How to Start a Business in Utah
Ready to start a business in Utah? You’re in the right place. You’ve got a killer business idea, the ambition of a future billionaire, and the cleverness to know that our business guide is the best on the internet—all that you need now is to get started. Utah’s flat rate corporate income tax, robust small business economy, and state-wide business incentives makes the Beehive State a great choice for your new business venture. Technically, all you need to start a business is to start selling something—but if you want to protect your assets, attract investors, and follow Utah’s regulations, you’ll need to do more. This comprehensive, step-by-step guide will tell you everything you need to know about starting a business in Utah.
Ready to Start a Business in Utah?Let's Get You Started
Pick a Business Structure
Name Your Business
File Formation Paperwork
Draft Internal Records
Get Utah Business Licenses
Organize Your Money
Get Business Insurance
Understand Your Tax Burden
Build Your Business Website
File Utah Annual Report
Apply for Trademarks
1. Pick a Business Structure
Picking a business structure for your Utah business is an important choice. A one-person business, such as a freelancer or online re-seller, is a sole proprietorship by default. If you have a business owned by two or more people, by default it’s a general partnership. While these business types are appealing because they don’t require you to file formation documents, they are missing one crucial part of starting a successful business: liability protection.
Though technically optional, it’s a good idea to have liability protection for your business. Liability protection essentially means that business owners are not personally responsible for the business’ debts. It protects the owners’ personal assets, like their cars and houses, if the business is sued or defaults on a debt.
In order to enjoy liability protection, businesses must be a separate legal entities from their owners. The most common business entities with limited liability protection are LLCs and corporations.
Utah Limited Liability Company (LLC)
A limited liability company (LLC) is a popular business entity type because it offers a lot of flexibility and individual choice for the business owner. While LLCs have the great benefit of liability protection, they also give the owners flexibility in how they will be taxed and how the business will be managed. To start a Utah LLC, file a Certificate of Organization with the state.
Like a Utah LLC, a Utah corporation has liability protection. However, a Utah corporation has less flexibility than an LLC in terms of taxation and management (corporations are required by law to have a board of directors). While this might seem like a downside to you, keep in mind that the strict organizational requirements of corporations make them much more enticing to donors and investors. To start a Utah corporation, file your Articles of Incorporation with the state.
Can an LLC be just one person?
Yes! A one-person LLC is called a single-member LLC. Single-member LLCs are one of the most common kinds of businesses in the country. For the most part, single-member LLCs are just like multi-member LLCs, but there are some slight differences in how they file taxes and protect personal assets.
Read all about Single-Member LLCs.
What about a Utah nonprofit?
2. Name Your Business
When naming your business in the state of Utah, make sure that the business name you want is not already being used by another Utah business. You can check whether your name is available on the Utah Division of Corporations Business Search. Make sure to search for possible spelling variations when searching for your potential name because Utah might reject a name that is too similar to another business name, even if the names aren’t identical.
So what requirements does your business name have to follow? Your Utah business name must:
- be unique among business names in Utah
- include a relevant identifier, such as “LLC” or “limited” for a limited liability company, or “Inc.” or “corp” for a corporation
- not mislead customers as to the nature of the business
Can I reserve a business name in Utah?
Yes! Reserving a business name in Utah is as simple as filling out an Application for Reservation of Business Name. The reservation costs $22 and is good for 120 days.
What is a DBA?
What about trademarked names?
It’s a good idea to check with the US Patent and Trademark Office (USPTO) to make sure your business name hasn’t been trademarked by someone else. If it has, and you use it anyway, there’s a chance that the business could come after you for infringement.
3. File Formation Paperwork
To start an LLC or corporation in Utah, you will need to file formation documents with the state. (Sole proprietorships and general partnerships are not required to file formation paperwork.)
To form your LLC or corporation, you will need to file your documents with the Utah Division of Corporations and Commercial Code.
