
Utah requires PLLCs to be formed for the purpose of rendering one specific type of professional service or related professional service.
Professionals in the same industry with different specialties can form a PLLC together. For example, a PLLC providing legal services can include an estate planning attorney and a criminal defense attorney as members of the same PLLC.
In general, Utah PLLCs are taxed as pass-through entities, meaning their profits are taxed only on the individual members’ tax returns. However, in rare circumstances, a PLLC may elect to be taxed as a C corporation.
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Disclaimer: The content on this page is for information 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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