If you are preparing to launch a new Utah business, you should carefully consider the proper structure for your new company.
In fact, this is one of the first steps you’ll want to make in establishing your new business. Choosing the wrong type of entity can prove costly in the future, and potentially expose you to unnecessary liability and significant legal fees.
Consulting an experienced Utah business attorney will provide the insight you need to understand your options, make an informed choice, and get your business set up properly.
Types of Utah Business Entity Structures
The most common types of legal structures you can choose for a new business in Utah fall into four general categories:
- Sole proprietorships
- General partnerships
- Limited partnerships
- Limited liability companies
- “S” Corporations
- “C” Corporations
Considerations when Selecting a Utah Business Entity Structure
When one or more people just start doing business without first forming a business entity, the business is a “sole proprietorship” if there’s just one owner, or a “general partnership” if there’s more than one owner. While these are the two simplest and initially least expensive business forms, from a personal liability and taxation standpoint these are probably the two worst business forms – especially the general partnership! As a result, a savvy business person will want to start his/her business by creating a legal business entity that actually owns and operates the business. This business entity, in turn, will be owned and controlled by its owner(s), who can also be employees of the legal business entity.
When choosing a legal structure for a new business entity, owners must consider issues such as liability, asset protection, transferability, taxation, financial arrangements, succession and, if applicable, shared ownership. The type of structure you choose also determines which set of laws you must follow, including income tax laws, that will affect both the business and its owners.
Some business entity types are more complex and, consequently, more expensive to establish and maintain. However, choosing a legal structure based solely on cost can backfire, potentially exposing owners to unnecessary personal liability and even more complex and expensive legal problems. This can also lead to having greater tax liability than would otherwise be necessary.
Choosing a Utah Business Law Attorney to Set Up a New Business Entity
Depending on the type of entity structure you choose, you must prepare and submit specific documents in accordance with the requirements of the state of Utah and the Utah Division of Corporations. For example, a limited liability company (an “LLC”) needs to file a certificate of organization, and may also need an operating agreement to specify how the LLC will be run, especially if there are multiple owners. A corporation requires the filing of articles of incorporation, and may also require bylaws and other documents to specify how it will be run and to keep track of the shareholders and how many shares they own.
These are just some of the steps needed to properly set up a new business entity in Utah. Choosing a business law attorney who understands these principles and processes will help ensure that your new business gets off to a strong, legal start.
At J.D. Milliner & Associates, P.C., our Utah business lawyers value the contribution that business owners make to our state’s economy and continued growth. Contact us today at our Salt Lake City offices to discuss your business startup questions and concerns.
NOTE: This article is for informational purposes only and should not be construed as providing legal advice. Use of this site does not create an attorney-client relationship. Contact an attorney to obtain legal advice.