To start a Utah LLC, file your Utah Certificate of Organization.
- To start a Utah corporation, file your Utah Articles of Incorporation.
These forms require general information, such as your business name and purpose, as well as the contact information for your Utah registered agent. This information all becomes public record—so make sure you choose your registered agent wisely.
What is a registered agent?
A registered agent is a person or entity that receives legal mail on a business’s behalf. This means if you are served a lawsuit, the registered agent will receive this notice and forward it to you in a timely manner. Your registered agent must have a physical location in Utah and be available during regular business hours. Many business owners choose to hire a registered agent service in order to ensure their business is in good hands.
How can I keep my information off the public record?
You can keep your information off the public record by hiring a registered agent service like Northwest. Some registered agent services (including ours!) will let you use their name and address on your formation documents wherever allowed. Utah doesn’t require LLCs to put members’ or managers’ information on formation documents, so having an external registered agent gives you complete privacy on your formation documents if you’re starting an LLC. (Corporations must list their officers and directors.)
4. Draft Internal Records
So far in this guide, we’ve dealt with public forms that you’ve had to file with the Utah Division of Corporations. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company.
Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS.
Here are the major internal documents you need to organize for LLCs and corporations:
Utah LLC Operating Agreement
This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.
Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft a Utah LLC Operating Agreement template that you can use as a solid foundation.
Utah Corporate Bylaws
Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. While corporate bylaws are not legally required in Utah, it is standard practice to have them. Having strong corporate bylaws can also help you avoid legal trouble down the road.
As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted a Utah Corporate Bylaws template you can use to get started.
Starting a nonprofit? Learn about nonprofit bylaws.
5. Get Utah Business Licenses
Businesses in Utah are required to maintain up-to-date federal, state, and local business licenses. All businesses, including sole proprietors, will be required to have at least one license, though most businesses require multiple.
Utah State Business License
Every business in the state of Utah is required to get a Sales Tax License. Also called a Seller’s Permit, this can be obtained by filing online through Utah’s One Stop or by submitting Form TC-69. Your additional state licensing requirements are based off of your individual profession and location. Let’s go over what that might look like for you.
Professional Business Licenses
Professional business licenses are required for any business in the professional sector, such as law firms, medical offices, and educational businesses. The Division of Occupational and Professional Licensing (DOPL) approves all professional licensing for the state. However, keep in mind that each profession might have a different process or list of requirements, including but not limited to additional local licenses. DOPL offers a list of professions that require professional licenses to help you determine which licenses you need.
Local Business Licenses
Which business licenses you need will also depend on where your business is located. For example, in Salt Lake City, every business is required to have a valid city business license, regardless of what products or services your business offers. Check with your local Utah city business department to find out which license (or licenses) you need.
Learn more about How to Get a Business License.
How do I get a Utah business license?
The process for applying for a Utah business license just involves filling out the appropriate paperwork, paying any relevant fees, and waiting to hear back from the appropriate departments/boards. Applications will vary, but you’ll likely need to include basic information about your business, contact information, and federal ID number.
How much does it cost to get a Utah state business license?
The Utah Seller’s Permit (also called your Sales Tax License) is free. This is the only license that is mandatory for all businesses in Utah, so technically there’s no cost connected to getting your business license in Utah. However, there might be fees for additional licenses, such as professional and local licenses.
How do I get a professional license in Utah?
You can get a professional license in Utah by finding the appropriate department/board, paying your fees, and submitting your application. For example, in Utah all plumbers must have an approved license to conduct business—but even just within the profession of plumber, there are several possible licenses that you might need. A Master Plumber and an Apprentice Plumber need separate licenses. Make sure to check the Utah Department of Commerce, Division of Occupation and Professional Licensing to see what you might need.
How do I get a local business license?
You can get your local business licenses by searching for your area’s local business department and seeing what licenses are required. For example, the Salt Lake City Consolidated Fee Schedule details all the licenses required by the city and their fees. The actual process involves applying, paying fees, and waiting for approval.
