How to Start a Business in Utah in 13 Easy Steps

Utah ranks in the top 10 of WalletHubs, Forbes, and CNBC’s “Best States to Start a Business in.”

The Beehive state’s consistency comes from lower than national average business costs, a friendly tax climate with a low 4.95% corporate tax rate, an educated workforce, and a robust economy (our nation’s strongest in 2022). 

All combine to make Utah the 4th fastest growing state in the country, with Salt Lake City the 5th fastest growing city!

And with 99.3% of Utah’s businesses (324,821) being small businesses, with a first-year survival rate of 83.2% (again, above the national average of 81.6%), starting a business in Utah could be the best decision you’ll ever make. 

But to start a business in Utah takes specific steps, all of which you’ll find right here, plus helpful government department links and funding programs. 

Starting a business can be a daunting task, we created this simple step by step guide to help you get started easily.

The steps:

1. Come up With Your Business Idea
2. Create a Business Plan 
3. Choose a Business Name
4. Choose a Business Structure
5. Register your business with the Utah Secretary of State
6. Set up Banking, Credit Cards, and Accounting
7. Get Funding for Your Utah Business
8. Get Insured
9. Obtain Permits & Licenses
10. Comply With Utah Tax Regulations
11. Build Your Utah Team
12. Market & Grow Your Business
13. Launch Your Business

Step# 1. Come up with your business idea

Your first step in starting a business in Utah is choosing a business idea.

Take your time to explore different business concepts and niches. For example, will you sell a product or a service? On or off-line? Or combine both!

Also, make sure your idea suits your interests, skill sets, and passions because starting a business is a 24/7 commitment, and your motivation is 99% why it’ll succeed. 

Mark Manson – Author of the best-selling book “The Subtle Art of Not Giving a F***” puts it this way:

“To want the benefits of something, you must also want the costs.”

Mark is saying to consider what you’ll need to give to your chosen business idea to ensure success before investing because your business will become an integral part of your life!

Once you have a business idea, evaluate its chances of success based on your target audience’s demographics and the needs and interests of your community. 

To help you with that, here are some business ideas that often do well in Utah.

Popular Utah business ideas:

Accommodation, tourism, food services, construction, social assistance, and health care are the largest Utah employers; other popular Utah business ideas are:

• Airbnb
• Guest house
• Tour guide
• Outdoor equipment sales
• Home-based catering business
• Food delivery business
• Landscaping service
• Handyman service

Your next step is to run your business idea through a business plan to validate it and ensure it’ll be worth your investment.

Step #2: Create a business plan

A business plan is your entrepreneurial vision on paper, showing what your idea needs to start, how it’ll operate, and how it will make money.

It does it by calculating your startup costs, accessing your competition, defining your target audience, and identifying engaging marketing strategies.

It also gives prospective lenders the information they need to decide whether to invest in your business. 

Two types of business plans exist, traditional and one-page, and both have 3 sections that help you validate your business idea.

Market research

Who are your customers, their demographics, and what wants or needs do they need satisfying?

You need those answers to confirm your business idea solves a problem people will pay for at the right price. 

Market research answers those questions by surveying prospective customers, competitors, and industry trends.

Marketing plan

Your marketing plan outlines your strategies for attracting your target audience by using the results from your market research over time to ensure you get the best returns from your advertising investments.

Financial plan

What`s your projected profitability? 

Your business plan must answer that crucial question to show how, when, and how much money your business can make over a specific time (usually monthly, quarterly, and annually). 

A financial plan includes 5 essential budgets:

• Investment budget: A budget outlining your startup costs.
• Financial budget: This shows how you’ll get the money to start your business in Utah.
• Operating budget: Calculates your fixed and variable expenditures.
• Cash flow budget: A forecast of your potential income, essential for getting a business loan.
• Personal expense budget: Outlines what you’ll need to take as a wage and any other personal expenditures to run your business.

Once you know your business idea is viable, it’s time to choose your location.

Choose a location

The right location is essential to most startups, especially those in the retail and food industries, which require a high footfall of passing trade, easy access, and adequate customer parking.

Your choice of location also depends on your target audience and must be in an area they expect to find it. 

Utah isn’t short on options, with 5 cities in WalletHub’s top 10  list of “best small cities to start a business,” and 3 are in the top 5!

