Benefits of a corporation
For many business owners, the biggest advantage to forming a corporation is the protection it provides to its owners’ personal assets. A corporation is a separate legal entity from its owners, so only the corporation’s assets—not the owners’ personal money and property—are at stake in a lawsuit, court judgment or bankruptcy. A corporation also offers other benefits, such as possible tax savings and added appeal for investors.
Requirements for incorporating in Utah
Preparing your articles of incorporation
A Utah corporation is formed by filing articles of incorporation with and paying a filing fee to the Division of Corporations and Commercial Code of the Department of Commerce. A corporation legally exists when the articles are filed, unless the articles specify a later date. The following is the minimum information that must be included in the articles of incorporation:
- Name of the corporation
- Names and addresses of incorporators
- Registered agent
- Corporate purpose
- Stock structure
In regard to stock structure, the articles of incorporation must also state the number of shares the corporation is authorized to issue. If more than one class of shares is authorized, the articles must provide a designation for each class. Before any shares of a class are issued, the articles must state the limitations, privileges, and relative rights of the shares in that class.
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Naming your corporation
It is wise to find out if your desired corporate name is available before you file incorporation documents. You can check name availability by searching the Division of Corporations and Commercial Code’s website, or by phoning the Division.
You can reserve a name for 120 days by filing an application with the Division of Corporations and Commercial Code.
When choosing your corporation’s name, you must meet the following requirements:
- Your corporation’s name must contain the word “corporation,” “incorporated” or “company,” or an abbreviation of one of those words.
- Your corporation’s name must be distinguishable from any other business name registered with the Division of Corporations and Commercial Code.
An incorporator is responsible for signing and filing the articles of incorporation. The following requirements apply when specifying incorporators:
- The articles of incorporation must list the incorporators’ names and addresses.
- Your corporation must have at least one incorporator.
- An incorporator must be a person who is at least 18 years old.
- After incorporation, the incorporators must meet to elect directors and approve bylaws, if directors were not named in the articles of incorporation. After directors have been chosen, the incorporators have no other duties.
Directors oversee the corporation’s business, usually delegating the day-to-day operations to the officers. Directors have a duty to act in the best interests of the corporation and its shareholders.
The following requirements apply when specifying directors:
- The minimum number of directors depends on the following factors:
- Before any shares are issued, there must be at least one director.
- If there are three or more shareholders, there must be at least three directors.
- If there are fewer than three shareholders, the number of directors must be equal to or greater than the number of shareholders.
- Although there is no maximum number of directors, the number should be established by the articles of incorporation or bylaws.
- A director must be a person. The articles of incorporation or bylaws may contain other limitations regarding who can serve as a director.
Specifying a registered agent
Every corporation must designate a registered agent to receive notices, demands, and lawsuits for the corporation. The agent is then responsible for delivering these documents to the corporation.
The following requirements apply when specifying a registered agent for your corporation:
- The articles of incorporation must list the name of a commercial registered agent, the name and street address in Utah of a noncommercial registered agent or the title of a person at the corporation who will act as registered agent and that person’s business address in Utah.
- A registered agent may be an individual, a business entity or a person at the corporation. The registered agent may also be a commercial registered agent that has registered with the Department of Corporations and Commercial Code.
Stating a corporate purpose
You may state your corporation’s purpose in general terms to allow flexibility for your business in the future. For example, the articles of incorporation may state that “the purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the Utah Revised Business Corporation Act.”
Determining incorporation bylaws
Bylaws are the rules a corporation follows in running its business. They typically outline the rights and responsibilities of the corporation’s officers, directors and shareholders and may include any provisions for managing the corporation’s business and affairs. Bylaws are not filed with the Department of Corporations and Commercial Code.
Utah corporations are not required to have bylaws, but they may be adopted by the directors or incorporators. Bylaws cannot include provisions that are inconsistent with the law or the articles of incorporation.
Costs of incorporating in Utah
The Division of Corporations and Commercial Code of the Utah Department of Commerce requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.
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