Utah Business License – Salt Lake City, Utah Attorney

Are you thinking about starting a business in Utah and need to legally form and organize? We can help. Our Utah business formation attorneys are experienced in organizing and incorporating companies so that the individual owners are shielded from liabilities and can focus on running their companies. There is more to forming a company than simply filing the articles with the state. We have seen many legal issues arise with companies and their owners because the business was never properly organized from the beginning. You will save money and time in the long run by having one of our Utah business lawyers on board with your company from the beginning.

Every business is different, at SLF we work with you to determine which business structure is right for you. Here are some general guidelines to consider when thinking about what corporate structure would be right for your business.

1.            Limited Liability Company (LLC)

Advantages:

• All members enjoy limited liability.
• No limitation on the number or types of members.
• Centralized management is available if an LLC is manager managed.
• Business profits are subject to only one tax, at the individual member level,  and are not subject to double tax as would be the case if the profits were earned by a C corporation.
• Losses are available on the members’ personal income tax returns and can offset other income (subject to the at risk rules and passive loss rules).
• Special allocations may be made for income tax purposes.
• Disproportionate distributions may be made to members.

Disadvantages:

• Formalities are required for organization and operation.
• Qualification is required for doing business in other states.
• Regular reporting to governmental entities is required.
• Termination results from the death, disability, or withdrawal of a member under the laws of some states.
• Interests are not freely transferable.
• Business profits are taxed as income to the individual members and, as a result, may be subject to self-employment tax as well as income tax.
• Transfer of interests may be subject to securities law regulation.

2.            Corporation (Inc.)

Advantages:

• All shareholders enjoy limited liability.
• Ownership interests are freely transferable.
• Perpetual existence unaffected by the death of shareholders or transfer of shares.
• Centralized management.
• No limitation on the number or types of shareholders.
• Flexibility of financing is available through the sale of various types of securities to many investors.
• Tax-favored fringe benefits are available to employee-shareholders.
• Income is taxable at corporate rates, which are for the most part for the most part lower than individual rates.
• Noncorporate shareholders may qualify for an exclusion from federal income tax of one-half of the capital gains realized on stock of a small business corporation organized as a C corporation.

Disadvantages:

• Formalities are required for organization and operation.
• Qualification is required for doing business in other states.
• Regular reporting to governmental entities is required.
• Stock transfers are subject to securities law regulation.
• Income is subject to double taxation.
• Losses of business may not be deducted by individual shareholders.
• The distribution of property by a C corporation to its shareholders is generally a taxable event for income tax purposes as to both the corporation and the shareholders. Thus, withdrawing property from a corporation can be extremely expensive from a tax standpoint.

3.            S Corporation (S Corp)

Advantages:

• All shareholders enjoy limited liability.
• Ownership interests are freely transferable (subject to restrictions imposed by contract to preserve S corporation status).
• Perpetual existence unaffected by the death of shareholders or transfer of shares.
• Centralized management.
• Business profits are subject to only one tax, at the individual shareholder level, and are not subject to double tax as would be the case if the profits were realized by a C corporation.
• Losses are available on the shareholders’ personal income tax returns and can offset other income (subject to the at risk rules and passive loss rules).

Disadvantages:

• Formalities are required for organization and operation.
• Qualification is required for doing business in other states.
• Regular reporting to governmental entities is required.
• Stock transfers are subject to securities law regulation.
• Strict qualification rules must be met on a continuing basis, which among other things limit the number and types of shareholders.
• The distribution of property by an S corporation to its shareholders is generally a taxable event for income tax purposes.

If you are looking to form a new company, call the experienced corporate formation attorneys at Salcido Law Firm today to ensure your company is protected.

For business formation services, call us today at 801.207.8212 or toll free at 888.337.3235.

You may also email us or fill out our free case review form.