Although taxes can be unpleasant, paying taxes is an important part of running a business.
This article will get you started with the basics of Utah LLC tax filing requirements.
Tax requirements for Utah LLCs
After you start a Utah LLC (Utah Limited Liability Company), there are two main types of ongoing obligations: filing an Annual Report with the state, and filing taxes.
On this page, we discuss the federal and state tax requirements for your LLC.
Each Utah LLC has a unique tax situation. This lesson provides you with general resources and an overview of the rules.
Tip: We recommend hiring an accountant to ensure your LLC meets all of its tax obligations.
Get an EIN Number for your LLC
We recommend getting an EIN Number for your LLC. An EIN is also called a Federal Employer Identification Number. They mean the same thing.
Not only will an EIN number be used to open an LLC bank account, but it will also be used for filing income tax with the local, state, and federal governments.
You need an EIN Number for your LLC even if you don’t have employees.
LLC pass-through taxation (who pays the taxes?)
By default, LLCs don’t pay taxes. Instead, the LLC Members are responsible for reporting the income (or losses) on their personal 1040 tax return. The Members pay taxes. This is because of LLC pass-through taxation.
How are LLCs taxed in Utah?
By default, a Utah LLC is taxed by the IRS based on the number of Members the LLC has. Then the Utah State Tax Commission honors this and taxes your LLC the same way at the state level.
An LLC with 1 owner (Single-Member LLC) is taxed like a Sole Proprietorship.
An LLC with 2 or more owners (Multi-Member LLC) is taxed like a Partnership.
The above are referred to as the “default status“. Meaning, they are automatically applied based on the number of LLC Members.
Alternatively, you have the option of requesting an “elective status” for your LLC. This is done by filing an extra form with the IRS. Once granted, this elective status means the IRS will treat your LLC as a Corporation (either an S-Corporation or C-Corporation) for tax purposes.
Federal Income Taxes
Single-Member LLC taxes (default status)
The IRS treats all Single-Member LLCs as Disregarded Entities for tax purposes. This just means that the IRS doesn’t expect the LLC to file its own federal income tax return. Instead, the owner of the Single-Member LLC files the return (and pays the federal income taxes).
How the LLC pays federal taxes is determined by who owns the Utah LLC:
- If the LLC is owned by an individual, the LLC is taxed like a Sole Proprietorship.
- If the LLC is owned by another company, the LLC is taxed as a branch/division of the parent company.
Multi-Member LLC taxes (default status)
If an LLC has two or more owners, the LLC is taxed like a Partnership.
The LLC needs to file a 1065 Partnership return and issue K-1s to the LLC owners. The K-1s report each owner’s distributive share of profits. And the K-1 income “flows through” to the owners. The income taxes are then paid by each owner on their personal income tax return (Form 1040).
Husband and Wife LLC taxes
In community property states, a husband and wife Limited Liability Company (LLC) has the option to file taxes as a Single-Member LLC (aka Qualified Joint Venture).
However, this option isn’t allowed in Utah for state or federal income tax purposes. This is because Utah isn’t a community property state.
Instead, a husband and wife Utah LLC will be taxed in the default status as a Partnership (unless they elect to have the LLC taxed as an S-Corp or C-Corp).
Electing to have your LLC taxed as a Corporation
Instead of the default statuses above, an LLC can be taxed like a Corporation. We recommend speaking with an accountant before making a corporate election.
There are two types of corporate elections.
LLC taxed as an S-Corporation (elective status)
By filing Form 2553 with the IRS, your LLC can request to be taxed like an S-Corporation.
Being taxed as an S-Corp can help businesses (with established profits) save money on self-employment taxes.
Tip: There are additional expenses to having your LLC taxed as an S-Corporation. Most new business owners shouldn’t make this tax election until their business is established and revenue is consistent. Once there is at least $70,000 in annual net income per LLC Member, we recommend speaking to your accountant about this option.
LLC taxed as an C-Corporation (elective status)
By filing Form 8832 with the IRS, your LLC can request to be taxed like a C-Corporation.
Being taxed as a C-Corporation can help large employers save money on healthcare fringe benefits.
Tip: This election is not common. Most of our readers don’t choose to have their LLC taxed as a C-Corporation.
State Income Tax for Utah LLCs
Single-Member LLCs in Utah: The LLC itself usually doesn’t file a state-level return. However, the owner files a personal state-level return that includes the LLC’s profits/losses. The individual pays state income tax.
Multi-Member LLCs in Utah: The LLC itself may need to file a Partnership return at the state-level (and might pay state business tax). And the owners file a personal state-level return that include the LLC’s profits/losses. Each individual pays state income tax.
There are other types of Utah business tax that apply to certain industries and types of businesses.
We recommend hiring an accountant to prepare, file, and pay your state income taxes.
Alternatively, you can contact the Utah State Tax Commission for more resources.
Local Income Tax for Utah LLCs
You and/or your LLC may need to file and pay income taxes with your county and your local municipality.
We recommend hiring an accountant to prepare, file, and pay your local income taxes.
Alternatively, you can contact your county and municipality yourself to check on their requirements.
Utah Sales Tax
If you sell products to consumers in Utah, you may need to collect sales tax and have a sales and use tax license.
You can get this sales tax license from the Utah State Tax Commission.
You can read more information on the Sales & Use Tax page to determine whether you need to collect sales and use tax in Utah.
If you have any questions, you can contact the Utah State Tax Commission at 801-297-2200.
Tip: Save time by hiring an expert. We recommend using TaxJar. They'll help you register for, collect, and pay sales tax.
Utah LLC Tax Frequently Asked Questions
Gather these documents for your accountant to use in preparing your income tax return:
- Any 1099s you received
- Copies of bank statements
- All receipts for income earned (money your clients paid you)
- All receipts for expenses (things your LLC bought for the business)
- Information about quarterly estimated taxes you paid during the year
To file your LLC taxes with the Utah State Tax Commission, you’ll use:
You pay annual LLC fees in Utah by filing an Annual Report (aka Annual Renewal). This is separate from the federal, state, and local taxes that you pay each year.
The LLC Annual Report is filed with the Utah Division of Corporations. It is not a tax paid to the Utah State Tax Commission.
The Utah LLC Annual Report costs $20 per year. This is paid every year for the life of your LLC.
You can read more about the Utah LLC Annual Report in our detailed lesson.
You just need to look at your EIN Confirmation Letter (CP 575).
- If your EIN Confirmation Letter says “SOLE MBR” after your name, your LLC is taxed as a Sole Proprietorship.
- If your EIN Confirmation Letter says “MBR” after your name, your LLC is taxed as a Partnership.
If you don’t have your CP 575, you can call the IRS and request an EIN Verification Letter (147C). The 147C letter will also show “SOLE MBR” or “MBR”.
Exception: If your LLC is taxed as a Corporation, the CP 575 doesn’t tell the whole story. You – or your accountant – would have filed a form with the IRS to make the election. And the IRS would have sent you back an Approval Letter. That Approval Letter will confirm which corporate election your LLC made.
If you’re still unsure about how your LLC is taxed, we recommend calling your accountant or the IRS (1-800-829-4933). To speak to a live person at the IRS, press option 1, option 1 again, and then option 3.
Here are the steps to starting an LLC in Utah:
- Choose an LLC name and make sure it’s available
- Choose who will be your Utah Registered Agent
- File the Utah LLC Articles of Organization
- Complete and sign an LLC Operating Agreement
- Get a Tax ID Number (EIN) from the IRS
- Open an LLC bank account
- Check whether you need a business or sales tax license in Utah