A limited liability company, abbreviated by the letters “LLC”, is a legal entity whose owners are not personally liable for the company’s debts, liabilities, or other obligations. Under the eyes of the law, the company and its owner(s) are considered separate. Stated a different way, an owner of an LLC will not be liable for the debts of the LLC by virtue of its ownership. The company is considered a “person” under the law with its own assets and responsibilities. In most cases, a creditor cannot force the owner(s) to pay for the liabilities of the company. Likewise, if an LLC is sued, only the company is answerable because the owner and the company are considered different entities.
How does one choose a limited liability company name?
Generally, LLCs are easier to form and maintain that corporations. It is not considered difficult to form an LLC. The Utah Division of Corporations has a formal process for forming an LLC. One of the major steps in forming an LLC is deciding on a name. The name must be unique and cannot be similar to other registered company within the state. The name must also end with the designation, “Limited Company” or “Limited Liability Company”, or even its initials, LLC. The name should also not contain words that might confuse it with a government agency. When electing a name, an owner should also consider trademark and other intellectual property laws as well as marketing considerations.
What are the steps followed in creating a limited liability company?
Before organizing a company in Utah, you should consider meeting with a business attorney licensed in Utah to guide you through the process. If the proper procedures are not followed, the company will not be formed or may be defective, leading to undesired results, potentially even disastrous consequences for your business. While this is no substitute for competent legal advice, the following is a list of some of the necessary steps:
• First, choose and a name that is appropriate and available with the Utah Division of Corporations. This will ensure nobody else uses that name, especially while you are attempting to register the entity.
• Second, you must appoint a “registered agent” who will be legally recognized to receive paperwork dealing with the company. This includes, for example, paperwork related to a lawsuit against the business. The agent may or may not be a resident of Utah, but he or she must have the legal authority to operate in Utah and have a physical street address in Utah.
• Third, one must file a Certificate of Organization with the Utah Division of Corporations that shows the Company’s name, its registered agent’s name and address, the company’s business address and signature of the organizer or owner. Although not required, the Certificate of Organization may address other issues such as the purpose of the LLC and the period in which it will operate in Utah.
• Fourth, once the LLC is recognized by the state, you should have an operating agreement prepared. This is an important contract governing how the company will operate. That should clearly describe ownership of the company, state how the company will be managed, identify the roles and rights of managers and members, establish financial and accounting rules and set out other important legal issues. You should consult an attorney to draft this document. If an operating agreement is not adopted, then the Utah LLC statute will apply by default, which is not always the best result.
• Fifth, you should obtain an Employer Identification Number (EIN) from the Internal Revenue Service if the LLC has more than one member. If you are the only member, you should also get the EIN if you have employees or have your company taxed as a corporation.
• Sixth, you must file annual renewals with the state that are similar to an annual report. A fee is charged every year, and the report may be filed online or manually.
• Finally, you may be required to register or license the business with the city or county in which you are located in order to legally operate. You may also be required to register with other state agencies, such as the Utah State Tax Commission, depending on the nature of your business operations. With all that done, the company is ready to start operations.
How can a Utah Business Lawyer help in this process?
A smart and experienced business lawyer can make the difference between making it and breaking it. He or she can guide you and your business (and partners) to make fundamental legal decisions at the outset that will avoid trouble down the road and assist your company in success now. The business attorneys at Gordon Law Group, P.C. have years of experience and are ready to help you incorporate your business venture and protect your assets. Failing to organize your business properly exposes you to personal liability, discourages investment and increases the chances that your business may fail. We regularly shepherd new businesses through the incorporation process from A to Z. If you need assistance with your new business idea, or if you have already set up a business that is not operating properly, please contact Gordon Law Group for a free 20-minute consultation. This will be some of the best time and money you spend on your money-making machine.