If you’re considering turning your side hustle or craft into a small business, you’ve come to the right place. This guide will cover what you need to know to start a business in Utah, from finding the right business idea to incorporation and taxes. Right now, the only thing between you and the independence you’ve been dreaming about is information and some hard work.

Start Operating in Utah: Key Points

1. With a highly ranked economy and favorable business outlook, Utah is a great place to start a small business.

2. New Utah business owners must choose a suitable business name and structure, file business formation paperwork, acquire the proper permits and licenses, and pay taxes.

3. C corporations in Utah owe a 4.85% franchise tax, but owners of Utah LLCs can pay income tax on their personal tax returns.[1]

Ready to Start a Utah Business?

New business owners face many tough questions while setting up a business in Utah. But a little reading about business plans, the Utah incorporation process, taxes, and other nuts and bolts will clear things up quickly. Here’s an overview of what it takes for your small business to start operating in Utah. 

1. Choose a Business Idea

Entrepreneurs don’t need a particular skill or trade to start a new business. They first need a creative vision that answers market needs. Utah’s fast-growing and high-ranking economy is ripe with opportunity in Salt Lake City and beyond.[2] If your business idea isn’t a direct result of your passion or hobby, try these techniques to find inspiration:

• Write down your thoughts about some successful small businesses in your area of Utah. What markets are they tapping into? Can you identify any gaps or complementary services?

• Take a walk through your neighborhood and try to start up conversations about the small business environment. Do you notice common challenges or complaints from workers or business owners? Small insights that emerge from dialogue are critical to any successful business idea.

• Tune into yourself and the challenges you face in everyday life. Noticing little pain points, reflecting carefully, listening, and constantly learning are essential for identifying a brilliant business idea. These personal habits and activities for entrepreneurs can help get you started.

• Make the environment your first client. Green businesses are a necessary part of our future on this planet. This list of green small business ideas could help you find your way in. Remember: Utah has a whole lot of sunshine.

• Just graduated college? Here’s a list of post-grad business ideas.

2. Draft a Utah Business Plan

If you allow your new business to learn too many lessons the hard way, you probably won’t make it as a startup for long. This is why your business needs a strong business plan before launch, especially if you expect lenders to sign on. Here’s what goes into a typical business plan. For more detail, refer to this guide.

Your local Small Business Administration (SBA) office can also provide free one-on-one help developing your business plan.

What a Business Plan Should Cover[3]

Executive Summary

Give a brief and straightforward overview of everything the business plan covers. Be direct. You’re not telling a story where the reveal comes at the end. Someone should be able to scan the business plan and know everything they need to know as quickly as possible.

Opportunity

Show that you’ve done market research and identified a target market with desires you can articulate, preferably with data from surveys or industry resources. Show data that gives readers an idea of the size of your potential market, and describe the gaps you intend to exploit.

Execution

This is the “plan” part of your business plan. Talk about what your business will offer and your marketing plan to acquire customers. How will your business location facilitate your success? On what timeline will you expect to grow?

Team/Company

Why are you well-positioned to run this business? What kind of team and advisors do you have? Lenders will want to know you’re qualified to run your business before investing. If you don’t have many professional credentials, be direct about your other experience and skills, but also be brief.

Financial Plan

Your local SBA office can help if you don’t know how to build a financial plan. Using information on pricing, expected sales, and costs of doing business (and initial startup costs), project your profitability into the future. A solid plan shows solvency on a reasonable timeline, which can be a year to five years, depending on the business.

Appendix

The appendix contains supporting materials for further reference and detail not included in the body of the business plan.

With a comprehensive business plan, you’re almost ready to start operating in Utah. Next comes business formation paperwork and branding — starting with your business name.

3. Select a Business Name

A good business name will provide a solid introduction to your business to every customer that hears it. Business ideas live and die on the strength of their names. When brainstorming your business name, here are some things to remember: 

• First, search Utah business on the Utah Division of Corporations website. You can also use Swyft Filing’s Free Business Name Search Tool. If your name is too close to the name of a previously existing Utah business, state guidelines will tell you if it’s “distinguishable” or not.[4]

• Make sure your name is simple and pronounceable.

• If you have found the perfect name and are afraid that someone will take it, you can file a name reservation form with the Utah Department of Commerce. For a $22 filing fee, the name will be exclusively yours for 120 days.

• Ensure your name has a compatible domain name and available social media handles so that your brand is consistent across all the platforms you use.

