This post was originally published January 02, 2019, and extensively updated November 02, 2020.
The dream of business ownership is one that many people have. The idea of working for yourself and calling the shots is appealing and might be the thing that allows you to live the life you want.
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
1. Decide on a Legal Structure
If you want to know how to start a small business in Utah, the first step is choosing the best small business structure for your needs and goals. Utah offers an array of business entity types to entrepreneurs. 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, if you form an LLC, you'll have the option of being taxed as a sole proprietor or a corporation. If you own the business along with someone else then you might also be taxed as a partnership. As a sole proprietor or a partnership, you generally won't have to pay business income taxes, per se. Instead, you'll report your business income on your individual tax return.
If you're not sure which business entity to choose, you may want to consult with a lawyer or an accountant to discuss your options and the financial implications of each structure.
2. 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 search for the business name you want to use. 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.
3. Register Your Utah Business
No guide to starting a business would be complete without a section about business registration. After you check the name for 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 types. For example, if you form an LLC you'll need to submit articles of organization.
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 setup properly, but the state does allow you to setup the business yourself as well.
4. 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 whether you organize as a sole proprietorship, an LLC, or a corporation.
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 necessary information to the state.
5. Open Company Bank and Credit 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 smart to do at this time as well, so you have the buying power to purchase office supplies, raw materials, and inventory. Your personal credit will likely determine your eligibility for this, as well as the credit limits that will be granted.
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 difficult to pay for necessary items and even more difficult to pay your federal and state taxes.
6. Choose an Accounting System
Choosing the right accounting system is a necessary step when starting a business. Your accounting system 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 do everything from filing your income tax returns to paying your bills.
7. 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.
8. 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 fingerprints to the licensing agency. Requirements can vary greatly from industry to industry. Businesses are required to educate themselves with all licensing and permitting requirements, pay a filing fee if it's required, and always keep their licensing up to date.
You can find the necessary information about licensing requirements for businesses in Utah on the Utah Gov website, here.
9. 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.
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:
- Workers compensation insurance
- General liability insurance
- Professional liability insurance (required for some industries)
Your insurance should protect your employees and your assets from losses and lawsuits. Your workers comp 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 to evaluate your business risks and insurance needs so you can purchase the right insurance.
11. 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 their 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. Content that 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 search engines. Google advertising and Facebook advertising are both effective. Also, social media advertising is affordable and easy to do.
12. 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 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.
Starting a new business in Utah requires careful planning and execution. This guide tells you 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 get your new business off on the right foot. Click here to schedule an appointment -- we'd love to hear from you.