6. Organize Your Money
The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.
Open a Business Bank Account
To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.
Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.
How do you set up a business bank account?
Do I need a business bank account to accept credit card payments?
Probably. Payment processors require you to provide them with a bank account. This is where they’ll deposit funds from transactions. Most of the time, this needs to be a business bank account.
Some payment processors may let you get away with listing a personal bank account, but it’s not a great idea. Mixing your business finances with your personal finances erodes the separation between you and your business, weakening your liability protection. It also turns tax season into a nightmare.
Learn more about Payment Processing.
Set up Payroll
Setting up payroll as an employer in Utah might feel overwhelming, but you just need to follow these steps:
- Get your FEIN
- Register to receive your Withholding Account ID
- Determine whether you’re hiring employees or independent contractors
- Prepare the forms for your employees to fill out
- Choose a payroll system/service
- Decide on a payroll schedule
Some small business owners with only a few employees on payroll choose to do payroll themselves, while other businesses choose to hire a payroll service or use a payroll software. You can choose whatever is best for your personal needs. After this, all you have to do is choose a payday and hire your employees!
What forms do my employees need to fill out?
Your new employees will need to fill out a W-4 to determine how much you’ll withhold and an I-9 to verify that the employee is eligible to work in the US.
What’s the difference between an independent contractor and an employee?
It’s important to understand the difference between an independent contractor and an employee. That’s because for employees, you’ll need to withhold and pay income, social security, and Medicare taxes. Independent contractors pay these taxes on their own.
An independent contractor is self-employed—how they complete their work is not directly controlled by an employer. An independent contractor may perform the same kind of work for other businesses, and can do the work when and how they choose.
An employee, on the other hand, performs their work how and when their employer chooses.
If you’re unsure, you can file Form SS-8 with the IRS and let them decide.
Learn everything you need to know about hiring independent contractors.
How do I get a Utah Withholding Account ID?
To pay employees in Utah, you must have a Withholding Account ID number from the Utah State Tax Commission. When you first complete your business registration and create an account with Utah’s official government website, you’ll be given a temporary number. Your official, permanent number will arrive via the mailing address you supply in your application within two weeks of your registration.
7. Get Business Insurance
Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is on the hook to pay. Business insurance can help cover the costs.
There are a few different types of business insurance, but the most common are workers’ compensation and liability insurance.
Workers’ Compensation Insurance
Workers’ compensation protects you and your employees in the event of a work-related injury. Covering everything from lost wages to medical bills, workers’ compensation is legally required for nearly every business with employees in the state. There are a few exceptions, such as domestic workers, real estate brokers, insurance agents, certain agricultural employees, and sole proprietorships/general partnerships.
An employer can purchase workers’ compensation through a private insurance carrier, the Workers’ Compensation Fund of Utah, or by being self-insured with approval from the Labor Commission.
Corporate officers and directors are legally considered employees in Utah and need to be covered by workers’ comp. However, corporations with fewer than six directors/officers and no other employees may file a notice with the Labor Commission to be excluded from needing workers’ compensation.
This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.
Do business owners need workers’ compensation insurance in Utah?
No. Business owners with no employees are not required to have workers’ compensation, and they are not required to purchase coverage for themselves. However, it is a good idea to include yourself in your workers’ compensation insurance policy anyway because your personal insurance might decline any claims made from workplace-related injuries.
Do I need business insurance for my home-based business?
Probably. That’s because you can’t count on your homeowners’ or renters’ insurance policy to cover damages related to your business. Most insurance companies offer a home-based business insurance plan.
8. Understand Your Tax Burden
Paying your taxes are a necessary part of running a business in Utah. You will need to stay up to date with federal, state, and local taxes.
- LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. An LLC can file paperwork with the IRS to be taxed as an S-Corp or C-corp instead.
