How to Form a Professional Corporation in Utah


Steve Goldstein
Steve Goldstein
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Form a Professional Corporation in Utah

Are you considering starting a professional corporation in Utah? Congratulations! Establishing a professional corporation is an excellent choice for entrepreneurs and professionals alike who seek to benefit from a business structure that provides limited liability protection, tax advantages, and enhanced credibility. However, navigating the process of forming a professional corporation in Utah can be daunting.

This article aims to provide a comprehensive guide on how to form a professional corporation in Utah, covering everything from understanding the basics of this business entity to the essential steps and requirements you must comply with to launch your new venture successfully. Let’s dive in and explore the ins and outs of forming a professional corporation in Utah!

What is a Professional Corporation in Utah?

A professional service corporation (PSC), sometimes called a professional corporation (abbreviated as PC), is a type of organization authorized by state law to allow owners of particularly licensed professions in Utah. The owner of a professional corporation is responsible for their own negligence or misconduct, but they are not held personally accountable for the actions of other owners. PC or P.C. is a regularly used abbreviation to identify professional corporations.

PCs and LLCs provide personal asset protection; that is, the personal assets are free from business debts. However, they do not have similar tax benefits. There is no secret formula as to which type of business structure is better than the other. It solely depends on the requirements of your business. However, forming an LLC is easier than setting up a PC in Utah.

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Unlike other types of corporations, owners of Professional Corporations get two types of citizenship. One is where they incorporated the corporation, and the other is where they conduct the business. This benefit is not available for other types of corporations. You can form a free LLC in Utah if you hire a professional service that provides LLC formation at $0.

How to Form a Professional Corporation in Utah

To form a Professional Corporation for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Utah, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

  • Doctors
  • Architects
  • Engineers
  • Accountants
  • Lawyers and others

You should be qualified to have a license to provide your service. In most cases, once you have graduated with your studies, passed the exam, and got your license, you may now form a professional corporation. However, if you work in an industry that doesn’t offer a license or professional certification, you should consider forming a corporation or limited liability company.

Step 2: Name your Professional Corporation in Utah

After you have decided on the idea to form a professional corporation in Utah, deciding the name for your corporation is significant. There is a complete guide on Utah LLC name guidelines for you to have a proper business name. Here are some regulations you must follow while naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • No confusion with a government entity name.
  • A unique name is needed with no match
  • Limit of restricted words that need a license.

In Utah, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 120 days. To keep the name, you must file a name reservation application with Utah Secretary of State.

A professional corporation, professional association, service corporation, or professional service corporation must be present in the name if it doesn’t already. You might opt to register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for a DBA (doing business as). In this manner, you can choose any name you desire to run a clinic or law firm.

Step 3: Choose the Utah Registered Agent

The next step in forming a professional corporation is hiring the Utah Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Utah. Forming a professional corporation for your service will be easier if you have Registered Agent in Utah.

Alternatively, you can serve as your own Utah Registered Agent if you have the time. However, you must stay compliant to avoid missing any important documents from Utah.

Step 4: File the Articles of Incorporation in Utah

After you hire a Utah Registered Agent to form a professional corporation, the next step is to file the Utah Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information should be written. You should also include the names of all co-owners. All owners have to prove they have the proper license to practice the specific profession they intend to.

Filing the Articles of Incorporation in Utah may be done with four methods that are online, fax, by mail and in-person. The Articles of Incorporation fee may vary from different states. However, in Utah, it costs $54 for filing online, by mail, in person filing, or by Fax. Create an account/Log in to the SOS site, get the e-form, fill it, and submit online. Or get the online PDF, fill it up and upload it back on the site. . For offline filing, Send the form by mail to or drop it off in person at Utah Division of Corporations & Commercial Code, P.O. Box 146705, Salt Lake City, UT 84114.

