Starting a Business in Utah: Everything You Need To Know
Starting a business in Utah creates a legal entity that is separate from you as an individual.3 min read
2. Deciding What Type of Business To Start
3. Choosing a Business Entity
4. Selecting a Business Name
5. Registering for Taxes
6. Protecting Your Limited Liability
7. Obtaining Business Permits and Insurance
Starting a business in Utah creates a legal entity that is separate from you as an individual. Simply file the required forms with the state's Division of Corporations and Commercial Code to get started.
Steps To Start a Utah Business
Depending on the type of corporate entity you want to form, you must complete either articles of organization or articles of incorporation. Once these documents have been accepted by the state, you can obtain an employer identification number (EIN) with the IRS. This can be used to open a bank account and credit card for your business.
Businesses that withhold sales tax or hire employees must also register with the state tax commission. Depending on the type of business you have, you may need to apply for a business license. Sometimes your municipality will require a separate license. If you have a physical shop or location, you may need a zoning permit.
The Utah Small Business Administration can provide guidance about the specific licenses and permits you may need.
Deciding What Type of Business To Start
When starting a new company, the business should serve a specific purpose in line with your natural abilities, interests, and goals. Having a personal investment in your business will keep you motivated and increase your chance of success.
Document your ideas with a strong business plan. This should include details about:
- The problem your business will solve and how it is distinguished from solutions already in the market
- Who your potential customers are and how you will attract them
- Whether you will need to hire or partner with others and the roles these individuals will have
- Your financial plan and where the funding will come from
Choosing a Business Entity
Various types of business entities are available for Utah entrepreneurs, including partnerships, sole proprietorships, corporations, and limited liability companies (LLCs). Some of these entities have alternative structures such as the S corp and the limited partnership. When you decide on the type of entity to form, consider taxes, liability protection, and financial benefits.
The advantages of forming a corporation or LLC include personal liability protection against business debts and lawsuits along with increased credibility in the business world. LLCs are a popular choice for small businesses because of their beneficial tax treatment, easy setup, and fees of as little as $70.
Selecting a Business Name
You need to choose a business name that is unique among registered Utah businesses. Conduct a name search on the website of the Division of Corporations and Commercial Code (DCCC). When you find a unique name, you can reserve it for a 120-day period by filing an Application for Reservation of Business Name.
Registering for Taxes
Your business must file for an employer ID number (EIN) with the IRS. This number is used to open a business bank account and withhold taxes on behalf of employees. This can be done online and does not require a filing fee.
Businesses will need to register to collect and pay Utah sales tax if they sell a physical product in the state. Those with employees must also register for employee withholding and unemployment insurance tax.
Protecting Your Limited Liability
Having a separate bank account and credit card for your business increases your credibility with clients and investors as well as simplifies your accounting process. In addition, separating business and personal finances protects your limited liability. If you mix finances, your personal assets could be seized to pay business debts or legal judgments.
You should also establish an accounting system so you can keep track of your business's performance and easily pay your taxes.
Obtaining Business Permits and Insurance
Local, state, and federal regulations may require certain permits for your business, such as those for signage, health, zoning, the environment, construction, and specific services and industries.
You can use the state's OneStop online system to register with these state agencies with one application:
- Labor Commission
- Department of Workforce Services
- State Tax Commission
- Department of Commerce
- Department of Environmental Quality
You may also want to purchase insurance policies to protect your business and personal assets, including general liability insurance, professional liability insurance, and worker's compensation insurance.
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