Starting a Professional Corporation in Utah 2024: Ultimate Guide

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How to Start a Professional Corporation in Utah

Licensed professional? Level up your business with Utah professional corporation! Enjoy unique benefits like Utah LLC, such as limited liability, tax perks, and a polished image. Our step-by-step guide unravels the essentials for smooth compliance and the right fit. LLCBase has your back with expert guidance, so make an informed decision and triumph in Utah with your professional corporation today!

This guide will review the requirements for starting a professional corporation in Utah, explore the advantages and disadvantages of this business structure, and help you determine if it is the right fit for your business goals.

Start a Professional Corporation

What is a Professional Corporation

A Professional Corporation (P.C.) is a unique type of corporation designed for licensed professionals, such as doctors, dentists, lawyers, architects, and accountants. Forming a P.C. allows licensed professionals to offer their services through a corporate structure, providing them with the benefits of a traditional corporation, such as limited liability protection and tax advantages. Forming a professional corporation in Utah is a popular choice due to the thriving professional landscape and business-friendly environment. When starting a professional corporation, choose a reliable formation service in Utah.

The primary purpose of Utah Professional Corporation is to protect its owners from personal liability for the corporation’s actions. The shareholders’ personal assets are protected if the professional corporation faces legal issues. Moreover, Utah professional corporations can offer certain tax benefits, such as deducting employee benefits and operating expenses. These advantages make forming a professional corporation an attractive option for many professionals in Utah.

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Who Can File Under Professional Corporation Laws

Under Utah Professional Corporation laws, only certain licensed professionals are eligible to form a professional corporation. The specific professions allowed to form a P.C. may vary slightly by state, but in Utah, the following professionals can typically form a professional corporation:

  • Physicians and Surgeons
  • Dentists
  • Chiropractors
  • Optometrists
  • Podiatrists
  • Certified Public Accountants
  • Architects
  • Engineers and Land Surveyors
  • Psychologists
  • Marriage and Family Therapists
  • Clinical Social Workers
  • Professional Clinical Counselors
  • Veterinarians
  • Attorneys
  • Speech-Language Pathologists
  • Pharmacists
  • Registered Nurses
  • Physical Therapists
  • Occupational Therapists
  • Acupuncturists

Each profession has its governing licensing board, which sets specific rules and regulations for forming and operating a professional corporation. It is essential to check with the relevant board and state laws to ensure that your profession is eligible to form a professional corporation and to understand the specific requirements associated with your profession.

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Structure of a Professional Corporation

  • Shareholders: Utah Professional Corporation’s shareholders must be licensed professionals in the same field as the corporation’s purpose. For example, if a professional corporation is formed to offer legal services, all shareholders must be licensed attorneys. This requirement ensures that the professional corporation’s management comprises qualified individuals with relevant expertise.
  • Directors: The directors of a professional corporation in Utah are responsible for overseeing the corporation’s operations and making high-level decisions. The directors must also be licensed professionals in the same field as the corporation’s purpose. The number of directors required depends on the specific licensing board’s regulations, but typically a minimum of one director is needed.
  • Officers: The officers of Utah Professional Corporation manage the professional corporation. Officers typically include a President, Secretary, and Treasurer. However, additional officers can be appointed as needed. While not all officers must be licensed professionals, the President must hold a valid license in the same field as the corporation’s purpose.

Starting a Professional Corporation in Utah: A Guide

Here is a detailed guide to starting a professional corporation in Utah that you should follow.

Step 1: Appointment of Registered Agent

The first step in forming a Professional Corporation is appointing Registered Agent in Utah. This individual or company will act on behalf of the corporation, receiving official notices and legal documents. The agent must have a physical address in Utah and be available during regular business hours.

We compiled the list of the best registered agent services in Utah to help you choose the one you can rely on.

Step 2: Choosing the Name of the Corporation

Selecting a name for your Utah Professional Corporation is crucial. The name must be unique and appropriate, including the words “professional corporation” or the abbreviation “P.C.” It must also comply with the rules and regulations of the governing licensing board and should not be confusingly similar to an existing corporation’s name.

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Step 3: Drafting of By-laws

By-laws are the internal rules and regulations governing the management and operations of the professional corporation. These should include provisions related to the appointment of directors, issuance of shares, and any restrictions imposed by the licensing board.

Step 4: Appointment of Board of Directors

The board of directors oversees the management and operations of the Utah Professional Corporation. Directors must be licensed professionals in the same field as the corporation’s purpose.

Step 5: Conduction of Board Meetings

Regular board meetings are essential for maintaining the proper functioning and compliance of the professional corporation. The by-laws should specify the frequency, notice requirements, and procedures for conducting these meetings.

