This post was originally published on January 02, 2019, and extensively updated on June 20, 2022.
- Quick Utah Small Business Statistics
- Is It Good to Start a Business in Utah?
- How to Start a Business in Utah
- Create a Business Plan
- Get Financing to Start Your Small Business
- Pick Your Business Location
- Decide on a Legal Structure
- Decide on a Business Name
- Register Your Utah Business
- Obtain Your Federal Employer Identification Number
- Open Company Bank and Credit Card Accounts
- Choose an Accounting System
- Choose a Payroll Provider
- Obtain Necessary Business Licenses and Permits
- Taxes and Reporting
- Branding and Marketing
- Establish an Online Presence
- How to Start a Business in Utah: The Final Word
That said, it can feel like an overwhelming task to get a new business up and running. There are a lot of things you'll need to do.
At Cook Martin Poulson, we work with entrepreneurs and small business owners every day. One of the things we get asked about a lot is how to start a small business in Utah.
With that in mind, we've created this guide to starting a business in Utah to walk you through every step you'll need to take to create your business and turn it into a successful venture.
You may also want to read: Tips for Changing Your Tax Residence in Utah
Quick Utah Small Business Statistics
Before we give you the steps to start a small business in Utah, let’s review some statistics that show how important small businesses are to Utah’s economy and people.
- 5% of all employees in the state of Utah work for small businesses.
- 3% of private enterprises in Utah are classified as small businesses.
- Women business owners operate 43.8% of Utah’s small businesses and employ 44.6% of the workers.
- Racial minorities own 4.9% of Utah’s small businesses.
- Small business exports in Utah totaled $11.1 billion in 2019.
- Utah veterans own 5.4% of small businesses in the state and employ 3.9% of the workers.
- Between March 2019 and March 2020, Utah saw a net gain of 1,959 small businesses and 22,295 jobs in small businesses.
These numbers illustrate just how essential small businesses are to Utah. Without them, most workers would not have jobs.
Is It Good to Start a Business in Utah?
Because Utah has so many small businesses, you may assume that opening a small business in Utah is a good idea. Let’s look at some of the reasons that entrepreneurship is so high in Utah.
- Utah has a flat 5% corporate tax rate. While that’s not the lowest rate in the country, it is lower than most and makes Utah an advantageous place to start a business.
- Utah’s business regulations do a good job of balancing consumer protections with business protections that encourage job growth.
- Utah has strong fiscal management that has helped its economy thrive, making it easier for people to start small businesses and keep them going for years.
- Utah’s infrastructure is well-maintained, and while this might not seem like a business plus, it is essential and something that has been an issue for businesses in other states.
The takeaway here is that Utah is one of the best states in the US to start a small business. If you have a strong business idea, Utah’s advantageous approach to business law and taxation can help you succeed.
How to Start a Business in Utah
Now that you know why Utah is an advantageous place to start a business, here are the steps to follow to get your small business up and running.
1. Create a Business Plan
The first thing you’ll need to do is to write a business plan. This step is essential, and shouldn't be skipped. A well-thought-out business plan will help you every step of the way, including obtaining financing, attracting customers, avoiding debt, and achieving your long-term growth goals.
A well-crafted business plan should include the following items:
- An executive summary
- A description of your business
- Your business objectives
- A description of your products or services
- Market research
- A sales & marketing plan
- Financial analysis
- Financial projections
- Supporting information, including details about key employees, equipment, licensure, permitting, and anything else essential to your business plans.
Writing a business plan takes time and patience. Paying attention to detail and doing the necessary research will make it much easier to get the money you need to open your small business.
2. Get Financing to Start Your Small Business
Obtaining the necessary financing to open your business is the next step. Most Utah small business owners needed outside help to get up and running. Your business plan is your calling card when the time comes to meet with potential investors. Your startup costs may be low or high depending on the type of business you want to open and your operating expenses.
According to the Small Business Administration (SBA), even starting a micro business as a solo entrepreneur can cost up to $3,000. The SBA has a free start-up cost estimator that you can use to do a break-even analysis and determine how much financing you need.
It may take some time to find the investors you need. You’ll want to make sure that you have a plan for repaying the investors and likewise, you’ll need to convince them that your business is a worthwhile investment that will earn them a return.
3. Pick Your Business Location
Finding a business location is one of the most critical elements of starting a business. Especially if you plan on having a retail business or need office space for employees.
Because commercial real estate can be costly, you should price some locations before you write your business plan; however, you’ll need financing to rent the space. Keep in mind that in some cases, your business address may affect the way prospective customers view your business.
