Utah LLC Operating Agreement: Is It Required and What to Include

If you are forming a limited liability company in Utah, one of the first questions is whether you need an operating agreement and what goes in it. The short answer: Utah does not require one to form an LLC. You should still write one. Banks often ask for it, and if more than one person owns the company, it decides who owns what, who makes decisions, and what happens when someone wants out.

This guide covers the Utah rules that affect the agreement, what to include in it, and the filings that sit alongside it. It is informational content, not legal or tax advice. Read the disclaimer at the end before you rely on any of it.

Is an Operating Agreement Required in Utah?

No. Utah does not require an operating agreement to form an LLC, and you do not file one with the Utah Division of Corporations and Commercial Code. The formation filing is the Certificate of Organization, which carries a $59 filing fee. The operating agreement is an internal document. It stays with the company, its owners, and its advisors.

The Utah Revised Uniform LLC Act defines an operating agreement broadly. It can be oral, implied, in a record, or any combination of those. That matters for two reasons. First, a company without a written agreement still has one in a legal sense, and any dispute will be argued from what the members said and did. Second, anything the members leave out is governed by the Act's default rules. Those defaults are written for a generic company, and they may not match what you intended about profits, votes, or departures.

Why Write One Anyway?

Even a single-owner LLC benefits from a written agreement. In practice, it does five things:

• Satisfies banks. Business account openings and loan applications commonly ask for a copy to confirm who the owners are and who can sign. Requirements differ by institution, so ask your bank before you assume.
• Sets ownership and capital contributions. It records who contributed what and how that translates into ownership percentages. This is the first question any co-owner dispute raises.
• Defines voting and authority. It states which decisions need a majority, which need more, and who can sign contracts.
• Sets profit and loss splits. Equal ownership does not always mean equal profit, especially when one owner contributes time instead of cash.
• Controls transfers, buyouts, and exits. It answers what happens when a member dies, divorces, files for bankruptcy, or simply wants to leave.

Member-Managed or Manager-Managed?

The first structural decision the agreement must record is how the company is run. You have two options:

• Member-managed. The owners, called members, run the company directly. The agreement should state which members can bind the company and for what. This model suits a small group of owners who all work in the business.
• Manager-managed. The owners appoint one or more managers to run the company. Managers may or may not be members. This model suits owners who want to be passive, or a company with investors who are not involved day to day.

Write the choice into the agreement in plain language. Do not leave it implied. A company that ends up manager-managed by accident, or that gives every member signing authority without meaning to, causes problems with banks, vendors, and co-owners.

What to Include in a Utah Operating Agreement

Company Basics

Start with the facts that must match your state filing. The legal name must contain one of the approved designators: “limited liability company,” “limited company,” “LLC,” “L.L.C.,” “L.C.,” or “LC.” “Limited” may be shortened to “Ltd.” and “company” to “Co.” The name must be distinguishable on the Division’s records and may not imply the company is a state agency or political subdivision. Also record the registered agent, the principal office, the company purpose, and the effective date.

Ownership and Capital Contributions

List each member, the ownership percentage, and the initial contribution. Contributions can be cash, property, or services, so state the value of each. Address whether members must make additional contributions, how those are decided, and what happens to a member’s percentage if they do not contribute when asked.

Voting and Decisions

Define which decisions need a simple majority, which need a supermajority, and which need unanimous consent. Common items include admitting a new member, borrowing above a set amount, selling substantially all company assets, amending the agreement, and dissolving the company. Also state whether votes are weighted by ownership percentage or counted per person.

Profits, Losses, and Distributions

Explain how profits and losses are allocated, how often distributions are paid, and whether members may take draws between distributions. If the members want a clause that covers the owners’ tax liability on pass-through income, have your CPA draft and review it. The right approach depends on how the company is taxed.

Management Authority

Specify who can sign contracts, open bank accounts, hire staff, and commit funds, and set dollar limits for each. In a manager-managed company, describe the manager’s duties, how managers are selected, and how they can be removed.

Transfers, Buyouts, and Exits

This section causes the most disputes, so be specific. Cover the right of first refusal, the triggers for a buyout (death, disability, divorce, bankruptcy, retirement, or voluntary exit), the payment terms, and the valuation method. A valuation clause that says “fair market value” with no process invites a fight. Name a formula, an agreed appraiser, or a process for choosing one.

Adding Members and Dissolution

State how a new member is admitted, including the vote required and any signed joinder. Then describe what triggers dissolution and the steps for winding up: settling debts, selling assets, and distributing what remains.

What the Operating Agreement Does Not Do

The agreement does not replace any state filing. It does not register the LLC, appoint a registered agent with the Division, or make the company eligible for a city or county license. It also does not decide your tax treatment. Those items are handled through separate filings and elections. Keep the agreement and the filings in agreement with each other, and update the agreement in writing, signed by the members, whenever ownership or management changes.

The Utah Statute: Title 16, Chapter 20

Older sources and older company agreements cite the Utah Revised Uniform LLC Act as Title 48, Chapter 3a. Under S.B. 41 and S.B. 40, the Act was renumbered to Title 16, Chapter 20, effective October 1, 2026. When you cite the Act in your agreement or in correspondence, use Title 16, Chapter 20. If an agreement you are reviewing still cites Title 48, Chapter 3a, ask the drafter to update it.

