How to Start a Business in Utah
There are multiple steps to starting your own business in Utah. As a small business owner, you might be feeling overwhelmed. We try to keep things simple, helpful, and give you business advice delivered straight.
We’ve broken them down below to walk you through turning your business idea into a successful business.
Step 1: Create a Business Plan
Once you have the right business idea, the first step is to develop that idea into a business plan. This doesn’t have to be a formal document, but there are some important details to think about before you jump in.
Once you have a business idea, you should decide whether to work by yourself or to have business partners.
If you get stuck working on your business plan, you can contact the local office of the Small Business Administration for help: Utah District Office.
You should decide other details during this first step, such as:
- business model
- marketing ideas
- business address
Your business model is how your business plans to make money – what you will sell, how is it made and delivered, etc. Your business plan should consider your business location, and whether you will run your business online.
Think about whether you plan to hire employees. And you should conduct market research to ensure your business has a good chance of success.
Review the NAICS codes list to find the standard name for your industry. Selecting your industry ahead of time is important. Applications for business licenses and tax registrations often ask for this information (or the NAICS code). Choosing your industry upfront will reduce confusion when you complete those forms.
It’s a good idea to think of marketing ideas early on to help your business succeed. A good marketing plan can include developing a logo and brand name, deciding how and when to advertise, building a website, and developing a social media strategy.
You should choose a primary business address. This can be an actual office address, but it doesn’t have to be. It could be your home address or one of your business partners’ home addresses. You could even rent a mailbox or a PO box. The purpose is to have one designated address where all mail for the business is sent, and that you can use on official documents.
Step 2: Choose a name for your business
The next step is to choose a name for your Utah business. We recommend taking your time to choose a business name people will remember and positively associate with your business.
The best business names are:
- easy to spell
- easy for people to remember
- easy to pronounce
- original and unique
- not too many words
- not easily confused with other businesses
For additional business name tips, check out how to choose a business name.
After you’ve thought of a few business names, you should search them on the Utah Business Entity Search to make sure they are available. This is because two business entities can’t have the same business name in the same state.
Search for your domain name
We recommend coming up with a business name that’s available as a domain name and as a social media username. It’s okay to look at variations of your business name – the domain name and social media username don’t need to exactly match your business name.
You can search for domain names with GoDaddy for your business website.
Find a domain name
Tip: If you need help coming up with more names, check out TRUIC’s Business Name Generator.
Step 3: Choose your business structure
Next, you’ll need to select a type of business entity for your Utah business.
The most common business entities are:
- Sole Proprietorship
- Limited Liability Company (LLC)
A Sole Proprietorship in Utah is an informal business structure with one owner.
This business structure isn’t a separate legal business entity. Instead, it happens when you operate your business as yourself.
The advantage of a Sole Proprietorship is that they are easy to set up. You don’t have to file a document to “form” your Sole Proprietorship with the state. However, if you’d like, you can file paperwork to request an EIN from the IRS, and reserve a DBA with the state or county.
Another benefit is that they have pass-through taxation. This means the owner reports the business income or loss on their personal tax return.
The disadvantage of a Sole Proprietorship is that the owner is personally responsible for the business debts and obligations (there’s no personal asset protection).
A Utah General Partnership (aka Partnership) is similar to a Sole Proprietorship, but this informal business structure has 2 or more people.
Like a Sole Proprietorship, the advantage of a Partnership is pass-through taxation. This means the owners report the business income or loss on their personal tax returns.
The disadvantages of a General Partnership are that they require more paperwork to set up, and the owners are personally responsible for the business debts and obligations.
A Utah Corporation is a formal business entity that must have a board of directors, corporate officers, and shareholders.
The advantage of a Corporation is liability protection for the owners. The disadvantages are added complexity of management, double taxation, and the requirement to hold annual board meetings.
Additionally, Corporations aren’t very common for most small businesses. They are more commonly used by companies that are looking to raise capital, take the company public, or have large healthcare expenses.
An example of companies that operate as Corporations are high-growth technology and startup companies.
Limited Liability Company (LLC)
A Utah LLC is a hybrid business entity that combines the benefits of a Corporation and a Sole Proprietorship or Partnership.
Meaning, LLCs have personal liability protection for their owners. If the business is sued, the personal assets of the owners are protected.
LLCs also have pass-through taxation, and therefore avoid the double taxation that Corporations face.
LLCs are also a lot easier to set up and maintain than Corporations. For these reasons, LLCs are the most common choice for small business owners.
For more information, please see LLC vs Sole Proprietorship vs Corporation.
Step 4: Register your business with the Utah Division of Corporations
Depending on which business structure you choose, you may need to file paperwork with the Division of Corporations and Commercial Code in the Utah Department of Commerce.
If you’re starting an LLC or Corporation, you’ll also need to choose a Registered Agent with a physical address in Utah. A Registered Agent receives mail from the state and Service of Process for your company.
The filing fee to form a Utah LLC is $70. Check out LLC Cost in Utah for more info about LLC fees.
The filing form is called the Certificate of Organization. It can be filed by mail or it can be filed online.
The filing fee to form a Utah Corporation starts at $70.
The filing form is called the Articles of Incorporation. It can be filed by mail or it can be filed online.
If you want to operate as a Partnership (aka General Partnership) in Utah, there’s no paperwork to file with the state. You and your partner(s) can simply begin business activities by drafting a Partnership Agreement.
