Entrepreneurship is exciting—the thrill of developing a winning product or service, bringing that idea to life, and making life better for your clients—it’s fun. But unfortunately, it’s not free. Long story short: starting a business has a price tag. LLCs are no exception.
If you’re hoping to start an LLC in Utah, you’ll quickly learn that you’ll have a pretty long list of fees for forms, licenses, and applications that you’ll need to get started. Some of those are optional fees, and some are unavoidable. In this guide, we’ll walk you through all the costs you can expect when starting a Utah LLC. By the end, you’ll have a clear picture of how your new business will impact your wallet.
What’s the least amount I have to pay to form an LLC in Utah?
If you’re crunching the numbers before diving right in, good on you! Planning ahead is a surefire way to start your business off on the right foot. But let’s make one thing clear: the phrase “cost to start an LLC” is a bit deceptive. That’s because you don’t want to get stuck focusing on the “day one” expenses of business.
That’s right—when budgeting for start-up costs, you need to account for the costs you’ll pay today and the costs you’ll pay a year or two down the road.
So let’s talk start-up costs and ongoing costs for your Utah LLC. But to keep things simple, here we’ll cover the non-negotiable costs. Later on, we’ll talk about services that are nice to have (but you can live without if you have to).
UT LLC Start-up costs
There are two primary start-up costs in Utah. The most important one is the Certificate of Organization. The fee is $70. But regardless of whether that sounds like pocket change or an expense you’ll have to budget for, it’s a cost you can’t avoid. After all, the Certificate is what officially forms your business in the state. Without it, you’re not a recognized business.
New LLCs will also be required to get licenses. For starters, there are general business licenses. These aren’t administered on the state level; instead, Utah has its cities and counties handle them. That means that you’ll have to contact your local government office (find it here) to get your license.
Beyond that, there are industry-specific licenses to consider. Utah requires licenses for occupational therapists, carpenters, dental hygienists, and more. You can find more about these licenses at the Department of Occupational and Professional Licensing.
Unfortunately, since each county and each industry runs a bit differently, we can’t provide a comprehensive list of licenses and fees. But you can reasonably expect to pay an application fee when you get one.
Ongoing costs for an LLC in UT
If your business lasts (and we’re confident it will), then you’ll have several ongoing costs. These include license renewals, annual reports, and taxes. Let’s dig into those prices and fees.
License renewals
Licenses don’t last forever, unfortunately. You’ll have to renew them (both your general business license and your industry licenses) on a fairly regular basis. Each Utah county and industry licensing board has its own policy for renewals, though, so we can’t really list them here. This guide would be tedious if we did. When you obtain your licenses, we recommend taking note of the renewal requirements for your industry so none of the fees surprise you.
Annual taxes
In Utah (or any state, for that matter), one of the biggest annual costs you’ll have will be taxes. One of the most substantial taxes you’ll have will be income taxes. But unlike a lot of states, Utah doesn’t have a different rate for LLCs taxed as individuals or corporations. That’s because the state charges the same flat rate for both types: 4.95%. Many businesses will also need to collect and pay the state sales tax (4.7%).
There’s also a wide variety of miscellaneous business taxes that might apply to your LLC: transient rooms, grocery foods, and restaurant taxes are just a few examples. But we won’t dig into all the nitty-gritty details here. If you think a miscellaneous tax might apply to you, we recommend checking out the Utah State Commission.
Annual report
Most states require LLCs to file some version of an “annual report,” or a document that informs the state about the current standing of your business. This document is usually required in addition to annual tax reports, since it usually includes information about your business address, members, your registered agent, and so on.
In Utah, the annual report is fairly straightforward. You simply log in or download the form, fill out the required information, submit it, and pay the $20 fee. As long as you complete this process by your LLC’s anniversary date, you’re good to go.
What are the discretionary costs to form a Utah LLC?
When you’re starting your business, your budget is usually pretty tight. Prioritizing costs can get tricky. The costs we listed above are unavoidable. Well, technically, you can avoid them, but you’ll be heavily penalized if you do. And there’s not much point to spending all that money on starting a business only to knowingly let it be dissolved because you didn’t pay your ongoing costs.
But if you can help it, doing the “bare minimum” is probably not the best way to start your business. There are plenty of discretionary costs you can pay for certain services that make life easier. Here, we’ll dig into those costs—and why you might consider paying them.
1. Name reservation application
Naming things can be a bit tricky; after all, sometimes inspiration is a little lacking! And since Utah doesn’t allow you to use a name that someone else has already claimed, you have to work even harder to pick one that’s unique, memorable, and just right for your business.
It’s a multi-step process, really: you have to brainstorm name ideas, choose just the right words, meet state name requirements, and of course, ensure that the name isn’t already in use (you can check using a Name Availability Search).
If you’re like a lot of people, you probably want to ensure that your hard work doesn’t go to waste once you’ve created the perfect name. So you have to lay claim to your new business name. You can do so either by filing your Certificate of Organization, or by filing an Application for Reservation of Business Name. You should only file this form if you’re not yet ready to file your Certificate. Otherwise, you’d be wasting your hard-earned cash. Utah requires a $22 fee for an Application for Reservation, but it protects your chosen name for 120 days.
