Experienced Attorneys Help You Form A Business In Utah

Provo legal team provides valuable insight for startup companies

Starting a new business can be an exciting endeavor. However, without trustworthy counsel by your side, you could make a mistake that costs you in the short or long term. At Jeffs & Jeffs, P.C. in Provo, our lawyers have decades of experience advising small business owners in Utah County and across the state. We work closely with clients to gain a full understanding of their new venture and their overall objectives, so that they can choose the business entity that best fits their needs and goals. 

How many different types of business entities exist?

The following are the principal types of business entities available under Utah law:

• Corporations — This is a separate legal entity that must be registered with the state and follow certain legal formalities, including the filing of articles of incorporation. Shareholders are not personally liable for company debts. Whether the corporation is subject to federal tax depends on if the company is an “S” or “C” corporation under IRS rules.
• Sole proprietorships — This means your business is owned and run by you and registration with the state is not required. You keep all profits and the business is not subject to separate taxation. However, you are personally responsible for losses or debts incurred by the company.
• General partnerships — In this entity, each member is jointly and severally responsible for debts and legal responsibilities of the business. Income passes through to the individual owners, who are responsible for paying income taxes.
• Limited partnerships — This entity is made up of limited partners and at least one general partner. As long as the limited partners do not participate in the control and management of the partnership, they are not personally liable for business debts. General partners, however, are responsible for all obligations of the business.
• Limited liability companies (LLCs) — Since their introduction, LLCs have been popular because they blend benefits of corporations and partnerships. An LLC protects owners from personal liability, allows income to pass through for tax purposes and does not require the formalities of corporate status, giving owners flexibility in the division of responsibilities and risk.

Consulting with a seasoned business lawyer is the best way to understand the differences between types of entities so that you can pick the optimal structure for your venture. 

What factors do Utah business owners need to consider when selecting an entity?

Among the important considerations are whether you are willing to accept personal liability and how many owners are involved. You should also think about your plans for the company, such as whether you intend to hire a large number of employees and offer shares to the public. Issues such as legal requirements and tax consequences for different structures should also be considered. 

Can Provo business owners change their venture’s entity as it evolves?

Business circumstances and goals change over time. At some point, the original legal entity chosen by a company owner may no longer be the best option. Shifts in how Utah or another state treats various business entities might also prompt a re-evaluation. Our attorneys keep up with legal developments and assist with the dissolution and creation of legal entities when that is the best path forward. 

Are there tax consequences for selecting certain business entities?

Tax status is one of the most important considerations when selecting a business entity. Many entrepreneurs prefer pass-through entities in which the business itself is not taxed and the income is reported on an owner’s personal return. Partnerships, LLCs and S corporations are pass-through entities. Income to sole proprietorships is also treated in this manner. Conversely, a C corporation is a taxable entity and owners are subject to a personal tax on their earnings. 

What documents are essential for forming a business in Utah?

The state Department of Commerce has an online portal where owners can register a new business. Specific filing requirements differ depending on the entity. For example, you must submit articles of incorporation to start a corporation, while an LLC requires a certificate of organization. Our firm will help you prepare the necessary forms and assist with any other documents that might be necessary to launch a venture, including company bylaws, permit applications and employee non-compete contracts.

Speak with a Utah business formation lawyer to discuss your legal options

Jeffs & Jeffs, P.C. is dedicated to helping Utah business start-ups establish a strong foundation for success. To speak with one of our qualified attorneys, please call 801-373-8848 or contact us online. Our office is located two blocks from the Provo courthouse and one block from the Latter-Day Saints Historic Provo Temple.