How to Start a Limited Liability Partnership in Utah | 2024 Guide

Start a Limited Liability Partnership in Utah

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in Utah. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in Utah, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Utah LLP, all the steps in this article must guide you.

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in Utah, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and Utah General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

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Steps in Starting a Limited Liability Partnership in Utah

To form a limited liability partnership in Utah, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Registered Agent, filing for Certificate of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in Utah, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the Utah business registry. Ensure that your chosen name follows Utah naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with Utah Secretary of State if desired.

Here are some guidelines you must follow while naming your LLP in Utah- 

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the Utah Secretary of State business name database and Utah Business Name Search. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $22 and mail name reservation fee of $22. If your LLP plans to operate under a name other than its legal name, you may also need to register a fictitious or “Doing Business As” (DBA) name. 

The DBA filing can be done by three methods, online, by mail, and in person filing, which costs around $22. In addition, the DBA’s validity in Utah is three years, which you can file in the Utah Secretary of State.

You can check out how to file a DBA in Utah for clearer understanding.

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Step 3: Designate a Registered Agent

In Utah, you’ll need to designate a Registered Agent for your LLP. The Registered Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or Utah Registered Agent Services to serve as your LLP’s Registered Agent, ensuring that they meet Utah requirements.

However, If you plan to become a Registered Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the Utah Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the Utah Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with Utah laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Utah. The default laws in Utah might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain Utah Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain Utah Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Utah.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your Utah LLP. Additionally, obtain the necessary Utah Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in Utah to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the Utah Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, Utah, and local levels.

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Advantages of Forming a Limited Liability Partnership in Utah

While the specific advantages of forming an LLP in Utah can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in Utah:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in Utah.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in Utah may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in Utah.

Cost of Forming an LLP in Utah

The cost of forming an LLP in Utah may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as Utah Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in Utah instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

