The Utah Revised Uniform Limited Liability Company Act governs limited liability companies registered with the State of Utah. A limited liability company, known as a “LLC”, is a business entity that has some of the advantages of a corporation combined with some of the advantages of a partnership. Electing to operate as a LLC is usually a wise decision for small to medium size companies with only one or a few owners.
You must file a certificate of organization with Utah before receiving the rights and benefits granted to a LLC. A certificate of organization must state:
- the name of the LLC;
- the street and mailing address of the LLC’s principal office;
- the name of at least one organizer of the LLC; and
- if the LLC is a low-profit LLC (a business with limited income), a statement that the LLC is a low-profit business.
There are also special considerations for professional businesses and LLCs that have multiple membership types (known as series).
Paperwork for your LLC will be filed with the Utah Department of Commerce Division of Corporations and Commercial Code’s website. On that website, you will be able to:
- Register a LLC
- Renew a LLC
- Make changes to a LLC
- Reinstate a LLC
- Order copies for a LLC
- Purchase a Certificate of Existence for a LLC
Generally, LLCs have the tax advantages of a partnership with the liability protections of a corporation.
- Tax Advantage. LLCs are not taxed at the corporate level. Rather, taxes on the income of the LLC are made at the personal level of the owner members. This is known as “pass-through” taxation.
- Liability Protection. The owner members of a LLC are usually protected from personal liability for the debts of the LLC. If the LLC is sued for negligence then only the assets of the LLC are at risk, the assets of the owners are usually safe.
The biggest disadvantage to electing to operate as a LLC is that LLC members owe each other specific duties under the law. For example, and unless stated otherwise in the LLC’s operating agreements, members of a LLC must bring potential business opportunities to the LLC before pursuing the opportunities away from the LLC. While this may appear to be straightforward it can become extremely complicated when LLC members have multiple businesses.
If you think you need help forming your LLC, then contact a local Utah business lawyer to discuss the formation and operation of a LLC. There are many pitfalls and obstacles that arise in the LLC business model and it is important to seek strong legal advice.