Key Takeaways

  • Naming requirements: Your business name must be distinguishable and can be reserved for 120 days through the Utah Division of Corporations.
  • Articles of Incorporation: Must include specific details like registered agent and share structure. Filing is done with the Utah Division of Corporations.
  • IRS Requirements: An EIN is required, and Form 2553 must be filed within strict IRS deadlines to elect S Corp status.
  • Director Appointment: Directors must be named and documented before issuing stock.
  • Corporate Records: Keeping minutes and records is essential for legal compliance in Utah.
  • Ongoing Compliance: Annual reports and state tax obligations must be maintained to retain good standing.

If you're wondering how to set up an S corp in Utah, the following steps provide a clear roadmap. Keep in mind that setting up an S corp requires one or more incorporators who will sign and file the required documents with the appropriate governmental entities.

  1. Name your corporation.
  2. Submit Articles of Incorporation.
  3. File for an EIN.
  4. Elect company directors.
  5. Create a corporate records book.

What Is an S-Corp?

An S corp, short for S corporation, is a way to set up your company that will keep your personal money or property separate from your business assets. By keeping these separate, you are protecting your property from being taken into consideration in a case against your company.

Though there will be strict guidelines for compliance if you choose to incorporate as an S orp, another advantage to creating your company under this structure is that an S corp is independent from its stakeholders. It can operate forever, even if your partner decides to sell his or her shares of the company.

Naming Your Corporation

Since no two corporations can have the same name, first check whether your chosen name is available. Contact the Division of Corporations and Commercial Code by phone or on the website. Once you've identified a name that is available, you can file an application and, they will reserve your name for up to 120 days.

Submitting Your Articles of Incorporation

You must submit your articles of incorporation to the Division of Corporations and Commercial Code of the Department of Commerce. Once you do, your company will officially and legally become an S corporation.

To file correctly, the articles of incorporation will include at least one incorporator and meet the following minimum requirements:

  • List the corporation name.
  • List the names and addresses of your incorporators, who must be at least 18 years old at the time of incorporation.
  • State the purpose for your corporation, which you may do in a general way if you would like to add flexibility to your business.
  • Name a registered agent, who will be the go-to person for notices, lawsuits, and other legal matters. The registered agent will also be in charge of getting the documents back to the corporation for appropriate action.
  • State the number of shares the corporation may issue, providing a designation for each class of share if there is more than one. Also, state all regulations pertaining to the shares before issuing, such as limitations, privileges, and any rights in relation to the shares.

Filing for an EIN

From the perspective of the IRS, an EIN is the business equivalent to the TIN or Social Security number. The EIN, or employer identification number, will allow you to comply regulations and pay your taxes. Our website has more information about the tax structure of an S corp.

Electing Company Directors

You could name officers and directors as you file for incorporation, but it is not required during submission. If you decide to wait, the incorporators should gather after incorporation to vote for directors and approve company bylaws, if any.

After having elected the directors, the incorporators will not be responsible for any more duties. Instead, it will now be the directors who will safeguard the interests of the company and supervise the business and delegate daily operations to the officers.

Follow these guidelines to correctly specify directors for your company:

  • Name at least one director — who must be a person, not another company — before shares are issued.
  • The number of directors should at least match the number of shareholders. For example, if you have two shareholders, there must be at least two directors. This number must be dictated by the bylaws or the articles of incorporation.
  • It is possible to include other limitations in either the bylaws or the articles of incorporation in reference to the service of a director.

Creating a Corporate Records Book

We recommend that you create and uphold bylaws for your corporation, even though Utah does not require them. Record-keeping through meeting minutes, on the other hand, is a requirement for maintaining a company's corporate status. Both tools will help protect your company, and we recommend analyzing Utah requirements before you incorporate.

Your records book may also aid in complying with Utah's annual reporting requirements. You will need to file an annual report each year by the date of your company's anniversary.

Maintaining S Corp Status and Avoiding Termination

Once your Utah S corp is established, ongoing compliance with both IRS and Utah state regulations is vital. To avoid involuntary termination of your S Corp status:

  • Maintain Eligibility: Ensure the number of shareholders does not exceed 100 and all are eligible (U.S. citizens or resident aliens).
  • One Class of Stock: Issuing multiple classes of stock can revoke S corp status.
  • File Timely Returns: Late tax filings or failure to file may result in penalties or revocation of S corp election.
  • Notify IRS of Changes: Significant changes such as ownership shifts or address changes must be reported promptly.

Regular audits of corporate governance practices and periodic consultation with a tax professional can help preserve your S Corp benefits.

Complying with Utah State Tax and Annual Requirements

Even though S corps are generally not subject to federal corporate income tax, they must still meet Utah-specific tax obligations. Key compliance requirements include:

  • Annual Renewal: All S corporations must file an annual report with the Utah Division of Corporations and pay a renewal fee. This is due by the anniversary of your incorporation date.
  • Franchise Taxes: While Utah does not have a corporate franchise tax, your business may still be subject to other fees or taxes depending on the nature of your services and sales.
  • Withholding Taxes: If you hire employees, you'll need to register for a Utah withholding tax account and remit payroll taxes.
  • Sales and Use Tax: Selling goods or taxable services requires registration with the Utah State Tax Commission for a sales tax permit.

Filing IRS Form 2553 to Elect S Corp Status

To officially operate as an S corporation in Utah, filing Form 2553 with the IRS is mandatory. This form allows a corporation to be taxed under Subchapter S of the Internal Revenue Code.

Key points to know about Form 2553:

  • You must file the form within 75 days of incorporation or the beginning of the tax year when S Corp status is to take effect.
  • All shareholders must sign the form to indicate their consent to the election.
  • The corporation must meet IRS eligibility requirements, including having no more than 100 shareholders and only one class of stock.

The form can be submitted by mail or fax to the IRS, and confirmation may take up to 60 days. To avoid delays, ensure all fields are complete and consistent with state incorporation details.

Frequently Asked Questions

1. How long does it take to set up an S Corp in Utah? The formation process typically takes 2–3 weeks depending on state processing times and IRS Form 2553 approval.

2. Can I form an S Corp online in Utah? Yes. You can file your Articles of Incorporation and apply for an EIN online. However, Form 2553 must still be submitted to the IRS by fax or mail.

3. What are the costs of starting an S Corp in Utah? Expect to pay a $70 filing fee for the Articles of Incorporation, plus costs for annual renewals and any optional name reservation fees.

4. Do I need an operating agreement for an S Corp in Utah? While not legally required, bylaws serve a similar function in corporations and are highly recommended for internal governance.

5. What happens if I miss the Form 2553 deadline? You may lose the ability to be taxed as an S Corp for that tax year. However, the IRS may grant late election relief if reasonable cause is demonstrated.

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