One of the things that can sink a small business is paying too much in rent, something that can happen if you overestimate the space you need. Be realistic, crunch the numbers, and remember that you can always upsize as your business grows.
4. Decide on a Legal Structure
A business is a legal entity, so the next step is choosing the best small business structure for your needs and goals. You can choose from several types of business entities in Utah. Here are your options:
- Sole Proprietorship
- Limited Liability Company (LLC)
- C Corporation
- S Corporation
Each of these business structures has its pros and cons. For example, owners of Limited Liability Companies have the option of being taxed as a sole proprietor, a c-corporation, or an s-corporation. If you own the business along with someone else, then you might also be taxed as a partnership. As a sole proprietor, a partnership, or an LLC in some cases, you generally won't have to pay business income taxes because these are known as “pass-through” structures. Instead, you'll report your business income on your individual tax return and pay tax at the individual level only.
If you're not sure which business entity to choose, you should consult with a lawyer or an accountant to discuss your options and the financial implications of each structure.
5. Decide on a Business Name
The next step to starting a business in Utah is selecting a business name. The name you choose should reflect the nature of your business. However, keep in mind that you may have two names: a corporate name and a DBA. DBA stands for "doing business as" and is the name you'll use to brand your company.
To organize your business in Utah, you'll need to go to the Utah Secretary of State's website and conduct a business name search. Whether you form an LLC or a corporation in Utah or choose another business type, your business name must be registered with the state.
If you choose to incorporate in a state other than Utah, the same process applies. To search for the business name you want, Google "State Name + Secretary of State" to find the website and search. Keep in mind that you may need to search variations on your business name to be sure your business name won't be confused with another business in Utah.
6. Register Your Utah Business
No guide to starting a business would be complete without a section about business registration. After you check the name of your business and choose a business type, you'll need to register your business with the Secretary of State's office. The requirements differ according to business type. For example, if you form an LLC you'll need to submit formation documents that include articles of organization and an operating agreement.
It’s important to check the registration requirements for your business to make sure you've covered everything. Proper registration is necessary to secure business financing, get a business bank account, and more. We recommend that you work with an attorney to make sure your business is set up properly, but the state does allow you to set up the business yourself if that is the route you choose to go.
7. Obtain Your Federal Employer Identification Number
The next step in our guide to how to start a business in Utah is applying for a federal Employer Identification Number or EIN. You'll need this number if you choose any business structure other than a sole proprietorship, although you may choose to get an EIN as a sole proprietor.
The EIN is also known as a tax ID number and it's what you'll need to file your business taxes. You may also need to provide your EIN to vendors and customers. You'll get your EIN from the IRS, but you'll also need to visit the Utah State Tax Commission website to provide the necessary information to the state.
8. Open Company Bank and Credit Card Accounts
Once you have your EIN, you'll be able to open a business bank account for your new company. Applying for a business credit card is also smart, so you have the buying power to purchase office supplies, raw materials, and inventory. Your personal credit will likely determine your eligibility for business credit and the amount of credit you can qualify for.
It's essential to establish good business credit as a business owner. Business owners can struggle without good credit regardless of what type of business they have. Poor credit can make it challenging to pay for necessary items and may lead to cash flow issues that make it difficult to keep your business afloat.
9. Choose an Accounting System
Choosing the right accounting system is a necessary step when starting a business. Your business account software is what you'll use to track your spending and expenses, account for cash you receive, and cut checks. You may also use it to pay employees and your taxes.
Many of our clients who are business owners in the Beehive State prefer QuickBooks Online because it offers an array of business-friendly functions and reports. As a new business owner, you may prefer something easy to use and understand.
Whatever accounting system you choose, make sure you can link it to your business banking account and business credit card accounts. Doing so will make it easier for you as a business owner to manage every aspect of your business finances, from paying taxes to managing inventory.
10. Choose a Payroll Provider
For business startups, employee payroll is one of the areas where mistakes are most likely to occur. Whether you have a few employees or thousands, you need to be sure that you're paying them promptly and properly. You will also need to track, pay, and file your payroll taxes.
Hiring a payroll provider makes sense because the companies that handle payroll are experts when it comes to calculating, withholding, and filing taxes. Many businesses choose not to handle payroll in-house because of the risk of potentially costly mistakes.
11. Obtain Necessary Business Licenses and Permits
Both registration of your business and obtaining a certificate of the organization are necessary for small businesses, but you'll also need to get your business license and any necessary business permits. Most businesses are regulated, so you'll need to operate within regulations to avoid penalties and fees.
For example, a Utah LLC that provides security services would need to obtain a Security Guard License. To keep your license current, you need to enroll in continuing education and submit the necessary fingerprints to the licensing agency. Requirements can vary greatly from industry to industry. Businesses are required to educate themselves about all licensing and permitting requirements, pay a filing fee if it's required, and always keep their licensing up to date.
