Utah Startup
Forming a new Utah startup business but not sure which business type is best? We
can help!
Utah DBA
A sole proprietorship is a type of
DBA (Doing Business As). This type of business is good for three years from
the filing date. Unlike many other states, Utah DBAs are filed with the Secretary
of State's office rather than the County Clerk's.
A Utah DBA does not provide limited liability protection for its owners; if the
business is sued, it is the owner him- or herself that is sued.
Incorporate in Utah
Unlike forming a DBA,
incorporating in Utah does create a separate legal entity, and owners have
limited liability protection against debts and obligations of the business. Also
unlike a DBA, a Utah corporation can exist perpetually, or until dissolved.
C Corporation
A
C corporation is a type of for-profit corporation, one that experiences
double-taxation; income is taxed once at the corporate level and again at the individual
level, after being distributed to the shareholders as profit.
This type of corporation is a flexible one, allowing any number of individual or
corporate shareholders.
S Corporation
An
S corporation is more limited in ownership structure; it cannot have more
than 100 shareholders, and these shareholders must be US citizens (or legal aliens)—they
cannot be foreign citizens or other business entities.
However, an S corporation experiences a lighter tax burden, forgoing the corporate
tax. Shareholders are taxed at the individual level when corporate profits are distributed
to them.
Utah Foreign Corporation
Sometimes, a corporation registered in another state intends to expand into Utah
and do business in the state. To do so, the corporation must file as a
Utah foreign corporation by submitting an application to the Secretary of
State's office.
Utah LLC
An LLC is registered
by filing Articles of Organization with the Secretary of State's office, just as
with a corporation. It is more similar to a corporation than to an assumed name
in that it exists perpetually or until dissolved, and that it provides limited liability
protection.
Unlike a corporation, an LLC is not an accepted federal tax classification, and
it may select a tax classification for use with the IRS.
Utah Nonprofit Corporation
A Utah nonprofit
corporation is registered by filing Nonprofit Articles of Incorporation.
The state provides a reduced filing fee for nonprofit corporations.
However, there is another important step that nonprofits must take if they intend
to operate as a tax-exempt organization, accepting tax-deductible donations and
other federal benefits—eligible nonprofit organizations must apply to the
IRS to be treated as a 501c3 organization. Until this acceptance, the organization
is simply a Utah nonprofit corporation and is still responsible for taxes.