- Corporations. Corporations are taxed as C-corps by default. This means that corporations pay the 21% federal corporate tax rate and the applicable Utah corporate tax rate.
To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.
Do I need an EIN if I’m self-employed?
If you’re operating a sole proprietorship or single-member LLC that doesn’t employ anyone else and you don’t need to file excise or pension plan returns, you don’t legally need an EIN.
However, you can still get one—and you probably should. Otherwise, you’ll have to use your own social security number to do business. Plus, you’ll likely need an EIN to open a business bank account.
How do I get an EIN?
To get an EIN, you can either apply online or file form SS-4 by mail with the IRS. Getting an EIN is free.
Check out our guide to applying for an EIN.
What is an S-Corp?
An S-Corporation is a federal tax election. Registered business entities like LLCs and corporations start out with a default tax status, but can file paperwork with the IRS to be taxed as an S-Corp. Like LLCs, S-Corps are taxed as pass-through entities. Like corporations, S-Corps can make distributions that aren’t subject to the 15.3% self-employment tax.
Learn more about the S-Corp tax election.
What is a C-corp?
A C-corporation is the default federal tax election assigned to corporations. Most corporations are taxed as C-corps, but LLCs can also apply for C-corp tax designation by filing paperwork with the IRS. C-corps file federal corporate income taxes and state corporate income taxes (in Utah, the corporate tax rate is 4.85%). C-corps can pay their shareholders in distributions, and the shareholders report those profits on their personal tax returns.
Learn more about the C-corp tax election.
Utah State Business Taxes
Utah is a great place to be a business owner because of its flat rate corporate income tax. The 4.9% corporate income tax rate is a huge benefit of starting a business in Utah. C-corps will need to pay this tax on any income they receive from the business, plus any other state, local and federal taxes the business owes. For example, businesses in Utah need to pay the Utah Sales and Use tax of 4.85%, plus any additional local sales tax.
Read more about your state tax requirements on the Utah State Tax Commission website.
Local Utah Business Taxes
Your local business tax is determined by your city and/or county’s taxation rates. Your city’s business department can help you find your exact tax requirements.
For example, Park City’s sales tax rate is 9.05%. This consists of the 4.8% Utah state sales tax, 0.3% Summit County sales tax, 1% Park City tax and 2.9% Special tax.
9. Build Your Business Website
If you want the people of Utah to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or an influencer to establish a robust online presence. You’ll just need the following:
- Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
- Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“[email protected]”).
- SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
- Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.
10. File the Utah Annual Report
Every LLC and corporation in Utah must file an annual report every year. When you file depends on when you first formed your business—your report will be due each year on your business formation anniversary date. There is a $18 fee that must be submitted to the Utah Division of Corporations & Commercial Code at the same time as your annual report.
Read more about How to File a Utah Annual Report.
What if I don’t file an annual report in Utah?
If you’re just a little late sending in your annual report, you will only be charged a $10 late fee. However, if you don’t submit your report within 30 days after the due date, your business could be shut down by the state.
11. Apply for Trademarks
A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.
You can apply to register your trademark with the State of Utah or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in Utah is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in Utah.
You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.
Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.
How do I register for a trademark in Utah?
You can register for a trademark in Utah by submitting the Application for State Trademark or Service Mark Registration. It costs $50 to submit your application, and your trademark will be good for five years. If you want to keep the trademark in your name longer than that, you’ll need to renew your application (also $50) six months prior to your trademark’s expiration date.
Can I register a trademark before I use it?
No. But you can file an application with the USPTO under Intent-to-Use status. This gets your application in line before you’ve actually used the mark, which could be helpful if you’re worried someone else might register your mark before you’ve had a chance to use it.
For your trademark to become official, you’ll eventually need to show proof that you’re using it. An Intent-to-Use application buys you some time to do that.
Learn more about filing an Intent-to-Use Trademark.