How Much Does It Cost to Get a Business License in Utah?
You may be wondering how expensive it will be to obtain a business license in Utah. The cost depends on the type of business you own and can range from $22 to $52. The filing fee is non-refundable.
The cost of permits can vary greatly, so we recommend researching those based on the type of business you plan to open.
You can find information about licensing requirements for businesses in Utah on the Utah.gov website, here.
12. Taxes and Reporting
Tracking and paying taxes is your responsibility as the owner of your business. The requirements may seem burdensome, but it's essential to understand your responsibilities. If you don't, your assets might be at risk.
The taxes you may be required to pay include:
- Federal income taxes
- Federal payroll taxes
- State income taxes
- State payroll taxes
- State sales tax
- Personal Property Tax (on equipment and supplies)
- Other taxes
Certain business expenses may be exempt from sales tax. For example, if you operate a farm business, the fuel and certain things used in agricultural processes are not taxable under Utah law.
Keeping up with tax reporting requirements and payments can be a challenge even for experienced business owners. Cook Martin Poulson offers both Income Tax Services and Payroll Services to ensure that our business clients keep up with their tax reporting and filing requirements.
Many small businesses have struggled as a result of the COVID-19 pandemic, which is why it's even more important that they take full advantage of the many available tax credits. Many small business owners are unaware of tax credits and wind up paying more in taxes than they need to. Check out our blog post about 13 Small Business Tax Credits in 2022 You Shouldn’t Overlook
Obtaining proper business insurance for your new venture is necessary because doing so provides liability protection for both you and your small business. You will need the following types of insurance:
- Workers compensation insurance
- General liability insurance
- Professional liability insurance (required for some industries)
Your insurance should protect your employees, business, and personal assets from losses and lawsuits. Your workers' compensation insurance is what will pay your employees if they are injured on the job and unable to work.
It may be tempting to skimp on insurance but it's not a good idea. A significant accident or dispute could cost you thousands or even millions of dollars and might even cost you your business. A good accounting firm can help you evaluate your business risks and insurance needs so you can purchase the right insurance.
14. Branding and Marketing
The steps we have included so far are all you'll need to establish your business in Utah or any other state. However, if you want your business to be successful, you'll need to do everything you can to define who you are, differentiate yourself from competitors, and attract new clients or customers.
Your company brand is the sum of everything people know about your company. Defining your brand clearly and completely is a must if you want to beat out your competitors and turn your business into a success story. Branding includes:
- Your company logo
- Your company colors
- Your company slogan
- The tone and voice you use on your website and social media posts
- The way the public perceives you
For example, Nike's brand is based on empowerment which is why its slogan is “Just Do It”. A quick perusal of their company website and social media will show a consistent voice and message that helps people understand what Nike offers.
Once you've defined your brand, you'll need to market your products or services. Your marketing strategy should include content marketing. The content you use to promote your brand may include blog posts, white papers, videos, photos, and infographics. It may also include eBooks, webinars, and podcasts.
In addition to content marketing, you should think about paid advertising on social media or a search engine such as Google. Google advertising and Facebook advertising are both effective, affordable, and easy to do.
15. Establish an Online Presence
The final step in our guide on how to start a business in Utah is to establish your online presence. Your online presence is about more than just your website. The days of starting a business without a web presence are over. Customers and clients will expect to find your business online.
Your online presence begins with your website, which you should think of as your home office online. Your website should provide useful information about who you are as well as about your products and services. It should be properly optimized for local searches by including important local keywords.
A big part of establishing an online presence while starting a small business in Utah is thinking about how your potential customers and clients will find you. You'll need:
- Standardized business listings in online directories
- A system for soliciting and managing online customer reviews
- A well-thought-out social media presence
The easier it is for people to find you, the more likely it is that you'll achieve your business growth goals.
Do you want to find out the tax strategies for your small businesses? Check out our post: 17 Small Business Tax Planning Strategies to Slash Your Tax Bill , to learn how you can reduce your tax liability.
How to Start a Business in Utah: The Final Word
Starting a new business in Utah requires careful planning and execution. This guide explains how to start a business in Utah without missing any essential steps. We've included everything that you'll need to do to establish your business, handle the legal elements of business formation in Utah, and promote and market your business to the people who are most likely to buy your products or use your services.
At Cook Martin Poulson, we provide an array of services to assist Utah business owners with starting a business. Hiring a professional accounting firm will help you avoid potential pitfalls and start your new business off on the right foot, we'd love to hear from you.