Articles of Organization

The formation of a Utah LLC means that you have to file articles of organization (along with the $52 filing fee) with the Utah Division of Corporations and Commercial Code. The articles, which must be signed by at least one LLC manager or organizer, must include:

• The LLC’s name
• The LLC’s business purpose
• The street address of the LLC’s registered office
• The name of the LLC’s initial registered agent there and the agent’s status that permits him or her to be the LLC’s agent
• The signature of the initial registered agent
• The street address of the LLC’s principal office
• The name and address of each organizer who is not a member or manager
• If the LLC is to be member-managed, the names and street addresses of the initial members
• If the LLC will be manager-managed, the names and street addresses of the initial managers
• The LLC’s duration; if no duration is specified, the LLC will endure for 99 years from the filing date

Your new LLC is considered officially “organized” once an original and a copy of the articles of organization are delivered to the Department of Commerce (along with the $52 filing fee) by one or more organizers over 18 years of age and the Department of Commerce determines that the articles comply with state requirements.

The Department of Commerce endorses both copies but retains the signed original and returns the copy to the LLC or its representative. The articles are effective as of when they are filed, or, if another date and time is specified, the articles are effective as of the delayed effective date and time.

Registered Agent and Office

Utah LLCs are required to continuously maintain both a registered agent and registered office in the state—the person or office designated to receive official state legal and administrative correspondence. An LLC registered agent may be an individual who resides in Utah or a business entity authorized to conduct business there. The registered agent’s business office must be the same as the corporation’s registered office.

The registered office may be—but doesn’t have to be—the LLC’s place of business.

Operating Agreement

Another critical document for the new LLC is its operating agreement. Having an operating agreement is not officially required by the state, but it’s a highly important internal document that explains how the LLC will actually run. The operating agreement should list the LLC’s members, how much each one has invested, how any profits will be distributed, and how much relative weight each member has when voting. It can be amended or repealed as specified in the agreement itself or by state law.

The operating agreement can also include requirements for meetings (notice, quorum, voting rules, etc.) and similar functions, but it doesn’t have to. Often, however, it does include operating constraints and allowances that are already contained in state law and regulations. It also may contain constraints on the members’ authority to amend or repeal the operating agreement or any provision thereof.

Membership in the LLC

A Utah LLC must have at least one member, who must be an individual person. Members may acquire an interest in the LLC by signing the articles of organization or operating agreement, by evidencing an intent to become a member orally or in writing, by making a contribution to the LLC, or in some other manner designated in the articles or organization or operating agreement. Admission must be documented in the LLC’s records or otherwise acknowledged.

Member contributions to the LLC may consist of cash, property, services rendered, or a binding obligation (such as a promissory note) to make these kinds of contributions in the future.

LLC members may resign from the company, but only in accordance with the articles of organization or operating agreement. If neither document specifies the time or events upon which a member is allowed to withdraw, the member may not withdraw before the dissolution and winding up of the LLC’s affairs unless the member has the written consent of all other members.

Except for the initial managers, managers are elected by the members holding at least a majority of the profits interests in the company. Any manager vacancy is filled in the same way. Unless the operating agreement specifies otherwise, a manager may be removed with or without cause, at any time, by the decision of members owning a majority of the profit interests in the company.

Ongoing Requirements

All Utah LLCs must keep the following types of records open and available for inspection at its main office:

• An alphabetized list of all members and managers and their respective addresses
• A copy of the stamped articles of organization and any amendments and related powers of attorney
• A copy of the required writing from an organizer
• A copy of the LLC’s federal, state, and local income tax returns, if any, for the past three years
• A copy of any financial statements for the past three years
• A copy of the LLC’s operating agreement and any amendments
• Unless specified otherwise in the articles of organization or operating agreement, a written statement of the members’ contributions and the amount of cash on hand

Dissolution

A Utah LLC is dissolved when any one of the following events occurs:

• When the time for expiration arrives that is specified in the articles of organization
• When the company fails to maintain at least one member
• Written consent to dissolve by all the members
• An event specified in the articles of organization or operating agreement
• The merger of consolidation of two or more companies when the LLC is not the surviving company
• A court order mandating dissolution

Taxes

An LLC by its nature offers some specific advantages over a corporation’s organizational structure, especially when it comes to taxes. This includes access to more deductions, since the LLC is not required to be a separate tax entity like a corporation. Instead, it is considered a “pass-through” entity for tax purposes, meaning that LLC owners report business profits and losses on their individual tax returns.