The best cities to start a business in Utah are:

• Washington.
• St. George.
• Provo-Orem.
• Cedar City.
• Logan.
• Lehi.

Utah zoning laws:

Once you have a location in mind, check zoning laws by contacting your local planning/zoning department to ensure your business type can operate and which permits you might need.

Home-based businesses must also comply with zoning laws. However, most residential laws allow entrepreneurs to run a business from home if it’s non-polluting, doesn’t have regular customers, negatively affects neighbors, and the property’s primary use is residential.

Decide if you’re an online-only business

Your business idea often determines whether you are an online-only business, a brick-and-mortar, or both. You can also start from one and expand later on.

Online business owners will need the following to operate and succeed in Utah:

• Website: Your brand’s digital shopfront, where you advertise your products or services, display testimonials, and enable consumers to place orders or make appointments.
• Social media presence: Facebook, Instagram, and TikTok can all help you create an online community to promote your latest products and encourage others to share them.
• Supply and Distribution Plan: Any business selling products needs a supply chain and distribution plan to ensure on-time delivery.
• Online Tax Laws: Sales tax applies to products transferred electronically, specific services, and retail sales for use or consumption in Utah.
• Utah-specific regulations: Businesses that sell goods and taxable services must register on the Taxpayer Access Point (TAP) online portal to apply for a sales tax number.

Your next step is coming up with a catchy business name:

Step# 3. Choose business name

Your business name should be available as a domain, suit your niche and target audience, be memorable, easy to say and spell, and convey your brand’s purpose and principles. 

Legal entities like LLCs must choose a business name before registering with the Utah Secretary of State. 

While complying with Utah state’s business naming rules:

• Be original: Your name must be unlike any other registered with Utah state; you check it using the business name search on the Utah Division of Corporations and Commercial Code’s website.
• Include certain words: Limited liability companies, corporations, and limited partnerships must incorporate their official titles of approved abbreviations (LLC, Company, L.P.) in their names.
• Exclude specific words: You cannot use words that insinuate your business is something it’s not, like bank, credit union, insurance, institute, or trust, nor those associated with government departments such as FBI, CIA, or DIA.
• Reserve your name: You can reserve your business name (if available) by filing an Application for Reservation of Business Name and paying the $22 processing.

Use a DBA in Utah:

Sole proprietorships and general partnerships can use a doing business as (DBA) allowing them to use a brand name by applying online using the Utah Division of Corporations and Commercial Code portal or by mail using a paper application.

Avoid trademark infringement:

Before registering your business name with Utah state, run a federal and trademark check to avoid infringement upon one registered in another U.S. state.

Step# 4. Choose a business structure

A business structure is a legal or non-legal entity you run your business under, and you’ve several to choose from when you start a business in Utah. 

Each structure has its benefits and disadvantages; let’s look and see which suits your startup.

Forming an LLC is a popular option for small and medium businesses, but there are other options to consider. 

The most common types of business structures

• Sole Proprietorship: Sole proprietors are individuals who start a business without registering a formal entity with the Utah Secretary of State’s office. The benefit is you have no filing fees and pay tax on your personal tax return; the disadvantage is you have no liability protection, so your assets are at risk if someone sues your business or if it incurs debts.
• General Partnership: General partners are 2 or more individuals who, like a sole proprietorship, start a business without applying to register a formal entity. Like a sole proprietorship, they have no filing fees or liability protection.
• Limited Liability Partnership (LLP): An LLP is a legal entity with liability protection where no partner is liable for another’s negligence or misconduct. Businesses that use the LLP structure include accounting and law firms, doctor’s offices, and any professional business with multiple partners.
• Limited Liability Company (LLC): An LLC is a legal entity you must register with the Utah Secretary of State’s office. It provides liability protection to the owner (in cases of a single LLC) or members (in multi-member LLCs) who pay due taxes on their tax returns.
• Corporations: Corporations (S corporations being most popular with SMB owners) are legal entities separate from their owners, with similar responsibilities and rights to individuals. Corporations can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes.

Tax advantages of each option

These business structures (including S corporations) avoid double taxation because they use the pass-through tax structure, which means all profits and losses pass to the owners, members, or shareholders, who report them on their tax returns.

