Utah LLC Search: Everything You Need to Know
LLCs are subject to ongoing requirements in the state of incorporation, such as annual reports and paying the associated fees or franchise tax.3 min read
A limited liability company (LLC) is the least complex business entity of all. It's different from an S corporation or a C corporation in that it's flexible. LLCs are subject to ongoing requirements in the state of incorporation, such as annual reports and paying the associated fees or franchise tax.
Different Types of LLCs
There are various types of LLCs available for small businesses and corporations:
- Domestic LLC: An LLC formed and operated within your state. If your LLC was formed within your state's jurisdiction, it maintains authority over your business.
- Foreign LLC: This doesn't apply to a business formed internationally. A foreign LLC operates in a state other than where it was formed. For example, you could form an LLC in Utah, but you operate in California.
- Member-Managed LLC: All members are running the business. They are all equal. A member-managed LLC is used most often.
- Manager-Managed LLC: Some business partners choose to be passive in their involvement, which means it's manager-managed. Members or nonmembers can be chosen to manage.
- Single-Member LLC: This LLC only has a single member.
- Multiple-Member LLC: More than one member runs this LLC. This requires a careful Operating Agreement because in the event that it goes out of business, there could be a dispute between members or a death.
- Series LLC: One “umbrella” LLC that has control over other entities. These can be assets, members, interest or managers. The series LLC began in Delaware, but it is available in Iowa, Illinois, Nevada, Tennessee, Texas, Utah, and Oklahoma.
- Restricted LLC: An LLC exclusive to Nevada. It began in 2009. This type of LLC elects to be limited by the Articles of Organization and can't make distributions to the members for at least 10 years following formation.
- L3C: This is a for-profit business that has a philanthropic purpose. It has a hybrid structure that combines the tax and legal flexibility of the LLC structure with the social advantages of a nonprofit and the marketing of a social organization.
- Anonymous LLC: An LLC in which the state withholds details and information from the public. Few states have this option.
If you need to change your LLC, you can amend it with the Office of the Secretary of State for your state. Though minor changes require an amendment, information within your Articles of Organization or Articles of Incorporation that has been changed should also be amended.
Advantages of Starting an LLC
There are many advantages to an LLC, including:
- Pass-through taxes: There's no corporate tax return. The LLC owners report their individual share of the profit on their personal tax returns, so there's no double taxation.
- No residency requirement: Those who own an LLC don't have to be U.S. citizens or permanent residents.
- Legal protection: Creating an LLC means there is limited liability for business debts and obligations.
- Enhanced credibility: Partners, suppliers, and lenders may prefer an LLC.
- Versatile tax status: LLCs have the flexibility to choose how to be treated as a tax entity. According to the IRS, an LLC is federally taxed as a partnership or a sole proprietor. However, it retains the option to be taxed as a C corporation or an S corporation.
- Flexible profit distribution: If the members choose, the income and profits of an LLC can be allocated to the members in proportion to their ownership percentage. This differs from corporations, which have to distribute profits according to the proportion or percentage of ownership of each shareholder.
- Minimal compliance requirements: LLCs are subject to limited state-mandated, annual filing requirements and formalities. Corporations are required to have at least an annual meeting of directors and shareholders, adopt bylaws and keep minutes of meetings, and other formal resolutions. An LLC doesn't have any such requirements.
- Different membership classes: Unlike S corporations, LLCs aren't limited to one ownership class. They can have many types of membership classes.
- Fewer formalities: LLCs have less annual paperwork than other entities and don't have the meeting requirements of C corporations and S corporations.
- Approval to add owners: Before adding owners or extending ownership, there must be written agreement from the current LLC owners.
If you need help with determining which LLC is right for you, 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.