Thinking about starting a business? Whether you’re launching a side hustle, taking your freelance work to the next level, or building the next big thing, one of the first decisions you’ll face is choosing a business structure.
For most small business owners, the answer is an LLC—a Limited Liability Company. It’s the sweet spot between protection and simplicity, and it’s why LLCs have become the most popular business structure in America.
I help entrepreneurs in Utah and Arizona form LLCs every week. Here’s your complete guide to getting it done right.
Why Choose an LLC?
Before diving into the “how,” let’s talk about the “why.” An LLC offers three major benefits:
Personal Asset Protection
This is the big one. When you operate as a sole proprietor, there’s no legal separation between you and your business. If your business gets sued or can’t pay its debts, your personal assets are on the line—your house, your car, your savings.
An LLC creates a legal wall between your business and personal life. If something goes wrong with the business, generally only business assets are at risk. Your personal wealth stays protected.
Tax Flexibility
By default, single-member LLCs are taxed as sole proprietorships and multi-member LLCs as partnerships—meaning profits “pass through” to your personal tax return. But LLCs can also elect to be taxed as S-Corps or C-Corps if that structure makes more sense as you grow.
This flexibility lets you optimize your tax situation without changing your business structure.
Credibility and Professionalism
Having “LLC” after your business name signals to customers, vendors, and partners that you’re serious. It shows you’ve taken the step to formalize your business, which can help when you’re trying to land clients, negotiate contracts, or open business bank accounts.
An LLC creates a legal wall between your business and personal life. If something goes wrong with the business, your personal wealth stays protected.
Utah vs. Arizona: Which State Should You Choose?
If you live in Utah or Arizona, you’ll typically form your LLC in your home state. But there are some differences worth noting:
Utah LLC Basics
- Filing fee: $70 online ($72 by mail)
- Annual renewal: $18
- Processing time: Usually 1-3 business days online
- No state income tax on pass-through entities (but Utah does have a flat income tax)
Arizona LLC Basics
- Filing fee: $50
- Annual report: Not required (one of the few states without one!)
- Processing time: 2-3 weeks standard; expedited options available
- Publication requirement: In some counties, you must publish notice in a newspaper
Arizona’s lack of annual reports is a nice perk—less paperwork and lower ongoing costs. However, the publication requirement can add $100-300 depending on your county.
Step-by-Step: Forming Your LLC
Step 1: Choose Your Business Name
Your LLC name must be unique in your state and include “LLC” or “Limited Liability Company.” Before you get attached to a name, search your state’s business database:
- Utah: Search at corporations.utah.gov
- Arizona: Search at azcc.gov
Also check if the domain name is available and do a trademark search. You don’t want to build a brand only to discover someone else owns the name.
Step 2: Designate a Registered Agent
Every LLC needs a registered agent—a person or company that receives legal documents and official correspondence on behalf of your business. The agent must have a physical address in your state (no P.O. boxes).
You can be your own registered agent if you have a physical address in the state, or you can hire a registered agent service (typically $100-300/year). Using a service provides privacy and ensures you never miss important documents.
Step 3: File Your Articles of Organization
This is the official document that creates your LLC. You’ll file it with your state:
- Utah: File online at corporations.utah.gov
- Arizona: File online at azcc.gov
The form asks for basic information: your LLC name, registered agent, business address, and whether the LLC is member-managed or manager-managed. Most small LLCs are member-managed, meaning all owners participate in running the business.
Step 4: Create an Operating Agreement
Neither Utah nor Arizona legally requires an operating agreement, but you absolutely need one. This document outlines how your LLC will be run: ownership percentages, how profits are distributed, how decisions are made, what happens if a member leaves.
Even single-member LLCs should have an operating agreement. It reinforces the separation between you and your business, which is essential for maintaining liability protection.
Even single-member LLCs need an operating agreement. It reinforces the legal separation that protects your personal assets.
Step 5: Get Your EIN
An EIN (Employer Identification Number) is like a Social Security number for your business. You’ll need it to open a business bank account, hire employees, and file taxes. The good news: it’s free and takes about 5 minutes to get one from the IRS website (irs.gov).
Step 6: Open a Business Bank Account
This is critical. Never mix personal and business finances. Co-mingling funds is one of the fastest ways to lose your liability protection—it’s called “piercing the corporate veil,” and it lets creditors go after your personal assets.
Open a dedicated business checking account and use it for all business transactions. Period.
Common Mistakes to Avoid
I see these mistakes regularly from new LLC owners:
- Skipping the operating agreement — This document is your protection. Get one.
- Mixing personal and business finances — Use separate accounts, always.
- Forgetting required filings — Utah requires annual renewals; Arizona requires the publication in some counties.
- Not maintaining records — Keep meeting minutes, financial records, and contracts organized.
- Treating the LLC as a “formality” — If you don’t treat your LLC as a separate entity, courts may not either.
After You’re Formed: Ongoing Requirements
Forming the LLC is just the beginning. To maintain your protection, you’ll need to:
- File annual renewals (Utah) or update your records when information changes
- Pay estimated quarterly taxes if you expect to owe $1,000+ in taxes
- Obtain necessary licenses and permits for your industry and location
- Keep your operating agreement updated as your business evolves
- Maintain the separation between personal and business finances
DIY vs. Professional Help
You can absolutely form an LLC yourself—the state websites are user-friendly, and there are plenty of online services that walk you through the process. But working with an attorney has advantages:
- Customized operating agreement that actually fits your situation
- Guidance on tax elections that could save you money
- Asset protection strategy beyond basic LLC formation
- Avoiding costly mistakes that could compromise your protection
For straightforward single-member LLCs, DIY often works fine. For partnerships, significant assets, or complex situations, professional guidance is worth the investment.
Ready to Get Started?
Starting an LLC is one of the best things you can do to protect yourself and your business. The process isn’t complicated, but getting it right from the beginning matters.
If you have questions or want help setting up your LLC properly—including a customized operating agreement and guidance on ongoing compliance—I’m here to help.
Ready to protect your business? I help entrepreneurs in Utah and Arizona form LLCs that actually protect them. Schedule a consultation and let’s get your business started right.