Step 5: Write an Operating Agreement in Utah

An operating agreement is a document that contains all of your company’s organizational details. It is not required to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The Utah operating agreement includes information like-

  1. About Business
  2. Members and management
  3. Capital contribution
  4. Profit Distribution
  5. Change of membership
  6. Dissolution

Step 6: Designate the PC Board of Directors in Utah

The next step is to appoint the initial board of directors in your PC in Utah. All the initial directors must submit their details to the owner. The owner must keep the records and submit them in accordance with the Utah SOS. When writing the By-laws, as a shareholder and owner, you must make sure there is a point mentioned about appointing a new director later.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

In creating corporate bylaws, you should include the following on how the decisions will be made.

  • The responsibilities are given to each officer.
  • How will judgments in business be made?
  • Where and when are the annual shareholder meetings?
  • The minimum number of shareholders required for decision-making.
  • Location and timing of dividend payments.

Step 8: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 9: Request an EIN in Utah

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Utah 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 the 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 4 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 number, you can benefit in a number of ways. It will give your professional corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 10: Open a Bank Account and Prepare for Taxes

Once you have filed and received your Employer Identification Number, you should open a bank account since you will use this account for yourself, your clients, and your employees.

Your business dealings in Utah might be simpler by having a US business bank account because it boosts your company’s legitimacy and liquidity. For firms other than sole proprietorships, most banks demand an EIN to create a business bank account. Also, keeping separate finances helps you avoid combining personal and professional finances. Also, having an EIN makes tax preparation easier. With a professional corporation, you can anticipate paying employment and corporate taxes.

Step 11: Get a Business License in Utah

Before your professional corporation operates in Utah, you need to have a business license first. A business license is a formal document issued by the state government agency that allows you to operate your business in the geographic region that that agency governs. In Utah, business license and permit costs depend on the business’s nature and type. You must check with the local authorities if any special licenses or city-based permits are needed.

Step 12: File Your Taxes in Utah

Finally, you are down to the last step. After getting a business license and being ready to operate, do not forget to file your taxes first. You should start paying taxes quarterly as soon as possible to avoid a large tax bill. Each state has different tax requirements. Go through the Utah classification of taxes for the taxes an LLC in Utah has to pay.

Important Information

Maintaining Professional and Business License in Utah

Now that you have established your professional corporation, you must maintain or renew your professional license every now and then. Even if your business is established but you don’t have a valid license to operate, your business is irrelevant. And, even if your professional license is still valid for a year or two, but your business license is already expired, it is still irrelevant.

Make time to check the status of your licenses at least once per year. Then, you can keep from missing anything significant. If there are any issues, you can address them.

Filing an Annual Report in Utah

In Utah, you will be required to submit a report each year. The owners’ and Registered Agent’s names and contact details are listed in the annual report. Also, it should include all of your yearly financial activity. You must submit one yearly in Utah, and you can do it yourself or hire someone else to handle it. Everything must be precise and up to date.

Advantages of Forming a Professional Corporation in Utah

A professional corporation takes a lot of time to process and pursue. However, with the help of the Utah Registered Agent, everything will become easier. In fact, there are advantages that will help you form a professional corporation in Utah.

  1. Limited Liability: The biggest advantage of setting up a professional corporation is that the owners are not held personally responsible for the debts and obligations of the company. This indicates that only the company’s assets will be confiscated to settle claims and creditors if the business is sued or declares bankruptcy. Additionally, this protection exempts corporate owners from being held accountable for other owners’ reckless or criminally negligent acts.
  1. Tax Deductions: Similar company expenses, such as employee fringe benefits, startup and operating costs, and equipment purchases, can be written off by professional companies in the same ways they can be for other kinds of firms. However, there are several tax deductions professional corporations can take advantage of that other types of businesses can’t. For example, the salaries and bonuses paid to owners and employees are tax-deductible.
  1. Retained Earnings: Professional corporations can keep a portion of their profits under the corporate tax system to grow their companies.

