Utah LLC Information

by Joe Stone

The first Utah LLC laws were enacted in 1991 in order to give business owners the benefits of incorporating combined with the tax and management benefits of a partnership. In 2001, these laws were repealed and replaced by the Utah Revised Limited Liability Company Act. The act was subsequently amended twice to permit new types of LLCs: in 2006 the act authorized “series LLCs,” and in 2009 “low-profit LLCs.”

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LLC Formation

The revised act authorizes Utah business owners to create an LLC as a separate legal entity, apart from the owners’ personal interests. The LLC is formed by filing a document called Articles of Organization with the Division of Corporations and Commercial Code of the Utah Department of Commerce. The division provides a form of Articles of Organization to facilitate filing, along with instructions and a sample Articles of Organization. The LLC comes into existence when the completed Articles of Organization and filing fee, which is $70 as of December 2010, are mailed or delivered in person to the division’s Salt Lake City office.

LLC Operation

The revised act permits the LLC owners -- called members -- to exercise a certain amount of control over their relationship with the LLC and each other by a private agreement known as an operating agreement. Except as prohibited by Utah Code 48-2c-120, the members can use an operating agreement to modify provisions of the revised act regarding such matters as whether the LLC is managed by all members or a designated manager or managers; the rights, powers and duties of the managers and members; and the LLC's purpose and conduct of its affairs. Even though an operating agreement is not required by the revised act, an operating agreement must be in writing to be effective.

Series LLC

In 2006, Utah amended the revised act to provide for a new type of LLC called a series LLC. As of 2010, Utah is one of only eight stated to authorize this type of LLC. The unique aspect of a series LLC is that it allows for a multiple series of assets, members and managers, each with separate rights, duties and liabilities (see Resources). The revised act requires a written operating agreement to establish a series LLC, and specifies the required provisions for the agreement in Utah Code 48-2c-606. An example of a business that may benefit from establishing a series LLC is a real estate venture with multiple rental properties.

Low-Profit LLC

In 2009, the revised act was amended to permit formation of the newest form of LLC called a low-profit LLC, also known as an L3C. As of 2010, Utah is one of only five states authorizing this type of LLC, which is intended as a less expensive and complicated business structure for private foundations that make program-related investments, or PRIs (see Resources). Under the revised act, a company must state its intention to be a low-profit LLC in its articles of organization, and comply with the Internal Revenue Code requirements for making charitable or educational investments.