However, if you want to do business under a name other than the business’s legal name, you should file a DBA name.
And the Partnership needs to file paperwork with the IRS to get an EIN.
Utah Sole Proprietorship
If you want to operate as a Sole Proprietorship in Utah, there’s no paperwork to file with the state. You can simply begin business activities. However, if you want to do business under a name other than your first and last name, you should file a DBA name.
And if you want to use an EIN instead of your SSN, you should file paperwork to get your EIN with the IRS.
Utah DBA (Fictitious Business Name)
If you want to do business under a name different from your business’s true and legal name, you should file a DBA. (You may also see DBA referred to as a Fictitious Business Name).
Using a DBA can be helpful for branding and marketing.
All business entities (including LLCs, Corporations, Sole Proprietorships, and Partnerships) in Utah file DBAs at the state level using an online registration system or by submitting a DBA Application by mail.
Need to save time? We recommend hiring MyCompanyWorks ($99 + state fee) to file your DBA.
Utah Division of Corporations
If you have any questions about registering a company in Utah, you can contact the Utah Division of Corporations and Commercial Code:
Utah Division of Corporations: Contact Us
Step 5: Get an EIN Number
An EIN Number (Federal Employer Identification Number) is also known as a Federal Tax ID Number. It is used by the Internal Revenue Service (IRS) to identify your business for tax purposes.
An EIN Number will also be used to open a business bank account.
You can get an EIN for your Utah business by mail, fax, or online. Getting your EIN online is the fastest option, since it only takes about 15 minutes to complete the application.
For instructions on how to complete the EIN application for a Utah LLC, please see Utah EIN Number.
Note: If you have a formal business structure, like an LLC or Corporation, make sure it is approved by the state before applying for an EIN Number.
Step 6: Open a business bank account
After your business structure is set up, it’s a good idea to open a separate business bank account.
This is important because it keeps personal and business accounts separate. Personal and business expenses should be paid from these separate accounts.
All of this helps protect your personal assets. And it makes accounting and tax filing easier for your business.
You can learn how to open a bank account here: LLC business bank account.
Once the account is opened, the bank will give you a debit card. And you can get a business credit card to earn rewards if you’d like.
And if you need business funding, the bank may be able to help.
Tip: To keep your personal finances and business finances organized, we recommend using a tool like Quickbooks, Mint, or a simple spreadsheet.
Step 7: Business license and permits
After starting your business in Utah, you may need to obtain a business permit or license.
Your requirements are determined by the industry you are in and where your Utah business is located.
You can use the search tools below, contact your local municipality, or hire a company for help.
The Utah Division of Occupational and Professional Licensing can help you determine if your type of business needs a state-level license or permit. Or you can use their Search Tool and List of All Licenses.
And check out the Small Business Administration’s Licenses and Permits page for a full list of industries with federal license requirements.
Tip: Save time by hiring an expert. We recommend using IncFile ($99) to handle the business license research for you.
Sales and Use Tax License
If you sell products to consumers in Utah, you may need to collect sales tax and have a sales tax license.
You can get this sales tax license from the Utah State Tax Commission.
Step 8: Income taxes
Depending on your business, you’ll likely need to file federal, state, and local taxes.
You can file these yourself or you can hire a business accountant for help. Check out our How to find an accountant guide.
Step 9: Purchase Business Insurance
For most small businesses, business insurance isn’t required, however, it may be a good idea.
The main type of business insurance is called General Liability Insurance. This covers accidents that occur at your place of business, like property damage and personal injury.
Your business may also need specialty insurance like Professional Liability Insurance (for example, Errors and Omissions Insurance or Malpractice Insurance). These provide coverage for more specific claims that arise from professional services (like claims against accountants, consultants, and healthcare providers).
And if you hire employees, you will need to obtain Workers’ Compensation Insurance and Unemployment Insurance.
Starting a Utah Business FAQs
Sole Proprietorship: Because there is no state filing to form a Sole Proprietorship in Utah, the cost is $0.
General Partnership: Because there is no state filing to form a General Partnership in Utah, the cost is $0.
Limited Liability Company: Filing the LLC Certificate of Organization costs $70.
Corporation: Filing the Articles of Incorporation starts at $70. It can cost more depending on how many authorized shares your Corporation issues.
Source: Utah Division of Corporations Filing Fees
You may also have other fees, like license application fees or DBA filing fees.
However, certain professions require a license, and municipalities have different license and permit requirements.
However, your business may need a state-level industry-specific license or municipal-level license or permit to operate. The filing fee for licenses will vary depending on where you’re doing business and what industry you’re in.
And you might not need a business license at all!
Unfortunately, we can’t say what your license costs would be, because it depends on several factors and the cost of Utah licenses varies.
However, the most important factors in deciding where to start a business are where you live and where you’re doing business.
Meaning, if you live in or do business in Utah, then you should start your company in Utah. While many websites talk about tax rates and advantages of certain states, none of that applies if it’s not the state where you live and do business.
For example, if you form an LLC in Nevada, but live in and conduct business in Utah, you’ll also need to register your Nevada LLC in Utah (and pay fees). And you’ll end up paying Utah taxes anyway. This ends up leading to more costs and more headaches with no advantages.
In summary, if you live in and do business in Utah, then yes, Utah is a good state to start a business. If you don’t live in and do business in the state of Utah, then no, Utah isn’t a good state to start a business.
For more information, please see Best state to form an LLC.