FAQs

What are the benefits of forming a professional corporation in Utah?
Forming a professional corporation in Utah offers several advantages, such as limited personal liability, tax advantages, and the ability to easily expand.
What types of professionals can form a professional corporation in Utah?
Doctors, lawyers, architects, engineers, veterinarians, and certified public accountants are all eligible to form a professional corporation in Utah.
What is the process for forming a professional corporation in Utah?
The process for forming a professional corporation in Utah involves filing the Articles of Incorporation with the Utah Department of Commerce, paying the applicable fees, and filing an assumed business name statement with the county clerk.
Do I need an attorney to form a professional corporation in Utah?
Although it is not required, it is highly recommended that you consult with an attorney when forming a professional corporation in Utah to ensure that all necessary documents are filed properly.
What taxes do professional corporations in Utah have to pay?
Professional corporations in Utah are subject to federal and state income taxes, as well as payroll taxes and other applicable taxes.
What is the cost to form a professional corporation in Utah?
The cost to form a professional corporation in Utah includes filing fees, which vary depending on the number of shareholders and the type of entity. The filing fee for a professional corporation is typically around $35.
What documents are required to form a professional corporation in Utah?
The documents required to form a professional corporation in Utah include the Articles of Incorporation, an assumed business name statement, and a Certificate of Authority.
How long does it take to form a professional corporation in Utah?
The process of forming a professional corporation in Utah typically takes about two to three weeks.
What are the requirements for a professional corporation in Utah?
The requirements for a professional corporation in Utah include filing the Articles of Incorporation with the Utah Department of Commerce, filing an assumed business name statement with the county clerk, and obtaining a Certificate of Authority.
What are the main differences between a professional corporation and a regular corporation in Utah?
The main difference between a professional corporation and a regular corporation in Utah is that a professional corporation is formed to provide professional services and is subject to different regulations than a regular corporation.
Are there any restrictions on the types of services that a professional corporation in Utah can provide?
Yes, professional corporations in Utah are limited to providing professional services such as those rendered by doctors, lawyers, architects, engineers, veterinarians, and certified public accountants.
Are there any regulations that a professional corporation in Utah must adhere to?
Yes, professional corporations in Utah must adhere to regulations issued by the Utah Department of Commerce and other applicable state and federal laws.
Are there any reporting requirements for professional corporations in Utah?
Yes, professional corporations in Utah must file an annual report with the Utah Department of Commerce and an assumed business name statement with the county clerk.
Can a professional corporation in Utah raise capital?
Yes, professional corporations in Utah are allowed to raise capital by issuing shares of stock and issuing debt instruments such as bonds or notes.
Can a professional corporation in Utah do business outside of Utah?
Yes, professional corporations in Utah are allowed to do business outside of the state as long as they follow all applicable regulations.
Can a professional corporation in Utah merge with other corporations?
Yes, professional corporations in Utah are allowed to merge with other corporations in the same line of business, provided that all applicable regulations are followed.
Are there any restrictions on the types of investments that a professional corporation in Utah can make?
Yes, professional corporations in Utah are restricted from investing in certain types of investments, such as real estate, certain types of securities, and certain types of businesses.
Can a professional corporation in Utah own property?
Yes, professional corporations in Utah are allowed to own property as long as it is related to their business activities.
What are the liability protections for a professional corporation in Utah?
Professional corporations in Utah are generally protected from liability for the acts of their employees, as long as the corporation is not grossly negligent.
Can a professional corporation in Utah indemnify its officers and directors?
Yes, professional corporations in Utah are allowed to indemnify their officers and directors from any liabilities arising from the actions of the corporation.
Are there any restrictions on the types of directors or officers that a professional corporation in Utah can have?
Yes, professional corporations in Utah must have at least one director and one officer who must be a licensed professional in the relevant field.
Are there any restrictions on the types of shareholders a professional corporation in Utah can have?
Yes, professional corporations in Utah are generally restricted to having individuals as shareholders and cannot have more than 35 shareholders.
How can a professional corporation in Utah be dissolved?
A professional corporation in Utah can be dissolved by filing a Certificate of Cancellation with the Utah Department of Commerce.
Is there a fee for dissolving a professional corporation in Utah?
Yes, there is a fee of $35 for dissolving a professional corporation in Utah.
Can a professional corporation in Utah be converted to another type of business entity?
Yes, a professional corporation in Utah can be converted to another type of business entity, such as a limited liability company, by filing the appropriate documents with the Utah Department of Commerce.
Are there any limitations on the types of activities that a professional corporation in Utah can engage in?
Yes, professional corporations in Utah are generally limited to activities that are related to the professional services they provide.
What is required to form a Professional Corporation in Utah?
To form a Professional Corporation in Utah, you must file a Certificate of Incorporation with the Utah Division of Corporations and Commercial Code and pay the associated filing fee. Additionally, you must have a minimum of one shareholder, one director, and a registered agent.
What is the filing fee for forming a Professional Corporation in Utah?
The filing fee to form a Professional Corporation in Utah is $70.
What is the process for forming a Professional Corporation in Utah?
The process for forming a Professional Corporation in Utah includes filing a Certificate of Incorporation with the Utah Division of Corporations and Commercial Code and paying the associated filing fee. Additionally, you must have a minimum of one shareholder, one director, and a registered agent.
What is the time frame for forming a Professional Corporation in Utah?
The time frame for forming a Professional Corporation in Utah is typically within two weeks.
What is the name of the Utah state agency responsible for regulating Professional Corporations?
The Utah Division of Corporations and Commercial Code is the state agency responsible for regulating Professional Corporations in Utah.
Are there any special requirements that must be met to form a Professional Corporation in Utah?
Yes, to form a Professional Corporation in Utah, you must have a minimum of one shareholder, one director, and a registered agent. Additionally, a Certificate of Incorporation must be filed with the Utah Division of Corporations and Commercial Code, and the associated filing fee must be paid.
Who are the shareholders of a Professional Corporation in Utah?
Shareholders of a Professional Corporation in Utah are the individuals or entities that own shares of the company.
What is the role of the directors of a Professional Corporation in Utah?
The directors of a Professional Corporation in Utah are responsible for overseeing the management of the company and making policy decisions on behalf of the shareholders.

