Are you looking to form a professional limited liability company (PLLC) in Utah, but you’re not sure how the formation process works? There are several important steps when it comes to creating a Utah PLLC that is compliant and able to do business in the state.
What is a Utah Professional LLC?
The professional limited liability company (PLLC) is a specialized type of LLC that is intended for licensed professionals to offer their unique services. In Utah, a PLLC can be formed to provide certain services that require a license, including the services rendered by architects, attorneys, certified or clinical social workers, chiropractors, dentists, doctors of medicine, mental health therapists, naturopaths, nurses, optometrists, osteopathic surgeons and physicians, pharmacists, physical therapists, physician assistants, podiatrists, professional engineers, psychologists, public accountants, real estate agents, real estate appraisers, real estate brokers, surgeons, and veterinarians.
The Utah PLLC is typically more popular than a professional corporation (PC) because it’s a more flexible business type, but it still includes the personal asset protection and professional qualifications that make the PSC valuable.
PLLCs in Utah have relatively simple formation and maintenance requirements, several options for how they want to be taxed, and flexible management. From one-person businesses to multi-member PLLCs with several owners, the PLLC is a popular choice for a reason.
An important detail of the PLLC that differs from a traditional LLC is that liability protection is not shared across all members of the company. For example, if you operate a PLLC for physicians, your business structure does not shield each individual member from malpractice suits. Instead, each member is liable for their own malpractice insurance, and no member is liable for another member’s malpractice.
Forming a PLLC in Utah (in 6 Steps)
Step One) Choose a PLLC Name
Your PLLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
In Utah, professional limited liability companies must include in their names the words “professional limited liability company” or the abbreviation “P.L.L.C.” or “PLLC.” The name cannot contain language that states or implies that the company is formed for a purpose other than a purpose authorized by Utah law and by the company’s Certificate of Organization. The name should also follow any rules of the regulating body of the profession for which the company was formed.
Another aspect to consider is including language that explains what your business does. For example, if you’re a doctor, put the word “physician” or the initials “MD” in your PLLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
Do You Like It?
At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your PLLC name both sounds good when spoken out loud, and looks good when written down.
The most important consideration for naming a PLLC is to not get too attached to any one business name until you know that it is available for use. You can confirm if a name is available by using the Business Name Search tool on the Division of Corporations website. If you aren’t yet ready to form your PLLC but want to reserve a business name for future use, you can submit an Application for Reservation of Business Name to the Division of Corporations by mail, by fax, or in person. The filing fee is $22, and the reservation period lasts 120 days.
Step Two) Designate a Registered Agent
Every PLLC in Utah is required to designate a registered agent, which is the individual or business entity that receives government correspondence on behalf of your business, then forwards those documents to you.
Your Utah PLLC’s registered agent can either be a commercial registered agent, which is a registered agent that is registered with the Division of Corporations, or a non-commercial agent. A non-commercial registered agent can be an individual, a domestic or foreign entity, or an office or other position within your PLLC. All Utah registered agents must have a street address in Utah.
Without a registered agent, you could lose your good standing with the state of Utah, and the state also has the right to dissolve your PLLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
At the end of the day, we recommend hiring a dedicated registered agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record.
Step Three) File Formation Documents with the State
Once you are ready to form your Utah professional limited liability company, you will fill out the Certificate of Organization.
This is THE document that will register your PLLC with the state. You’ll want to ensure all of the following information is correct on the form:
- Name of your PLLC
- Principal office address
- Professional service to be provided by your PLLC
- Name and address of your PLLC’s registered agent
- Name and address of each member and/or manage
- Duration of your PLLC
You can file your PLLC’s Certificate of Organization with the Division of Corporations online through Utah’s OneStop Business Registration website, in person, by mail, or by fax.
Cost to Form a PLLC
The filing fee for the Certificate of Organization is $70.
Online filings are processed within 24 hours. Mailed, faxed, or in person filings can take up to 7 business days to process.
Step Four) Create an Operating Agreement
After you register a PLLC in Utah, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for a copy of this document. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your operating agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your operating agreement, or you can create one from a free template online. You can read more about operating agreements here, but some of the basic information you’ll want to have includes:
- Individual members' ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the PLLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Step Five) Handle Taxation Requirements
The vast majority of PLLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important PLLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
Your PLLC’s state tax obligations will depend on its tax classification status and the nature of its business activities. Utah has several types of taxes that may apply to businesses, such as income tax, sales & use tax, and withholding tax. You can learn more about taxes in Utah on the Utah Tax Commission’s website.
Once your PLLC is formed, you will need to register your PLLC with the Utah Tax Commission, either through Utah’s OneStop Business Registration System, the Utah Taxpayer Access Point, or by mail. You can also use the Taxpayer Access Point to manage, file, and pay your PLLC’s Utah taxes.
Depending on where in Utah your business is located, you may also need to pay some local taxes. You should contact your city and county for information on your PLLC’s local tax obligations. If your PLLC is located in one of the four largest cities in Utah, you can visit the following websites for local business resources and contact information: Salt Lake City, West Valley City, Provo, and West Jordan.
Step Six) Obtain Business Licenses and Permits
While Utah does not have a general state business license, all businesses in the state are required to obtain a business license from a city or county. If your PLLC operates in more than one city or county, you may need to obtain multiple licenses. You should contact each city and/or county in which your PLLC operates to confirm licensing requirements. A list of licensing offices for all cities with a population of 600 or greater is available in the Division of Corporations Business Licensing and Registration Guide. The State of Utah’s website also includes information about business registrations and licensing in the state.
In addition, you should confirm you have the necessary professional licenses to render professional services through your PLLC. Visit the Department of Occupational and Professional Licensing’s website for more information on profession-specific licenses and application procedures.
Would You Prefer a Professional Form Your PLLC?
If you would prefer to have a professional handle the paperwork for you, consider hiring an online business formation service.
Because of the often-complex nature of professional limited liability companies, some of our favorite service providers don’t offer PLLC formations, but there are still plenty of quality companies that do provide this service. A couple of our favorites for PLLC formation are LegalZoom and MyCorporation.
Another option would be to hire a business attorney to handle your PLLC formation. While this is certainly a more expensive route than using an online formation service, a lawyer’s expertise could come in handy when you’re forming a specialized business structure like this.
Next Steps: What to Do After Creating a PLLC in Utah
Open a business bank account
We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
Employers in Utah are generally required to carry workers’ compensation insurance. If your PLLC will have employees, you should make sure you have this coverage in place. For more information about workers’ compensation in Utah, you can review the Utah Labor Commission’s Employers’ Guide to Workers’ Compensation. Though not required, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies pertaining to the profession practiced by your PLLC.
Understand income reporting
Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year.
In Utah, your income will reported on a state income tax return. Utah has different forms for different types of business entities. You can find all of the Utah state tax forms and related instructions on the Utah Tax Commission’s website.
Understand annual reporting
Utah requires that businesses, including PLLCs, submit an annual report, or renewal form, each year. This form can be submitted online, by mail, by fax, or in person. The renewal fee is $20 and the form is due by the anniversary date of your PLLC’s formation.
Find an accountant
We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how to best manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.