How to start a business in Utah in 8 steps
You’re in great company if you’ve set your sights on opening a brand new business in Utah. Utah small businesses make up a whopping 99.3% of the economic landscape, with over 310,000 small establishments employing around 600,000 workers—which means small businesses are responsible for over 45% of the whole state’s payroll. Phew—that’s a massive piece of the economic pie!
Starting a small business isn’t easy—but it can be accomplished so long as you’re honest about your strengths (and weaknesses) and pay attention to the forms, licenses, and tax requirements every business must accommodate.
Sound like a lot? Don’t worry; Huckleberry is here to help. Below, we break down 8 steps to get your business plans off the drawing board and into the real world.
1) Think about the type of business you want to start
Whether you have the exact details of your dream fusion restaurant already decided, or you’re still trying to nail down the more nuanced characteristics of that product design, it’s good to have a clear vision of what your business idea will bring to the table—literal or otherwise.
What problem does your business or product help solve? What gap does it fill in the life of your community? Is there a distinct need for this kind of business, or would it seem redundant among similar concepts? In short: How will your company create enough demand to keep it viable? Doing some research on your potential competitors and crunching numbers on your upfront and continual cost of operation will help you get a better picture.
Beyond considering the demand for your product or service, it’s important to consider how a specific type of business or industry gels with your personality, talents, and lifestyle. Take into account the curveballs that a new business might experience—doing something you genuinely enjoy will help guide you forward despite bumps in the road.
So long as your idea is marketable, personally fulfilling, and financially realistic, it’s good to create an airtight business plan—outlining your industry outlook and market research, business structure, and financial planning. A business plan gives you credibility and helps you get the business loans or grants you might need.
Before you do that, an essential part of your business plan is deciding how to…
2) Set up your legal structure
How you structure your business affects how you handle big things like taxes and financial liability. So, it’s essential to choose a business model that works best for everyone involved. Here are the formats you have to choose from:
- Sole proprietorship: This is the simplest option. You (the business owner) receive all business profits, and taxes come straight from your personal finances. The downside is that you have no protection of your personal assets should you get sued by a client or suffer financial loss. You’ll file taxes using your social security number.
- Partnership: Functions similarly to a sole proprietorship, except that you will be sharing responsibilities with another person. Like a sole proprietorship, this structure does not protect your personal finances as there is no legal separation between your business and personal assets.
- Corporation: A business structure in which shareholders own the company and the company functions as its own legal entity apart from the members. This is a good option for business owners looking to expand financially and otherwise with the help of investors. You’ll need to file your articles of incorporation with the Utah Division of Corporations and Commercial Code.
- Nonprofit: Suppose your business is focused on social causes and expanding services from donations rather than financial gain. In that case, you may want to register as a Domestic Non-Profit Corporation with the state of Utah. Some nonprofits may be exempt from paying sales and other taxes.
- Limited Liability Company (LLC): A popular choice with small business owners, this business model combines the ease of taxation and autonomy of a sole proprietorship with the personal liability protection of a larger corporation. Still, you’ll need to structure your LLC in a way that works for you—find out how to structure and set up your LLC in Utah here.
3) Name and register your business
Once you’ve decided on the business model that matches your needs and finalized your market research, it’s time to determine your business name.
First, make sure that another business doesn’t already own your potential name by running a search through the Utah Division of Corporations and Commercial Code’s (DCCC) records. Then, run a trademark search through state and federal records on the U.S. Patent and Trademark Office website and the Utah DCCC’s Trademark Manager. It’s also good to run a quick social media and website search to check that your name isn’t already being used in another business’s online marketing.
Keep in mind that your business structure affects your naming options. For example, a Limited Liability Company must always contain the words “Limited Liability Company” or an abbreviation (“LLC”), and a corporation must include the word “Company.” Universally, you cannot use special titles with legal strings attached like “University” or “Bank” unless you submit special paperwork.
Additionally, suppose you’d like more time to think things over. In that case, you can reserve your name temporarily by turning in an Application for Reservation of Business Name to the Utah DCCC. Suppose your business is a sole proprietorship or partnership, or you’d like to do business under a different name. In that case, you may also file for an “assumed name” (as it is referred to in Utah) by filing a DBA. This indicates you’ll be “doing business as” a different name) with the Utah DCCC.