• Secure a general business name if you can’t find the right “official” name. Then you can reserve a “doing business as” (a DBA), allowing your business to operate with a separate name from its official name legally.

This article has even more detail and guidance.

Once you choose a business name, starting a business in Utah involves paperwork. Then it’s up to you to put your business plan into action.

4. Choose a Business Structure

Your business structure is the legal entity under which you choose to organize your business. Each has its benefits and drawbacks. This is a choice you make during the incorporation process. Below, we present an overview of your business structure choices.

Sole Proprietorship

Sole proprietors do business without formal incorporation. They run the business however they want and don’t have to register with the state. However, unless you’re doing business under your legal name, you will need a DBA to operate your business.

As a sole proprietorship, there will be no legal separation between your personal assets and your business’s. This means you could lose everything, from your savings to your house, in a lawsuit against your company. Sole proprietorships can buy business insurance if they’re worried about this. 

Limited Liability Company (LLC)

LLCs are flexible like sole proprietorships but enjoy liability protections like a traditional corporation. You’ll pay taxes for your LLC on your personal income taxes, avoiding corporate tax. This potent hybrid suits the needs of most new businesses.

An LLC is limited in the investment it can take on, and it can’t go public. Transferring ownership (like buying and selling shares in a corporation) might also be onerous.

C Corporation

A C corporation can issue stock to raise money, and even go public. It uses a robust structure, with board members, shareholders, and executives. For big investments and projects with many partners, the C corp is stable and strong.

Nonprofit

Nonprofits don’t pay income tax because they advance a social mission, and you can accept tax-deductible donations, and are eligible for grants to fund your work. 

A nonprofit can’t accrue profits to distribute to its owners; it only exists to further a social mission. The paperwork can be a pain, and nonprofits are required to form a board of directors.

S Corp (Tax Status)

Available to LLCs and C corps, S corp status can save some profitable businesses on income taxes

Usually, S corp status is more paperwork than it’s worth, and it places limits on a corporation’s shareholders and owners.

5. File Business Formation Documents

Now that you’ve chosen a business structure, you’re ready for the paperwork with the state of Utah, known generally as the business registration process. In Utah, the Division of Corporations and Commercial Code under the State Department of Commerce handles business registration. 

If you don’t register your business, you’ll face fines and penalties, and you won’t be able to secure the licenses you need or register to pay taxes, the neglect of which will get you in deeper trouble.

Utah Business Formation Documents by Business Structure[5]

Limited Liability Company (LLC)

You must file a Certificate of Organization, also known as the article of organization, certificate of incorporation, or certificate of formation in other states. The filing fee is $54.

Although not required, an operating agreement is recommended to handle the business as it grows.

C Corp

You’re required to file Articles of Incorporation with a $54 filing fee. You must also create bylaws but are not required to file them officially. You should make a shareholder’s agreement to outline understandings between shareholders, although it’s not required.

Nonprofits

To start a nonprofit in Utah, you must file Nonprofit Articles of Incorporation, IRS Form 1023, and create a set of bylaws. Filing fees come out to $30.

Before filing, you must secure a Utah-registered agent for your business — more on that in this article. Swyft Filings makes an affordable and reliable registered agent for any business.

Filing fees for these incorporation documents are nonrefundable, and a small detail out of place means rejection. To get these forms right the first time and avoid costly delays, let Swyft Filings get the paperwork done. Whatever business structure you choose, our business formation service will make it easy and smooth, freeing you to build your business. 

6. Apply for Utah Business Licenses and Permits

Many businesses will require you to secure specific permits and licenses before you can start operating in Utah. Here are some licenses and permits to look out for:  

• You will likely need a building permit to construct your office or storefront. 

• Licenses are required to sell regulated commodities such as alcohol or tobacco.

• Every Utah business is required to secure a general business license from either its city or county government.[6] 

• Suppose your startup will provide a service that requires a professional license, such as medical or veterinary care, plumbing, childcare, or something else. In that case, you may need a permit from a state-certified board.

• If you hire employees, you will need to obtain workers’ compensation insurance.[7]

Operating without a license is a class B misdemeanor in Utah, carrying fines of up to $1,000 and jail time of up to 6 months.[8] [9] So it’s crucial to find out which Utah business licenses you need and make sure you have them in place immediately after incorporation before you start operating in Utah.

To get your state, municipal, and professional licensing done in one place, with minimal effort, take advantage of Swyft Filings’ Business Licenses and Research service, which assembles all the licenses and permits you need and manages your applications.

