Utah Corporate Tax: Everything You Need to Know
Utah corporate tax includes the tax requirements and documentation needed to form a legal business in the state of Utah.3 min read
Utah corporate tax includes the tax requirements and documentation needed to form a legal business in the state of Utah.
Utah LLC Annual Filing Requirements
If you wish to start and operate a limited liability company, or LLC, in the state of Utah, the first step is preparing the required documents, which must be filed with the state. After starting an LLC, you must continue to file the annual report every year to renew your LLC in the state. You should receive a renewal notice from the Utah Division of Corporations (DOC), which will typically arrive about 60 days before the annual report's due date.
On the DOC website, you can find a blank report or renewal form to print, or you can file your completed report online. The report requires the name of the LLC and the entity number issued by the state. You must submit the annual report every year on or before the date of the creation of your LLC. With the annual form, you must also pay the required filing fee of $15. Any late payment would be subject to an additional penalty.
State Business Tax
Another aspect of Utah corporate tax is the state business tax. However, the majority of LLCs operating in the state take advantage of pass-through taxation. Pass-through taxation means that the business income and debts are passed through the LLC to the owners, called members. The responsibility to pay taxes on all business income falls on the members of the LLC, not on the business itself.
By default, an LLC doesn't pay income taxes, but its members do pay taxes on the business income. Some states require the payment of an additional fee or tax in order to business. Utah does not require this type of fee or tax.
The members of an LLC can elect for taxation as a corporation. In order to elect for this taxation, the LLC must file Form 2553 with the IRS, which is available on the IRS website. The default taxation for an LLC is pass-through but electing for taxation as a corporation changes the requirements. After filing this election form, the LLC must file its own tax return, separate from the personal returns of its members.
Like nearly every other state, Utah requires corporations to pay a corporate income tax, which is also referred to as the corporation franchise and income tax. The corporate income tax in Utah is generally a flat rate of 5 percent of the taxable income of the business. The minimum tax if $100. LLCs operating in Utah that elect for taxation as corporations are responsible for paying this tax every year. Use state Form TC-20 to file the income tax return with the Utah State Tax Commission.
State Employer Taxes
Another aspect of corporate taxation in Utah applies to businesses with employees. An LLC with employees must pay employer taxes. Some of the required employer taxes are imposed by the federal government and paid directly to the IRS. When you obtain a federal employer identification number (FEIN) from the IRS, the obligations to pay employer taxes begin. LLCs with employees in Utah are also required to pay employment taxes to the state.
The first requirement is withholding income taxes from your employees' paychecks. The income taxes will be paid to the Utah State Tax Commission. Before you can pay withheld income taxes, you must register the business with the Utah State Tax Commission. This process can be done through Form TC-69 from the Utah State Business and Tax Registration or through the website. After registering, you must file the withheld taxes on a specific schedule, such as quarterly or monthly. When you file, use Form TC-941. When reconciling the tax withholdings, you will also need to file Form TC-941 each year.
In addition to withholding and filing income taxes, LLCs with employees must register and pay the required unemployment insurance taxes to the state. Unemployment insurance taxes are paid to the Utah Department of Workforce Services (DWS). The steps include:
- Register to pay these required taxes online or file DWS-UI Form 1.
- After registering, you must file DWS-UIC Form 33H to report all wages and pay the required taxes on a quarterly basis.
Additional information regarding unemployment insurance taxes is available on the DWS website.
If you need help with Utah corporate tax, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.