Utah Filings and Licenses to Handle Alongside the Agreement

The agreement is one piece. These are the state and local steps that run in parallel:

• Certificate of Organization. The filing fee is $59. File online at businessregistration.utah.gov with a UtahID login. Most online filings are approved instantly. Filings that need manual review are stated at 2 to 4 business days, and the Division has posted 7 to 10 business days during backlogs. Expedited processing is $75 per filing.
• Name reservation. Reserving a name costs $22 and holds it for 120 days. Details are at the Division’s online registration instructions.
• Registered agent. Every LLC must name a registered agent for service of process with a Utah street address. A PO box may be listed only in addition to a street address. The agent can be an individual, a registered business in good standing, or a commercial registered agent. Commercial agent registration costs $52. Appointing an agent is an affirmation that the agent has consented to serve, so confirm this with the person before you list them.
• Annual renewal. The renewal fee is $18. The first renewal is due one year from the date of registration, and every year after that. The renewal window opens 60 days before the anniversary date. A late renewal fee of $10 applies.
• No statewide general business license. Registering with the Division is a registration, not a license. Utah issues no statewide general business license. Inside city limits, the business license comes from the city or town. Outside city limits, it comes from the county. A city license does not transfer to another city, so a move across city lines usually means a new license. Confirm the current requirements and fees with your city or county.
• Assumed name (DBA). If the LLC will operate under a name other than its legal name, file an assumed name registration with the Division of Corporations and Commercial Code. It is filed at the state level, not with the county. The cost is $22 to register. For the renewal term and fee, check the Division’s DBA page. Details are at the Division’s DBA page.
• Sales tax. A seller with an established presence in Utah needs a Utah Sales Tax License from the Utah State Tax Commission, which you can apply for through the Tax Commission’s TAP system. The state rate is 4.85 percent, and combined state and local rates run from 6.35 percent to 10.05 percent depending on jurisdiction.
• Occupational and liquor licenses. Many professions require an occupational license from the Division of Professional Licensing. If you plan to sell alcohol, the Department of Alcoholic Beverage Services (DABS) is the agency to contact. Check both before you open.

How the LLC Is Taxed in Utah

Utah has no separate LLC franchise tax. By default, an LLC is taxed as a partnership or a sole proprietorship. Income passes through to the members and is taxed at Utah’s flat individual income tax rate, which is 4.45 percent for tax years beginning on or after January 1, 2026. Confirm the current rate with the Tax Commission at tax.utah.gov. An LLC that elects corporate treatment instead pays the 4.45 percent corporate franchise and income tax (2026), with a $100 minimum tax. For most small LLCs, the only recurring state filing cost is the $18 annual renewal.

Your operating agreement should be drafted with your tax classification in mind. Distribution and allocation clauses that work for a partnership can produce problems for a corporate-taxed LLC. Confirm the federal and state tax treatment with a CPA before you finalize those sections.

Common Mistakes

• Skipping the agreement because Utah does not require one. The state requirement is not the test. Your bank, your co-owners, and a future buyer will all want to see it.
• Using a template without changing the defaults. Templates often assume a structure you do not have. Delete what does not apply, and fill in the rest with specifics.
• Leaving the buyout valuation vague. “Fair value” with no method is where partnerships go to court.
• Confusing the Certificate of Organization with the agreement. The Certificate is the public filing. The agreement is private and internal.
• Forgetting to update the agreement. Adding a member, changing a manager, or changing ownership percentages without a signed amendment leaves the record out of date.

Step-by-Step Checklist

1. Confirm the name meets Utah’s designator and distinguishability rules. Reserve it for $22 if you need time.
2. Appoint a registered agent with a Utah street address, and confirm they have agreed to serve.
3. File the Certificate of Organization for $59 at businessregistration.utah.gov.
4. Decide member-managed or manager-managed, then draft the operating agreement covering the sections above.
5. Sign the agreement, keep the signed copy with your company records, and give a copy to your bank.
6. Obtain the business license from your city or town, or from the county if you are outside city limits.
7. File a DBA if you will use a trade name, and register for sales tax through TAP if you sell taxable goods or services in Utah.
8. Calendar the $18 annual renewal and its 60-day window.

When to Talk to a Professional

Use a Utah business attorney for any LLC with more than one owner, any plan for outside investors, any buyout or succession planning, or any company that will hold real estate or significant assets. Use a CPA to confirm your tax classification and to review any distribution or tax clauses. The Utah Small Business Development Center and the SBA Utah district office are useful starting points for general business guidance.

Official Utah Resources

• Utah Division of Corporations and Commercial Code: commerce.utah.gov/corporations
• Utah Business Registration System: businessregistration.utah.gov
• Utah State Tax Commission: tax.utah.gov
• Utah business search: businessregistration.utah.gov

Disclaimer

This guide is informational content about Utah business formation. It is not legal advice, tax advice, or accounting advice, and it does not create an attorney-client or CPA-client relationship. Fees, deadlines, and statutory references can change. Confirm current figures with the agency that administers them before you file or pay. For your specific situation, consult a qualified Utah attorney and a CPA before you sign an operating agreement or choose a tax classification.