7. File and Report Business Taxes

When your Utah business becomes a legal entity, you’ll be responsible for its annual and quarterly taxes. Neglect these, and all kinds of financial trouble will be waiting. Tax returns are due based on the fiscal year you set during the incorporation process for your business.

• You’ll need an Employer Identification Number (EIN) from the IRS to withhold and pay Federal taxes. In the next section, we’ll cover the EIN, also called a Federal Tax ID.

• Register with the Utah state tax commission’s Taxpayer Access Point to pay state tax, including sales tax and franchise tax for C corporations.[10] Your LLC will pay income tax on your personal tax returns.

8. Open a Business Bank Account

Opening a business bank account is essential to keep your personal assets separate from your business’s. Failure to do so may compromise your limited liability. Tracking expenses with a different bank account will also be far more manageable, saving you effort at tax time.

A Federal Employer Identification Number (EIN) issued by the IRS is required to open a bank account for your business. This is like a social security number for your business, providing a unique tax ID you’ll use frequently. Swyft Filings can help you get an EIN in no time.

While opening a bank account, consider shopping for a general liability insurance policy to protect you and your fellow business owners from unforeseen circumstances.

Take Your First Steps Toward Small Business Ownership

To start a business in Utah, you need more than a great business idea — there’s also a mountain of paperwork to fill out and miles of red tape to dodge. This is why Swyft Filings’ services are so effective. When you get us on your team, you’ll save untold hours and headaches dealing with business formation paperwork. We do everything from incorporation to licenses to your EIN.

Startups need time to gather steam. New business owners can’t waste days filling out forms. So let Swyft Filings get it done for you and before you know it you’ll be ready to start operating in Utah.

Frequently Asked Questions

Is Utah a good place to start a business?

In 2022, U.S. News & World Report ranked Utah the #1 economy in the country and the “best state” overall.[11] Any state with that much momentum behind it is an excellent option for just about any business, and you won’t be alone among thousands of new small business owners.

How much does it cost to start operating in Utah?

Depending on their business structure, entrepreneurs need to secure a registered agent and pay the requisite filing fees. Filing fees for business formation documents are $54 for Utah LLCs and C corporations.

Can I start a business in Utah without a business plan?

You can start a Utah business without a plan, but would you set out on a long road trip without a map? Even if you don’t stick to it, writing a business plan will pay off when your business entity is up and running — especially if you want investors to help with your startup costs.  

What does Utah require to start a business?

New businesses must file formation documents according to their business structure, including a $54 filing fee for LLCs and C corporations.

What is the process for starting a business in Utah?

New Utah business owners must register their business with the division of corporations and commercial code; secure the proper licenses and permits; register for state and Federal taxes; and keep their business in good standing for the duration of their business’s existence.

Why are most LLCs in Delaware?

Delaware has advantageous regulations for the LLC business structure that, in some cases, can save businesses money on taxes or other costs. But suppose your Utah small business is brand new. In that case, it will usually be better to incorporate it in Utah because operating a Delaware business from the Beehive State is probably more of a hassle than it’s worth. 

Bibliography

1. Utah State Tax Commission. “2022 TC-20 Corporation Franchise Tax & Income Tax Forms and Instructions.” Accessed July 10, 2023.

2. State of Utah Governor’s Office of Economic Opportunity. “Accolades & Rankings.” July 10, 2023.

3. Swyft Filings. “Mastering Your Plan: How to Create a Small Business Plan.” Accessed July 10, 2023. 

4. Utah Department of Commerce Division of Corporations and Commercial Code. “Business Name Conventions and Policies.” Accessed July 10, 2023.

5. Utah Department of Commerce Division of Corporations and Commercial Code. “Updated Fee Schedule July 1, 2023.” Accessed July 10, 2023.

6. Utah Department of Commerce Division of Corporations and Commercial Code. “Business Licensing & Registration Guide.” Accessed July 10, 2023.

7. Utah Department of Insurance. “Workers’ Compensation.” Accessed July 10, 2023.

8. Utah Code. “76-8-410 Doing business without a license.” Accessed July 10, 2023.

9. Utah State Courts. “Criminal Penalties.” Accessed July 10, 2023.

10. Utah State Tax Commission. “2022 TC-20 Corporation Franchise Tax & Income Tax Forms and Instructions.” Accessed July 10, 2023.

11. U.S. News & World Report. “Best States Rankings.” Accessed July 10, 2023.