Learn more here about how to start an LLC in Utah. 

Step#5. Register your business with the Utah Secretary of State

Entrepreneurs who choose a formal business structure must register with the Utah Secretary of State. Sole proprietors and general partners (informal business structures) don’t have to do this.

Here’s how to register:

• You form an LLC in Utah by filing a Certificate of Organization online or by mail.
• You form a corporation in Utah by filing Articles of Incorporation online or by mail.

Okay, great. Once you’ve chosen your business idea, its name and registered it (in cases of formal entities) with Utah’s Secretary of State’s office, your next steps are setting up your business banking and accountancy systems, applying for funding (if needed), and meeting your business insurance requirements.

Pro-tip:

For more information on registering your business in Utah, visit the Utah Division of Corporation and Commercial Code website.

Step# 6. Set up banking, credit cards, and accounting

Running a new business requires wearing many hats, including bookkeeping. One way to simplify the process is to open a business bank account, as it separates your startup and personal finances. Other ways are using a business credit card and an accountant to help with your taxes.

I’ll explain why next.

Business banking

Entrepreneurs forming a legal business structure (like an LLC) must separate their business and personal finances to protect their liability in cases of litigation or debt.

All business owners, however, can benefit from using a separate bank account, as it simplifies tracking your debits and credits and helps maintain a positive cash flow.

Credit cards

Besides a business bank account, credit cards help simplify your bookkeeping duties by separating your business and personal expenditures. 

Business credit cards also help you build your startup’s credit profile, which can help you qualify for cheaper business loans and lines of credit.

Accounting system

An accounting system is essential for record-keeping and tax compliance for every business. 

Most states require businesses to keep 3 years of financial records; to comply, you can use accounting software that integrates with your business bank and credit card accounts that record your invoices, working hours, and employee wages.

Step# 7. Get funding for your Utah business

Most new businesses need funding to start and run until they profit. How you get financing depends on your chosen business structure, your credit history, and your collateral. 

Fortunately, you have several funding options when you start a business in Utah.

• Self-funding: An entrepreneur with personal savings can use them to start their business and reinvest the profits to encourage growth. Self-funding helps avoid interest-rate loans and reduces your initial expenditure.
• Family and friends: Another way to avoid costly business loans is to ask family and friends to help fund your new venture’s startup costs.
• Traditional loans: Local and online banks provide conventional business loans with fixed repayment times and interest rates. New business owners often need collateral and a positive credit rating to get one.
• A business line of credit: Some businesses have seasonal income fluctuations, and a business line of credit helps cover any financial shortfalls during those periods.
• Crowdfunding: A free way to raise your business startup costs by registering with a crowdfunding platform, and if people like your idea, they donate.

Utah grants and state incentives:

New businesses that meet specific requirements can apply for Utah business grants and incentives, along with other investment programs; let’s look at what’s available:

• Utah’s Governor’s Office of Economic Opportunity: A list of grants and incentives throughout Utah state.
• Economic Development Tax Increment Financing (EDTIF): A post-performance tax rebate new businesses can apply for that includes payroll, sales, and corporate income tax.
• Utah Small Business Development Centers (SBDC): The SBDC provides startup support, including business consultation and training.

Small Business Administration:

• SBA-guaranteed loans: Entrepreneurs having difficulty getting traditional business loans can apply for an SBA-guaranteed loan, reducing the lender’s risk and increasing your chances of financing.
• SBA investment programs: The SBA also offers a range of investment programs that make equity investments, fund innovative startups, and encourage federal research and development in Utah.

Step# 8. Get insured

As a new business owner, one of your goals is to minimize your expenditures while ensuring you have everything you need to operate.

Insurance is one of those expenditures, and which policies you need depends on your business type and Utah’s mandatory requirements. 

Here are the most common types of business insurance:

• General liability insurance: Most service and brick-and-mortar businesses need general liability insurance (also known as slip and fall) to protect against damage to a client’s property and injuries in their place of work.
• Professional liability insurance: Covers professionals like financial advisors, solicitors, and accountants against client claims of negligence, errors, or omissions.
• Business interruption insurance: Provides financial help if you cannot work because of illness or natural disaster.
• Commercial property insurance: Protects your workplace against fire, theft, and natural disasters.
• Umbrella insurance: An optional insurance policy that provides an extra layer of financial protection should your other policies fall short.