The LLC tax rate for Utah is variable, based on Utah taxable net income.

Articles of Incorporation

Before it can legitimately begin operations in the state, a new Utah corporation must file articles of incorporation with the Utah Division of Corporations and Commercial Code. The charter must be executed (signed) and delivered by at least one incorporator—who must be a natural person of legal age or a business entity—and accompanied by the $52 filing fee. The following information must be included in the articles:

• A statement of the corporate purpose (may just say that the corporation may conduct any and all lawful business)
• The classes of shares that the corporation is authorized to issue and the number of shares per class
• If more than one class of shares is authorized, the articles must prescribe a distinguishing designation for each class, as well as its preferences, limitations, and relative rights
• The articles of incorporation must authorize (a) at least one class of shares that has unlimited voting rights; and (b) at least one class of shares, which may be the same class or classes as those with voting rights, that is entitled to receive the corporation's dissolved assets
• The street address of the corporation’s initial registered office
• The signature of the initial registered agent

Utah also permits optional provisions to be integrated into the charter, such as:

• The names and addresses of the initial directors
• The corporate purpose(s)
• Provisions for regulating the powers of the corporation, its board of directors, and shareholders
• Provisions for managing the business and regulating the affairs of the corporation
• Authorization for classes and series of stock to have certain other rights

Registered Agent and Office

Every Utah corporation must have a registered agent in the state—the person or office designated to receive official state correspondence, both administrative and legal. The registered agent is required to sign the articles of incorporation, indicating acceptance of the appointment as registered agent.

The registered agent must be either a Utah resident whose business office is the same as the registered office, or a corporation authorized to conduct business in the Volunteer State that has a business office identical to the registered office.

Bylaws

Bylaws lay out the corporation’s basic managerial and legal operating principles that manage their internal affairs. Utah corporations must keep a copy of their bylaws at their principal executive office, but are not required to file them with the state.

At its initial meeting, the incorporators or the board of directors should adopt corporate bylaws, and then keep them updated as time goes on. If no directors have been elected the incorporators may adopt initial bylaws for the corporation. If neither the incorporators nor the board of directors have adopted initial bylaws, the shareholders may do so.

The board of directors of a corporation may adopt, amend, or repeal bylaws, unless the articles reserve this right to the shareholders. Bylaws normally address:

• Shareholders and directors meetings
• The authority, number, and tenure of directors
• Voting procedures
• The duties, responsibilities, and tenure of officers
• How stock is issued
• How and when annual financial information is provided to shareholders

Directors and Officers

A corporation’s board of directors consists of at least three directors except that the board may consist of only one or more director if no shares have been issued yet. Directors must be natural persons. After shares are issued and for as long as a corporation has fewer than three shareholders, the number of its board of directors may be equal to or greater than the number of those shareholders.

Officers are listed in the initial bylaws or elected by the board of directors, and may appoint other officers in accordance with the bylaws. There must be at least a president and a secretary. At least one officer has the responsibility of preparing minutes of director and shareholder meetings, and for maintaining and authenticating corporate records

An officer may hold more than one office in the corporation unless specified otherwise by the corporation’s bylaws.

Required Reports

Your corporation must file a report with the Utah Division of Corporations each year by the end of the second calendar month after the month in which the report is mailed from the agency. The report must state:

• • The corporation's name and where it was incorporated
• • The street address of the corporation’s registered office
• • The name of the corporation’s registered agent there
• • The street address of the corporation’s principal office
• • The names and addresses of the corporation’s directors and principal officers
• • A brief description of the nature of the corporation’s business

Additionally, the corporation must send requesting shareholders the most recent annual or quarterly financial statement showing corporate assets, liabilities, and operational results.

Taxes

Utah's corporate tax structure consists of a flat rate of five percent on all corporate income with a $100 minimum. Among states levying corporate income taxes, Utah's rate ranks 41st nationally.

Utah corporations are subject to a corporate franchise tax based on net income. Every corporation must file a return and pay the tax each calendar or fiscal year, regardless of whether or not a profit was made or business was conducted.

“S corporation” status is recognized by Utah. A “subchapter S” corporation (frequently referred to as an “S corp”) is treated as a pass-through entity for tax purposes in the same way as a sole proprietorship or partnership. The S corp does not file a tax return on its own behalf; instead, all tax-related data for the S corp is filed as part of the owner’s individual income tax.