2. Obtaining a DBA
Wait—didn’t we just cover business names? Yes. But there’s a distinction: your business name, which you’ll write in on your Certificate of Organization, is the legal name of your business. A DBA, sometimes called an assumed name, a trade name, or fictitious name, is like a nickname for your business. For example, your legal name might Joseph Smith, but your friends call you Joe for short. Joe is a perfectly valid name, but you can’t put it on legal paperwork. You’d have to legally change your name to do so.
A DBA acts kind of like a nickname for your business; some LLCs and corporations also use DBAs to establish new product lines or new “businesses” under the LLC “parent company.” But regardless of why you use a DBA, if it differs from your legal name, you need to register it before you can use it.
Quick note: before you register a DBA, you need to ensure that it’s even available for you to use. You can’t have a DBA that’s indistinguishable from another name on record. Once you’ve determined your name is available, you can register it using a DBA Application.
There is a $22 fee for this application, but it will last you three years. After that, you’ll need to renew it if you intend to continue using your DBA for another $22. For more information on this registration process, check out our guide to DBAs in Utah.
3. LLC formation services
Paperwork is a massive hassle. And unless you’re starting an LLC to help other Utah residents with their paperwork, odds are you don’t want to deal with much paperwork yourself.
The bad news? Paperwork is an unavoidable part of starting a Utah LLC: the Certificate of Organization, the annual report, license applications—the list goes on and on. The good news? You can hire an LLC formation service to do the pesky paperwork for you.
Of course, there’s some cost involved. And while there are a lot of great LLC formation services, they aren’t all created equal. And they all have different price points.
Many LLC formation services offer a wide variety of packages, with basic options starting at low prices like $39 from Zen Business (one company, Incfile, even offers a starter package for $0). But if you’re willing to shell out some serious cash for comprehensive assistance, you’ll find package prices going as high as $799.
These services are completely optional; you can DIY your Utah LLC formation. But many entrepreneurs find the time saved is worth the money. If you do opt to hire a service, please make sure you take the time to understand what you’re buying. Some services charge one-time fees, and others tack on “free services” that will cost you next year. If you don’t read the fine print, you can get slapped with unexpected service fees. And surprise bills are never fun.
4. UT Registered agent services
Utah law clearly states that every LLC must designate a registered agent to act as a middleman between your business and the state. Long story short, the registered agent accepts service of process (and any other official communication from the state) on your behalf.
Technically, this is another thing you can DIY; Utah allows you to serve as your own registered agent. However, in our opinion, it’s worth the expense to hire a registered agent.
Why? For starters, a registered agent’s address becomes part of the public record; anyone in the state can find that address. That leads to spam mail (sometimes worse). Plus, a registered agent must be present at the registered address during all standard business hours. If you serve as your own, you’d be tied down to your location constantly. A registered agent service prevents those annoyances. A service will also help you keep track of annual filing requirements, license renewals, and more.
These services typically charge an annual fee. For example, annual fees for our top 4 Utah registered agent services range from $99 to $299 per year depending on the service you choose. That said, some offer the first year free if you use them as an LLC formation service.
Quick Note: If you need to later down the line, you can always change your registered agent.
5. Expedited filing fees
In Utah, it usually takes 3-10 business days (upon receipt) for the Division of Corporations and Commercial Code to process your Certificate of Organization (or other business documents). Granted, that time can vary based on order volume, time of year, and so on. But they’ll usually approve or reject your Certificate of Organization within a week.
If that sounds like too long to wait, Utah allows you to expedite your form for a $75 fee. Expedited orders are usually processed within 1-2 business days. Since that expediting fee isn’t crazy expensive, you might decide it’s worth the extra expense to expedite your filings, but patience works, too. You can let your budget and your timetable be the deciding factors.
6. Business attorneys
Starting a business is a complicated process. And it’s a legal one. We do our best to make the process seem less daunting with guides like this one. But at the end of the day, we can’t write a guide that would cover every single question every business will ever face. That’s because your business is unique.
Business attorneys, however, can talk you through all the nuances of forming and running your business. In many cases, the advice of an attorney can save you thousands by helping you avoid expensive legal mistakes.
However, the upfront costs of hiring a business attorney can be pretty pricey. For example, many attorneys charge per hour, with rates ranging between $150-$350. Others offer “LLC formation packages” for flat rates that fall between $500-$2000. And of course, those fees vary based on the attorney’s experience, location, and so on.
If you’d like to hire one, we recommend checking out sites like Avvo.com. Their database is nearly comprehensive, so it’s a great way to search Utah business lawyers. You can also narrow results by location, cost, overall satisfaction rating, and more. It’s the best place to look to find the right legal consultation for your business.
Conclusion
Long story short: starting a Utah LLC can be a pretty pricey endeavor. If you look at each cost separately, it doesn’t seem too bad (even the Certificate of Organization fee of $70 is pretty manageable). But when you add them all up or tack on some additional services, the total price tag grows pretty quickly.
Thankfully, since you’ve read this guide, you know what you’re up against. And sometimes, knowing is half the battle—and now you’re armed with all the information you need to budget the start-up costs so you can start your Utah LLC off on the right foot. We wish you and your new business the best!