Utah-Specific Regulations:

When you start a business in Utah and hire employees, you’ll need workers’ compensation and unemployment insurance.

Step# 9. Obtain permits & licenses

Licenses allow your business to operate, and permits enable you to provide specific services in certain locations. 

Which ones you’ll need depends on your niche and location. For example, 2nd hand stores will need a reseller’s license, a home-based bakery will need a health and safety permit, and a restaurant will need a liquor license to serve alcohol.   

Licenses come in 3 levels, while permits are local; follow the below links to see which your business needs:

• Federal licenses: The US Small Business Administration (SBA) provides a federal license guide.
• State licenses: Utah’s Government Requirements web page shows state licensing regulations and how to apply.
• Local licenses: Utah startups need a county or city business license to operate; contact your local licensing authorities for more information.
• Professional and occupational licenses: Entrepreneurs working in specific fields need a POL; you’ll find a comprehensive list on the Utah Division of Professional Licensing website.

Okay, now for everyone’s favorite subject: tax!

Step#10. Comply With Utah tax regulations

When starting a business in Utah, your first tax requirement is registering with the state using the OneStop Business Registration online application service. 

Next, talk with a Utah accountant to ensure you comply with local, state, and federal tax obligations.

Federal, state, and local taxes:

New businesses are often liable for federal, state, and local taxes, and some others, depending on your business operations, such as:

• Federal taxes: Business owners must pay self-employment and quarterly taxes to the IRS.
• State taxes: Utah ranks 8th in the nation’s “best states for taxes” because of its low individual income and corporate tax rates, at 4.85%.
• Local taxes: Utah also charges local business taxes, ranging from 1.25% to 4,20%.
• Sales tax: Businesses that sell tangible products or provide specific services to Utah residents must get a seller’s permit to collect state and local sales tax with a maximum combined rate of 7.19%.

Pro tip:

Visit the Utah State Business Income Tax webpage for more information on state and local business taxes.

Step# 11. Build your Utah team

A business is only as good as those who help run it.

For example, if you need employees to interact with your customers, you must ensure they appropriately represent your brand. Behind the scenes, you might need an experienced Utah accountant or marketing professional. 

You can hire people with the skills you need on a project basis, such as freelancers or contractors, to reduce your expenditures and liability. But for part or full-time employees, you must comply with Utah’s hiring and payroll regulations.

Utah hiring requirements

Business owners hiring Utah employees must report them within 20 days to the Utah Department of Workforce Services (DWS) using the Utah New Hire Registry reporting form.

Comply with payroll regulations

Payroll regulations ensure employees comply with federal, state, and local laws that govern how they pay their employees. Employers who violate these laws can face stiff penalties or, sometimes, jail time!

In Utah, payroll regulations include:

• Minimum wage: Utah applies the federal minimum wage of $7.25 per hour.
• Overtime pay: The overtime rate is 1.5 times an employee’s regular wage for hours worked over 40 per week.
• Payment dates: Employers must pay employees at least twice monthly on pre-designated paydays.
• Vacation/sick leave: Utah doesn’t require employers to pay employees vacation or sick leave.

Pro tip:

Using payroll software is a proven way to help comply with your employer’s payroll duties. Another is to hire contractors!

Hire Utah contractors

Hiring contractors is a great way to get the skills or services your business needs without the expense of hiring full-time staff.

But in Utah, you must classify your contractors correctly; this means you can’t report an employee as a contractor to avoid your employer’s payroll obligations.  

So, what is a contractor?

Contractors are independent individuals who engage in a profession, occupation, trade, or business similar to the services they provide (i.e., a plumbing contractor offers a plumbing service) and must be free from an employer’s control while performing their services.

Step# 12. Market & grow your business

Marketing is how you create brand awareness, drive growth and profit, attract and keep customers, and enhance your target audience engagements. 

Effective marketing strategies suit your business type, ideal clients, and, most importantly, your budget. 

Here are 6 worth considering:

Consider making special offers to attract your first customers

Your business is the new kid on the block, and as consumers choose brands they already know or trust, you’re in a chicken-and-egg situation! So, how do you get that trust when you don’t have customers or reviews?