Also Read

Why Utah Professional Corporation is So Important

Professional Corporations in Utah are distinct legal entities that enable professionals such as doctors, lawyers, accountants, and architects to practice their professions within a corporate structure. This structure offers several key benefits, including limited liability protection, favorable tax treatment, and opportunities for business growth and expansion. These benefits make Professional Corporations an attractive option for professionals looking to establish and grow their practices in the state.

First and foremost, the limited liability protection offered by Professional Corporations is a crucial advantage for professionals in Utah. By operating within a corporate structure, professionals are shielded from personal liability for the debts and obligations of the corporation. This protection can be especially important in professions where the risk of lawsuits and legal claims is high, such as in healthcare or legal services. Limited liability helps professionals safeguard their personal assets and financial security, providing peace of mind as they carry out their professional duties.

Additionally, the favorable tax treatment available to Professional Corporations in Utah can lead to significant cost savings for professionals. By structuring their practices as corporations, professionals can take advantage of deductions, tax credits, and other tax incentives that are not available to sole proprietors or partnerships. These tax benefits can help professionals reduce their overall tax burden, allowing them to reinvest more of their earnings back into their businesses and services.

Furthermore, Professional Corporations offer professionals opportunities for business growth and expansion that may not be possible as sole practitioners. By operating within a corporate structure, professionals can attract investors, raise capital, and take advantage of economies of scale to expand their practices and offer more services to a wider range of clients. This ability to grow and diversify can lead to increased revenue, market share, and job opportunities for professionals in Utah, contributing to the overall economic vitality of the state.

In conclusion, Utah Professional Corporations play a vital role in supporting professionals across various industries and sectors in the state. With benefits such as limited liability protection, favorable tax treatment, and opportunities for business growth and expansion, Professional Corporations enable professionals to establish and grow their practices with confidence and security. As key contributors to Utah’s thriving economy, Professional Corporations deserve recognition for their important role in supporting and empowering professionals in the state.

Conclusion

In forming a professional corporation in Utah, having someone to help you build it is not necessary but suggestible. Even though it is easy because of the listed benefits and advantages above, forming your group of professional individuals will make it somehow successful. Just make sure to be guided by the steps and ensure that every one of the details and records is accurate and precise. And if you have any questions, share them in the comment section below.

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