Utah Corporation: Everything You Need to Know
Utah corporations have specific tax requirements as well as fees associated with its establishment.5 min read updated on February 01, 2023
What is a Utah Corporation?
Utah corporations are legal entities established by the shareholders of the business. The shareholders elect to incorporate the business in the State of Utah in order to create an entity that separates them from the business itself.
Utah Corporation: Taxes
Utah corporations have specific tax requirements as well as fees associated with its establishment, including the following:
- Annual report fee: Utah requires an annual report be filed before the anniversary date of the incorporation. Filing fee is $15.
- Taxes: Visit the Secretary of State’s website for the State of Utah to find the taxes associated with running a Utah corporation.
Federal tax identification number (EIN) fee: This is required for all Utah corporations that hire employees. Further, most financial institutions require a federal EIN if opening a business bank account.
- Note that Utah doesn’t require a state tax EIN.
Forming Your Utah Corporation
There are other formal requirements that must be met when establishing your Utah corporation, which includes:
- Filing of the articles of incorporation, which generally takes about two weeks to process if using the paper form. It can be completed in as little as one to two days if faxing or submitting the document online. The articles of incorporation must include the economic purpose of the business; its name; the number and value of shares being authorized; the name and address of its registered or non-registered agent, if applicable, or the name of the officer for legal service of process; the name/address of all incorporators; the name/address of all directors; stipulations for the management of the business; and imposition of personal liability on shareholders.
- Holding a meeting to go over the daily operations of the business, including the appointing of officers and adopting of bylaws.
- Be mindful that the name of a Utah corporation must contain one or more of the following terms: Inc., Corp., Co., Company, Corporation, or Incorporated. Also, the name of the business cannot contain terms such as “University,” “College,” or “Institute.” In addition, you cannot utilize any terms referring to the U.S. Olympics unless you have express consent. The fee for each name reservation is $22.
Foreign Utah Corporation
A foreign corporation cannot conduct business in the State of Utah until it files an application to do so with the Utah Division of Corporations and Commercial Code. The application to conduct business in the state must include the corporation’s name, jurisdiction in which it is incorporated, date of incorporation, physical address of its principal place of business, registered agent name/address, directors and officers names/addresses, the date when the corporation began or expects to commence business in Utah, and the fiduciary duties of the directors and officers.
Note that certain activities do not constitute “transacting business,” and include:
- Bringing or defending legal proceedings
- Holding meetings
- Maintaining bank accounts
- Selling through independent contractors
- Soliciting orders if such orders require acceptance outside of the state before becoming contracts
Fiduciary Duties of Utah Directors
In Utah, there is no duty of care or loyalty for directors, but rather a duty to act in good faith, with the care an ordinary person in a similar position would give under comparable circumstances, in a manner the director or officer reasonable believes would be in the best interest of the corporation. Utah case law further illustrates the standard of care that a director must exercise is the amount of skill ordinarily possessed by other members of the director’s profession practicing in a similar industry.
While discharging his or her duties, a director can rely on information provided by:
- Employees or officers of the corporation, so long as the director reasonably relies on the information
- Legal counsel, accountants, or other professionals
- A committee of the directors in which the other director is not a part of
A director cannot be held liable for any action or failure to act unless the director engaged in gross negligence, willful misconduct, or intentional infliction of harm on the corporation or its shareholders.
Merging of Utah Corporation
The merger must contain the following:
- The name of each business planning to merge
- The name of the surviving entity
- Terms and conditions of the merger
- The conversion of ownership interests
- Amendments to the articles of incorporation
- Any other stipulations to the merger
- How to merge the outstanding shares of each entity
- A statement of approval from the shareholders, and the actual vote that was cast
Board Actions Regarding Mergers
The board of directors of every Utah Corporation to the merger must approve the plan of merger or exchange of shares. If approval by the shareholders is required, the board of directors must also submit the plan of merger or exchange of shares to the shareholders for additional approval. If shares were previously issued, the board of directors must recommend dissolution of those shares. The board of directors can then re-issue the shares after the merger is complete.
What if all shareholders don’t agree to the merger? The Utah Revised Business Corporation Act allows shareholders a right to dissent the merger, and receive payment of the fair value of the shares owned at the time of the merger if:  shareholder approval is required or  the corporation is a subsidiary that is merging with its parent company. However, the following exception applies: The Utah Control Shares Acquisition Act (UCSAA) applies to only those “control shares” of an issuing public corporation. Control shares are those shares of an issuing public corporation that entitles someone to exercise voting power, either 1/5 or more but than 1/3 of all voting power; 1/3 or more but less than a majority of all voting power; or a majority or more of all voting power.
If a corporation wishes to sell all its property, it must first hold a shareholder meeting and obtain a majority shareholder approval.
Successor Liability After a Sale
Utah courts believe that the buyer of assets in an asset sale does not automatically assume the seller’s debts and liabilities, except if one of the following holds true:
- The purchase expressly or impliedly agrees to take on the debts
- The transaction amounts to a consolidation or merger
- The purchaser is merely continuing the operation of the corporation as-is
- The transaction between the purchaser and seller is entered fraudulently to escape liability of the corporation’s debts
Utah’s Conversion Statute
There is not one specific type of conversion; there are many options, which include statutory mergers, statutory conversions, and non-statutory conversions. However, it is important to be mindful of Utah’s specific state statute when it comes to converting your business. There is a simplified method that allows you to convert your corporation into an LLC by filing just a few documents with the Department of Commerce. Such a conversion, generally referred to a statutory conversion, transfers the corporations’ assets and liabilities. Therefore, there is no need to form a new LLC or dissolve the corporation.
Let us Help
If you need help either establishing your Utah Corporation or converting your Utah Corporation into an LLC, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.