You can overcome this problem by offering special discounts that are too good to ignore, like opening day sales, group discounts, buy-one-get-one-free offers, flash sales to create urgency, and loyalty programs.

Invite customers to opt-in to a mailing list or newsletter

A mailing list is a collection of people’s email addresses you use to build trust by sending regular newsletters; think of it as a personal conversation between you and your ideal clients via their inbox.

You collect those emails using an opt-in box on your website and convince people to provide their addresses by offering free, unique content that helps solve some of your target audience’s problems. 

Speaking of content, let’s look at what it means and how it works next:

Create unique, helpful content to showcase your activity

Do you know the saying, “You’ve got to give to receive?” Well, in sales, it’s vital.

Marketing legend Zig Ziggler describes how it works perfectly:

“Give people tons of free value, and they will want to give you money.” 

It’s that simple and removes the 2nd hand car salesman vibe from your marketing strategies.

All you do is provide your target audience with your unique, helpful content, and they’ll naturally associate your brand with the one that can fix their problems.  

With this technique, your email list is paramount, but you can also showcase your content on platforms like TikTok, Facebook, Instagram, and YouTube, where your viewers can like and share it with their community.

Look for local businesses or brands to collaborate with

Partnering with local businesses is another powerful way to create the trust you need to convince your target audience to choose your brand over your competitors. It also works online by using social influencers to promote your products or services.

Look for brands that provide a product or service complimentary to your own (known as indirect competitors), then join forces to promote each other’s businesses to one another’s customer base. 

Invest in word of mouth (happy customers attract each other)

Did you hear about the new restaurant that opened on French Street? It’s amazing. 

That’s Word-of-mouth marketing. 

One person tells another about a service or product they bought or used in a positive light. That person then uses your brand because they trust their friend’s recommendation.  

You invest in WOMM by providing excellent service, products, and aftercare sales.

Pay attention to online reviews; ask happy customers to review you

Whether you’re an Amazon seller, a local restaurateur, or an Airbnb host, every business needs positive reviews to convince prospects to choose them over their competitors.

Your job is to ensure you get reviews every time someone buys your products, uses your establishment, or hires your service by asking customers to review you and providing them with links to all your review platforms, such as Google My Business, on your website, on independent review sites, and social media accounts.

Step# 13. Launch your business

You have 2 choices when launching your business in Utah: sit back and wait for people to find you, or be proactive and throw a party, and everyone loves a party!

Plan a successful launch event

Traditionally, big brands throw launch events to create a buzz around a new product or service. However, any business can do it to create local awareness of their opening and make those first sales.  

How to throw a launch event:

• Know your purpose: Decide what you want to achieve by throwing a launch event, then build it around your objectives.
• The venue: Use a venue that suits your business; for example, a San Francisco dog grooming business could use Almo Square Park (it’s dog-friendly) and be where their target audience can see them.
• Make it fun: Use entertaining activities your guests can interact with and share across social media.
• Promote, promote, promote: Get creative and spread the word using social media, local press, flyers, and partnering with other businesses.
• Get branding: Give away free branded merchandise to organically your brand throughout your community.
• Use it in your advertising: Photograph and video key moments in your event, then share them across all your marketing platforms.

Utah Local Resources

State and local government offices:

State of Utah Website

Department of Commerce

Department of Veterans and Military Affairs

Be Ready Business: Emergency Preparedness

Governor’s Office of Economic Opportunity

U.S. Commercial Service Utah at Export.gov

Procurement Technical Assistance Center

Salt Lake City Department of Economic Development

Important Utah Contacts:

Utah Secretary of State

Utah Division of Corporations & Commercial Code

Utah Governor’s Office of Economic Development

Utah Small Business Development Center Network (SBDC)

Utah Chambers of Commerce

Utah State Tax Commission

Utah Labor Commission

Small Business Administration (SBA) Utah District Offices

Online Business Registration—Utah Division of Corporations

Conclusion

And that’s how to start a business in Utah.

Remember to begin by validating your business idea, then follow our steps and take advantage of available Utah business grants and incentives, and before long, you`ll be in business. 

I’ll leave the last words to a marketing genius.

“You can have everything in life you want if you just help other people get what they want.”-Zig Ziggler.

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