What is a limited liability partnership in Utah?
A limited liability partnership (LLP) in Utah is a type of business structure that offers limited liability protection to its owners while allowing them to operate their business like a partnership.
How do I form an LLP in Utah?
To form an LLP in Utah, you must file a Certificate of Partnership with the Utah Division of Corporations and Commercial Code.
What are the benefits of forming an LLP in Utah?
Some benefits of forming an LLP in Utah include limited liability protection, pass-through taxation, and the ability to operate as a flexible and informal business structure.
What are the disadvantages of forming an LLP in Utah?
Some disadvantages of forming an LLP in Utah include higher costs than other business structures, more paperwork and record-keeping requirements, and potential additional taxes.
Are there any specific requirements for forming an LLP in Utah?
Yes, in Utah, every LLP must have at least two partners and comply with state-specific filing requirements.
Do I need to have insurance for my Utah LLP?
Although not legally required in Utah, it is recommended that all LLPs carry some form of liability insurance.
Are there any naming requirements for my Utah LLP?
Yes, in Utah, an LLP must include the phrase “Limited Liability Partnership” or the abbreviation “L.L.P.” in its name.
Do I need to register my LLP with the state of Utah?
Yes, all LLPs must register with the Utah Division of Corporations.
What types of services can be offered by an LLP in Utah?
An LLP in Utah can offer a wide range of services, depending on the specific industry and business model.
How many partners are required to start an LLP in Utah?
According to Utah law, an LLP must have at least two partners.
Can a single-member LLC convert into an LLP in Utah?
Yes, it is possible to convert a single-member LLC into a multi-member LLP in Utah by adding at least one additional partner.
Is Utah a good state to form an LLP?
Yes, Utah is a great state to form an LLP, with a strong economy and pro-business laws.
Are there any filing fees associated with forming an LLP in Utah?
Yes, there are fees associated with filing a Certificate of Partnership with the Utah Division of Corporations and Commercial Code.
How do I dissolve an LLP in Utah?
To dissolve an LLP in Utah, you must file a Certificate of Dissolution with the Division of Corporations.
Can an LLP in Utah be run by only one manager?
No, an LLP in Utah must have at least two partners who serve as managers.
How frequently do I need to file documents with the Utah Division of Corporations and Commercial Code as an owner of an LLP?
LLPs in Utah are required to file periodic reports annually.
What is the difference between an LLC and an LLP in Utah?
The main difference between an LLC and an LLP is that an LLP offers its owners limited liability protection against certain kinds of legal claims.
Can an LLP have only one partner in Utah?
No, Utah law requires an LLP to have at least two partners.
How are profits and losses distributed among partners in an LLP in Utah?
Profits and losses in an LLP in Utah are distributed based on the partnership agreement.
Should I consult an attorney before forming an LLP in Utah?
While it is not required, consulting with an attorney before forming an LLP in Utah is highly recommended.
Can an out-of-state LLP operate in Utah?
Yes, an out-of-state LLP can operate in Utah as long as it is legally registered to do business in the state.
Can a non-Utah resident form an LLP in Utah?
Yes, non-Utah residents can form an LLP in Utah.
Can PLLCs form partnerships with LLPs in Utah?
Yes, PLLCs (Professional Limited Liability Companies) can form partnerships with LLPs in Utah.
Can out-of-state partners be part of a Utah LLP?
Yes, out-of-state partners can be part of a Utah LLP.
Are there any specific tax requirements for LLPs in Utah?
LLPs in Utah are typically taxed on a pass-through basis, meaning they do not pay entity-level taxes.
Which professions can operate as an LLP in Utah?
In Utah, LLPs can be formed in many professions, including legal, accounting, and architecture.
Can an LLP in Utah be sued?
Yes, an LLP in Utah can be sued, but the personal liability of its partners is typically limited to their investment in the business.
Is an LLP the right business structure for me in Utah?
Choosing the right business structure for your Utah-based LLP depends on your specific situation and goals. Consulting a legal or financial professional can help you make an informed decision.
What is a limited liability partnership (LLP) in Utah?
A limited liability partnership in Utah is a type of business structure that offers the liability protection of a corporation with the tax benefits of a partnership.
Can I form an LLP in Utah if I am the only member?
No, Utah requires at least two members to form an LLP.
Can a foreign entity form an LLP in Utah?
Yes, as long as the entity is authorized to do business in Utah and meets the state’s LLP requirements.
Is there a residency requirement for LLP partners in Utah?
No, there is no residency requirement for LLP partners in Utah.
Do LLPs in Utah have to file annual reports?
Yes, LLPs in Utah must file an Annual Report and pay the appropriate fee.
Are LLPs subject to state tax in Utah?
LLPs are pass-through entities, so they are not subject to entity-level taxation in Utah. Partners are responsible for reporting their share of the partnership’s profits on their individual tax returns.
Can LLP partners in Utah be held personally liable for business debts?
No, LLP partners in Utah are not personally liable for the LLP’s debts and obligations.
Are there annual maintenance requirements for LLPs in Utah?
Yes, LLPs in Utah must maintain their registration, pay annual fees, and file annual reports to remain in good standing.
Do LLP partners in Utah need to have written partnership agreements?
While written partnership agreements are not required by law, they are strongly recommended to avoid disputes and potential problems.
Can I change an LLP’s business name in Utah?
Yes, you can change an LLP’s name in Utah by filing a “Notice of Change of Entity Name” form and paying a fee.
Are there any special requirements for registering an LLP that operates in multiple states?
Yes, if an LLP operates in multiple states, it must comply with each state’s business registration and licensing requirements.
Can I register for an LLP online in Utah?
Yes, you can register for an LLP online through the Utah Division of Corporations and Commercial Code’s website.
Are employees of an LLP in Utah protected from personal liability?
Yes, employees of an LLP in Utah are generally protected from personal liability for the LLP’s debts and obligations.
Can an LLP in Utah be a member of another LLP or business structure?
Yes, an LLP in Utah can be a member of another LLC or business structure, as long as it is authorized to do so under its operating agreement.
What is the required fee to file an LLP in Utah?
The fee to file an LLP in Utah is $70.
Can a Utah LLP convert into a corporation?
Yes, a Utah LLP can convert into a corporation by following the state’s conversion procedures.
Are LLP partners in Utah subject to self-employment tax?
Yes, LLP partners in Utah are considered self-employed for tax purposes and must pay self-employment tax.
Can an LLP in Utah be structured as a nonprofit organization?
No, LLPs in Utah cannot be structured as nonprofit organizations.
Can an LLP in Utah have foreign partners?
Yes, an LLP in Utah can have foreign partners as long as they comply with U.S. immigration and tax laws.
Are there any restrictions on the business activities of an LLP in Utah?
An LLP in Utah must comply with all applicable laws and regulations governing its business, including licensing requirements for specific industries.
How long does it take to form an LLP in Utah?
It usually takes a few days to a week to form an LLP in Utah, depending on how quickly you submit the necessary paperwork and fees.
Can a Utah LLP have just one general partner?
No, a Utah LLP requires at least two general partners.
Can an LLP in Utah issue stock or sell ownership shares?
No, LLPs in Utah cannot issue stock or sell ownership shares.
Can LLP partners in Utah have different levels of liability protection?
No, LLP partners in Utah have the same level of liability protection.
Does an LLP in Utah need to have a registered agent?
Yes, an LLP in Utah must have a registered agent with a physical address in the state.
Can an LLP in Utah convert into an LLC?
Yes, an LLP in Utah can convert into an LLC by following the state’s conversion procedures.
Are there any ongoing reporting requirements for an LLP in Utah?
Yes, LLPs in Utah must file annual reports and pay an annual fee to maintain their registration and good standing.

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Conclusion

Starting an LLP in Utah may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in Utah.

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