Step 6: Issuance of Corporate Shares

Shares represent ownership in the corporation. The professional corporation must issue shares to its shareholders, who must be licensed professionals in the same field. Share issuance should comply with the by-laws and any restrictions imposed by the licensing board.

Step 7: Comply with State Requirements

Forming Utah Professional Corporation requires compliance with specific state requirements, such as obtaining necessary permits and licenses, paying fees, and adhering to rules and regulations the governing licensing board sets forth.

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Step 8: Filing of Statement of Information

Utah professional corporations must file an annual report with the Utah Secretary of State. This document includes essential information about the corporation, including its name, address, Registered Agent, and directors.

Step 9: Getting Tax Permits from the State

The professional corporation must obtain the necessary tax permits from the Utah State Tax Commission, such as an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

Step 10: Opening of a Bank Account

Finally, open a separate bank account for the Utah Professional Corporation to maintain proper accounting and financial records.

Fees Associated with Professional Corporation in Utah

Here are some of the most common fees when starting a professional corporation in Utah.

  • State Laws and Regulations: To form a professional corporation in Utah, it is crucial to comply with the state laws and regulations governing professional corporations. The Utah Code Title 16 and the specific licensing board’s regulations for each profession outline the requirements and restrictions for professional corporation formation. Before starting the process, professionals should consult with their licensing board to ensure they meet the necessary qualifications.
  • Incorporation Process: Once the licensing requirements are met, the next step to form a professional corporation in Utah is to draft and file the Articles of Incorporation with the Utah Secretary of State. This document includes essential information about the corporation, such as its name, address, purpose, and number of authorized shares. Filing the Articles of Incorporation requires a filing fee currently $70 for most professions. However, it is essential to check with the Utah Secretary of State for the specific fee associated with your profession.
  • Naming Requirements: You must follow specific rules when choosing a name for a Professional Corporation in Utah. The name must include the words “Professional Corporation,” “P.C.,” or “Prof. Corp.” Additionally, the name cannot be misleading or too similar to an existing corporation’s name. Conducting a name search with the Utah Secretary of State is recommended to ensure the chosen name is available. This search is free, but reserving a name before filing the Articles of Incorporation requires a reservation fee of $22 online and $22 mail.
  • Articles of Incorporation: The Articles of Incorporation is a critical document for forming a professional corporation in Utah. It outlines the corporation’s essential information, such as the name, address, purpose, and number of authorized shares. The Articles must also include a statement that the corporation is a professional corporation and the specific profession it practices. Once completed, the Articles of Incorporation must be filed with the Utah Secretary of State, accompanied by the appropriate filing fee.
  • Additional Fees and Costs: In addition to the filing fees mentioned above, forming Professional Corporation in Utah may involve other costs, such as:
    • Annual Report: professional corporations must file an initial Statement of Information with the Utah Secretary of State every Anniversary month of the corporation of filing the Articles of Incorporation. The filing fee for this form is $20.
    • Licensing and Permit Fees: Depending on the specific profession, the governing licensing board may require additional licensing and permit fees.
    • Registered Agent Fee: Hiring of Registered Agent service will likely involve an annual fee of $50 – $150, which can vary depending on the service provider.
    • Legal and Accounting Fees: Forming a professional corporation may involve consulting with attorneys and accountants, which can result in additional professional fees.

Advantages of a Professional Corporation

  • Limited Liability Protection: One of the main benefits of a professional corporation is its limited liability protection to its shareholders. This means the shareholders’ assets are protected from the corporation’s debts and liabilities.
  • Tax Benefits: Professional Corporations enjoy specific tax benefits, such as deductions for business expenses and the ability to retain earnings within the corporation.
  • Business Credibility: Operating as a professional corporation can enhance the credibility and reputation of the professional services, demonstrating a commitment to compliance and professionalism.
  • Continuity of Operations: A professional corporation has a perpetual existence, ensuring the continuity of operations even if the shareholders or directors change.

Disadvantages of a Professional Corporation

  • Complexity and Cost of Formation: Forming a professional corporation can be more complex and costly than other business structures, such as sole proprietorships or partnerships.
  • Ongoing Compliance Requirements: professional corporations must adhere to ongoing compliance requirements, including regular board meetings, filing annual reports, and maintaining proper records.
  • Limited Flexibility in Management: professional corporations may need more flexibility in management, as the board of directors must consist of licensed professionals in the same field.

