Setting Up a Business Partnership in Utah: What You Need to Know

Determine which type of partnership structure best suits your business needs in Utah. Options include general partnership, limited partnership (LP), or limited liability partnership (LLP). Each has different liability protections, tax implications, and filing requirements. Consider consulting with a business attorney to understand which structure aligns with your business goals and risk tolerance.

Select a name for your partnership that complies with Utah naming requirements. Verify availability by searching the Utah Division of Corporations and Commercial Code database. For general partnerships, the name cannot be identical to another registered business. For LPs and LLPs, the name must include 'Limited Partnership,' 'LP,' 'Limited Liability Partnership,' or 'LLP' as appropriate.

Create a comprehensive partnership agreement that outlines the rights, responsibilities, and obligations of all partners. Include provisions for profit and loss sharing, management responsibilities, decision-making processes, dispute resolution, partner admission/withdrawal procedures, and dissolution terms. While not legally required for general partnerships in Utah, a written agreement is strongly recommended to prevent future disputes.

Create a document detailing each partner's initial and ongoing capital contributions to the partnership. Specify the type of contributions (cash, property, services), valuation methods, timing of contributions, and how capital accounts will be maintained. Include provisions for additional capital calls if needed and consequences for failure to make required contributions.

Prepare a buy-sell agreement that establishes procedures for handling ownership changes. Include provisions for partner death, disability, retirement, or voluntary withdrawal. Specify valuation methods for partnership interests, payment terms, and funding mechanisms (such as life insurance). This agreement protects remaining partners from unwanted new partners and provides exiting partners with fair compensation.

Document the day-to-day operational procedures for the partnership. Include meeting schedules, voting procedures, record-keeping requirements, banking protocols, expense approval processes, and partner roles/responsibilities. These procedures provide clarity on routine business operations and help prevent misunderstandings among partners.

If forming an LP or LLP, prepare and file a Certificate of Limited Partnership or Statement of Qualification with the Utah Division of Corporations and Commercial Code. General partnerships are not required to file formation documents in Utah but may file a Statement of Partnership Authority. Filing fees apply and vary by partnership type. For LPs, the certificate must include partnership name, address, registered agent, general partner information, and term of partnership.

Apply for an EIN from the Internal Revenue Service (IRS) using Form SS-4 or the online application. An EIN is required for partnerships regardless of whether you have employees, as partnerships file annual tax returns. The EIN is also necessary for opening business bank accounts and hiring employees. There is no filing fee, and you can receive your EIN immediately when applying online.

If operating under a name different from the legal partnership name, file a DBA (Doing Business As) registration with the appropriate county clerk's office in Utah. Publication requirements vary by county. The registration typically expires after 3 years and must be renewed. This filing allows you to conduct business and open bank accounts under your business name.

Open a dedicated business bank account for the partnership using your EIN and partnership documentation. Prepare a Business Bank Account Resolution authorizing specific partners to conduct banking activities. Maintaining separate business and personal finances is crucial for proper accounting and liability protection. Bring your EIN confirmation, partnership agreement, and any filed formation documents to the bank.

Research and apply for all required business licenses and permits at the state, county, and city levels in Utah. Requirements vary based on business location and industry. At minimum, most businesses need a general business license from their city or county. Specialized industries may require additional permits or professional licenses. The Utah Business License & Registration Guide can help identify specific requirements.

Register with the Utah State Tax Commission for applicable state taxes. If selling taxable goods, apply for a Sales Tax Permit. If hiring employees, register for unemployment insurance and withholding taxes with the Utah Department of Workforce Services. Determine filing frequencies and deadlines based on your business volume and type.

Secure appropriate business insurance for your partnership. Consider general liability, professional liability, property, business interruption, and workers' compensation (if you have employees) insurance. Utah requires workers' compensation insurance for businesses with employees. For general partnerships, partners should consider additional personal liability insurance since they have unlimited personal liability for partnership debts.

Set up systems for maintaining required business records, including financial transactions, meeting minutes, tax documents, and partnership changes. Utah partnerships must maintain certain records at their principal place of business, including partnership agreements, tax returns, and financial statements. Proper recordkeeping is essential for tax compliance and may be legally required in the event of disputes or audits.

Create a compliance calendar outlining recurring filing deadlines and requirements. Partnerships in Utah must file annual reports (for LPs and LLPs) and partnership tax returns. General partnerships file Form 1065 with the IRS and distribute Schedule K-1 forms to partners. State and local license renewals, tax filings, and other periodic requirements should be included in this calendar to ensure ongoing compliance.