Taxation of Professional Corporations

Here are the taxes that your professional corporation must pay in Utah:

Federal income tax

A professional corporation in Utah is subject to federal income tax on its net earnings. However, a P.C. can elect to be taxed as an S corporation, which allows the corporation’s income, deductions, and credits to pass through to the shareholders. This can result in significant tax savings by avoiding double taxation.

State taxes

Utah Professional Corporation is also subject to state taxes, such as the Utah franchise tax, which is based on the corporation’s annual net income. Additionally, depending on the nature of its operations, the professional corporation may be subject to other state and local taxes, such as payroll and sales taxes permit in Utah.

Tax deductions and exemptions

A professional corporation in Utah can take advantage of various tax deductions and exemptions, such as deductions for employee benefits, operating expenses, and depreciation. These deductions can help reduce the corporation’s taxable income, ultimately leading to tax savings for the P.C. and its shareholders.

Alternatives to Professional Corporations in Utah

If you decide that a professional corporation is not for you, then you might consider the following alternatives.

  • Sole Proprietorships: A simpler business structure is where an individual operates the business under their name without limited liability protection.
  • Partnerships: Two or more individuals join to operate a business, sharing profits, losses, and responsibilities.
  • Limited Liability Companies (LLCs): A hybrid business structure that combines the limited liability protection of a corporation with the tax benefits and flexibility of a partnership.
  • S-corporations: Starting an S Corp in Utah avoids double taxation by allowing income, losses, and deductions to pass through to the shareholders’ personal tax returns.

FAQs

What is a Professional Corporation?
A Professional Corporation is a type of business organization in which the owners are licensed professionals such as doctors, lawyers, and accountants.
Is it possible to start a Professional Corporation in Utah as a sole proprietor?
No, a Professional Corporation in Utah must have at least two shareholders who are professionals in the same field.
What steps do I need to follow to start a Professional Corporation in Utah?
To start a Professional Corporation in Utah, you need to file the necessary paperwork with the Utah Division of Corporations and Commercial Code and obtain all the necessary licenses and permits specific to your industry.
Do I need to obtain any professional licensing to start a Professional Corporation in Utah?
Most professional fields require licensing, and a Professional Corporation in Utah must have at least two shareholders with a professional license.
What documents do I need to file with the Utah Division of Corporations and Commercial Code to form a Professional Corporation?
You’ll need to file the Articles of Incorporation, which are specific to a Professional Corporation, with the Utah Division of Corporations and Commercial Code.
Is there a filing fee for incorporating as a Professional Corporation in Utah?
Yes, you’ll need to pay a fee when filing your Articles of Incorporation with the Utah Division of Corporations and Commercial Code.
Can I file my Articles of Incorporation in Utah online?
Yes, you can file your Articles of Incorporation online via Utah’s eCorp website.
Can I form a Professional Corporation in Utah without the help of an attorney?
Yes, you can form your Professional Corporation on your own, but it’s recommended that you hire an attorney who specializes in corporate law to help you navigate the legal process.
Do Professional Corporations in Utah require a board of directors?
Not always, but Utah law requires a Professional Corporation to either have a board of directors or appoint one or more officers who are responsible for directing the corporation’s affairs.
How long does it take to form a Professional Corporation in Utah?
Once you file your Articles of Incorporation with the Utah Division of Corporations and Commercial Code, it typically takes around one week to obtain your corporation’s certificate of authority.
Can I change my Professional Corporation’s name after it’s been formed in Utah?
Yes, you can change your Professional Corporation’s name, but you’ll need to file a Certificate of Amendment with the Utah Division of Corporations and Commercial Code.
Are there any ongoing fees or licenses required for a Professional Corporation in Utah?
Yes, Professional Corporations in Utah must maintain a business license and a license specific to their profession.
Can a Professional Corporation in Utah have multiple professional licenses from different professions?
No, all shareholders of a Professional Corporation in Utah must be licensed in the same profession.
Can I hire employees for my Professional Corporation in Utah?
Yes, Professional Corporations in Utah can hire employees, but they can’t be shareholders in the corporation.
Are there any restrictions on where a Professional Corporation in Utah can operate?
No, but a Professional Corporation needs to meet all regulations and laws related to its profession and business operations in any city or county where it operates.
What are the tax implications of starting a Professional Corporation in Utah?
Professional Corporations in Utah are subject to state and federal corporate income taxes and other payroll taxes.
Do Professional Corporations in Utah have perpetual existence?
Professional Corporations in Utah typically have perpetual existence unless dissolved by the shareholders or regulatory authorities.
Do I need a registered agent to start a Professional Corporation in Utah?
Yes, you’ll need to have a registered agent who is permanently located in Utah and willing to receive legal documents on your corporation’s behalf.
Is forming a Professional Corporation in Utah complex?
While there are some legal requirements required to form a Professional Corporation in Utah, hiring an attorney can make the process feel less complex.
What happens if I fail to comply with the ongoing requirements to keep my Utah Professional Corporation active?
You could lose your corporation’s status as a “good standing,” which could lead to financial and legal consequences for any legal proceeding you may be involved in.
Can I renew my Utah Professional Corporation online?
Yes, renewal of fees and licenses for Professional Corporations in Utah can be done online using the Utah Division of Corporations and Commercial Code website.
Are there any residency requirements in Utah to form a Professional Corporation?
No, there are no residency requirements in Utah, which means that you can form a Professional Corporation even if you don’t live in Utah.
Can a Professional Corporation in Utah be sold or bought?
Yes, you may sell or transfer your share of the professional corporation, however, there may be limitations you need to legally follow.
Can a Utah Professional Corporation distribute profits to shareholders?
Yes, Professional Corporations can have profits distributed as dividend payments to shareholders, but distributions are subject to additional taxes and regulations.
What happens if a shareholder of a Utah Professional Corporation does not maintain their license?
Utah law requires at least two shareholders of the corporation maintain their professional license, therefore, failure to maintain a license or getting it suspended could lead to removal as a shareholder.
How long must professional documents be kept by a Professional Corporation after dissolving?
Documents such as certificates of professional licensing and state permits should be maintained by the professional corporation indefinitely even after its dissolution/termination.
Can a Professional Corporation in Utah convert to another entity format down the road?
Yes, but first the conversion should follow all additional legal and tax requirements and must meet Utah law before it’s officially agreed upon.
Are there any limitations on who can serve as a director, shareholder, or officer of a Utah Professional Corporation?
Yes, anyone who has been convicted of a felony and fails to meet standards for professional qualifications may not serve as a director, shareholder, or officer of a Utah Professional Corporation.
What is a professional corporation in Utah?
A professional corporation in Utah is a legal entity owned by one or more licensed professionals in a particular industry, such as doctors, lawyers, or accountants.
What’s the process to form a professional corporation in Utah?
The process of forming a professional corporation in Utah typically involves filing articles of incorporation with the Utah Division of Corporations and Commercial Code and following specific requirements set forth in the Utah Revised Business Corporation Act.
How long does it take to form a professional corporation in Utah?
The length of time it takes to form a professional corporation in Utah depends on various factors, including the complexity of the corporation’s business structure, the completeness of the required documentation, and the processing times of the Utah Division of Corporations and Commercial Code.
Does Utah require a registered agent for a professional corporation?
Yes, Utah requires a registered agent for all corporations, including professional corporations, to receive legal documents on behalf of the corporation.
What are the requirements for registering a professional corporation in Utah?
In Utah, the requirements for registering a professional corporation include obtaining a business license, filing articles of incorporation, appointing a registered agent, and submitting a certificate of good standing from the professionals’ respective licensing boards.
Can anyone form a professional corporation in Utah?
No, only licensed professionals, such as doctors, accountants, or lawyers, can form a professional corporation in Utah.
Does a professional corporation in Utah need to have a board of directors?
Yes, a professional corporation in Utah must have a board of directors, which oversees the corporation’s management and is responsible for making major decisions on behalf of the corporation.
How many directors can a professional corporation have in Utah?
A professional corporation in Utah can have one or more directors, depending on its size and structure.
What is the naming structure of a professional corporation in Utah?
A professional corporation in Utah must include the phrase “Professional Corporation” or its abbreviation “P.C.” in its name.
What are the tax requirements for a professional corporation in Utah?
A professional corporation in Utah must pay state and federal taxes, file annual reports, and obtain any necessary permits or licenses to conduct business in Utah.
Does Utah require a business license for a professional corporation?
Yes, a business license is required for all professional corporations operating in Utah.
How much does it cost to form a professional corporation in Utah?
The cost of forming a professional corporation in Utah varies based on the filing fees required by the Utah Division of Corporations and Commercial Code and any additional expenses related to attorney fees or professional licensing fees.
Can a professional corporation in Utah have shareholders?
Yes, a professional corporation in Utah can have shareholders, but they must be licensed in the same profession as the corporation.
Can a professional corporation in Utah convert to a different business entity?
Yes, a professional corporation in Utah can convert to another business entity, such as an LLC or a C corporation, by filing the appropriate amendment documents with the Utah Division of Corporations and Commercial Code.
Does a professional corporation in Utah need to be insured?
Yes, a professional corporation in Utah should have appropriate insurance coverage, such as general liability insurance, provided by a licensed insurance carrier.
What are the privacy requirements for a professional corporation in Utah?
In Utah, a professional corporation’s records, meetings, and other activities must be kept confidential, and access to them should only be provided to authorized parties.
Can a professional corporation in Utah hire employees?
Yes, a professional corporation in Utah can hire employees, but they must comply with all Utah employment laws, including hiring and termination procedures and payroll taxes.
Can a professional corporation in Utah be sued for malpractice?
Yes, a professional corporation in Utah can be sued for malpractice, and it must carry malpractice insurance to protect against such claims.
Are there any limitations on the type of professions that can form a professional corporation in Utah?
No, any licensed professional in Utah can form a professional corporation based on their profession.
What happens to a professional corporation in Utah if a professional leaves the corporation?
If a licensed professional leaves a professional corporation in Utah, the corporation must notify the licensing board of the departure and take appropriate actions to ensure the corporation remains in compliance with state regulations.
Who is responsible for governing a professional corporation in Utah?
The board of directors of a professional corporation in Utah is responsible for governing the corporation and making major decisions on its behalf.
What are the reporting and taxation requirements for a professional corporation in Utah?
A professional corporation in Utah must file annual reports and pay state and federal taxes based on the corporation’s income.
Does a professional corporation in Utah need to obtain any additional licenses or permits to operate?
It depends on the services or products that the professional corporation is providing. In Utah, certain professions require additional licenses or permits to operate legally.
Does Utah allow foreign professionals to form a professional corporation in the state?
Yes, foreign professionals can form a professional corporation in Utah, but they must comply with all state regulations and obtain any necessary authorization to do business in Utah.
Can a professional corporation have multiple offices or locations in Utah?
Yes, a professional corporation can have multiple offices or locations in Utah or across the country, but each location must be licensed to operate in the state.
How long is a professional corporation’s existence in Utah?
A professional corporation in Utah can exist indefinitely or until terminated based on the decisions of the board of directors.
What is a statement of organizer for a professional corporation in Utah?
In Utah, a statement of organizer is a document that identifies the individual(s) organizing a professional corporation, their contact information, and their signature on behalf of the corporation.
Can a professional corporation in Utah operate under a trade name other than its legal name?
Yes, a professional corporation in Utah can use a fictitious name (also known as a “doing business as” or “DBA” name) as long as it registers and uses the name in compliance with state regulations.

Also Read

How to Save Money While Forming Utah Professional Corporation

One of the first steps in saving money while forming a Utah professional corporation is to do thorough research. By understanding the process and requirements for forming a professional corporation in Utah, you can identify areas where you may be able to cut costs. This may include exploring different filing options or considering alternative service providers.

Another way to save money is to shop around for the best deals on services related to forming a professional corporation. There are many companies and attorneys that specialize in assisting business owners with the formation process, so it’s important to compare prices and options to ensure you are getting the best value for your money.

Additionally, you can save money by handling certain aspects of the formation process yourself. While it may be tempting to outsource every detail to a professional, there are many resources available online that can assist you in completing tasks such as drafting bylaws or preparing corporate documents. By taking on some of these responsibilities yourself, you can save on expensive professional fees.

Another cost-saving tip is to consider alternative business structures. While forming a professional corporation may be the right choice for your business, there are other options to consider, such as a limited liability company (LLC). By exploring different business structures, you may be able to find one that is more cost-effective for your specific needs.

In addition to exploring alternative business structures, you can also save money by being mindful of ongoing expenses related to maintaining your professional corporation. Ensure you are aware of all annual filing requirements and deadlines to avoid costly penalties. Additionally, consider any ongoing professional fees that may be associated with operating a professional corporation, such as licensing fees or professional liability insurance.

Finally, networking and seeking advice from other business owners can be a valuable resource in saving money while forming a Utah professional corporation. By connecting with other professionals in your industry, you may be able to receive valuable tips and recommendations for cost-saving measures. Additionally, seeking advice from experienced business owners can help you avoid common pitfalls and ensure you are making informed decisions throughout the formation process.

In conclusion, forming a Utah professional corporation can be a costly endeavor, but there are many ways to save money throughout the process. By conducting thorough research, shopping around for the best deals, handling certain tasks yourself, considering alternative business structures, being mindful of ongoing expenses, and seeking advice from other professionals, you can save money and ensure the success of your new business venture.

Conclusion

Utah Professional Corporation can offer several benefits for licensed professionals. However, it is essential to carefully consider the proper structure and compliance requirements before proceeding. Seeking professional guidance in forming a professional corporation can help ensure a smooth process and enable professionals to focus on providing their services. Visit LLCBase for more information about starting a professional corporation in Utah.

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