Once you’ve settled on your name, it’s time to make things official by registering your business with the Utah Department of Commerce. Again, how you register your business will depend on your business structure. For example, LLCs will need to submit a Certificate of Organization and pay a filing fee of $70. Corporations will need to file Articles of Incorporation for the same fee. So, make sure you’ve squared away all appropriate applications depending on your business model.
These applications ask for additional details about your business, including the name of your business’s registered agent. A registered agent is simply a person who has a physical address in Utah and who will accept legal documents on your business’s behalf. And, yes—you can be your own registered agent.
Last but not least, apply for your Federal Employer Identification Number with the Internal Revenue Service. Your EIN will function as a social security number for your business and allow you to hire employees and pay federal taxes—among other essential business functions—so be sure to apply through snail mail or at the IRS website.
4) Apply for licenses and permits
It’s vital to ensure you have all the business licenses and certifications necessary to run your Utah business legally. For example, bars and pubs require liquor licenses, and restaurant workers in Utah must have food handlers’ licenses. The last thing you want to do is face a lawsuit or shut down operations because you accidentally overlooked a necessary permit! So, to stay in the good graces of local, state, and federal authorities and the general public, it’s essential to be up-to-date on all your professional documentation.
Check Utah’s Division of Occupational and Professional Licensing (DOPL) and the US Small Business Administration’s guides for your industry’s legal requirements; don’t forget to touch bases with your local municipality for any additional mandates. Remember that specific permits and certifications must be renewed annually (or every few years).
5) Choose a location
Whether you’d like to open a boutique in Salt Lake City or a daycare business in West Jordan, choosing the perfect location for your Utah company is a balancing act. It would help if you chose somewhere your service is needed, where the commute will be manageable for you and your partners, and where you’ll attract your target market. Be sure you can cover rent and utilities wherever you situate your brick-and-mortar business—and that the location is big (or small) enough to match your target growth for the time being.
Also—keep an eye on zoning restrictions. Whether you've chosen a storefront for daily operations or you simply want to do business out of your home, double-check rental agreements and zoning bylaws to ensure you’re in the clear.
6) Open a bank account and prepare for future taxes
Unless your business is a sole proprietorship or partnership, entrepreneurs need to set up a business bank account. This helps to keep your personal and company finances separate. Thus, it protects your personal finances if your company faces litigation and helps keep track of business expenses for tax purposes. Getting a business credit card can help keep track of costs, as well, and help build your business’s credit so you can apply for bigger and better loans and grants down the line.
From here, make sure you’re filing the correct tax documentation for your company’s business model. For example, sole proprietors will pay taxes on their business income through their personal income tax by filing a TC-40 form. At the same time, corporations may need to pay a franchise tax in addition to their state and federal taxes. So, double-check your business entity’s unique requirements depending on its structure.
Note: All businesses with employees must pay state employer taxes, and if you’re selling any items, you’ll need to apply for a sales and use tax license.
Finally, it might be a good idea to invest in accounting services or an accounting system if staying on top of taxes and bookkeeping isn’t your thing—which is okay!
Head to the Utah State Tax Commission website for any additional information about your industry (and find the forms you’ll need to file your Utah state taxes).
7) Purchase business insurance
Small business insurance protects your company in the face of life’s strange twists and turns—including property damage, litigious clients, hospital bills for injured employees, and more.
Many different kinds of insurance can cover liabilities unique to your industry—like a restaurant endorsement, which helps take care of food loss or equipment breakdown that restaurant owners may contend with. Depending on your industry, you may be required to purchase specific policies. Regardless of legal requirements, this might be the most critical step in securing your business because no company always has smooth sailing. Let’s take a look at your protection options:
- General liability insurance helps pay out for court fees or fines if a client sues you for property damage or bodily injury.
- Workers’ compensation insurance is not only legally required in Utah if you have employees, but it’s a good idea. Why? It helps pay out for costs associated with injured employees. It protects your business from covering expensive hospital bills, rehabilitation, or doctors’ visits.
- Business interruption insurance helps cover payroll and other costs associated with stopping daily operations for a covered reason.
- Business property insurance and business personal property insurance help cover your building and the business-related stuff inside it if disaster strikes.
- A Business Owners’ Policy is a convenient bundle of necessary insurance coverages that most business owners want on stand-by.
Basically: If you can’t pay for any of these expensive emergencies with very little notice, you need small business insurance—just in case.
8) Create a marketing plan, hire employees, and more
You’re in the home stretch! Congrats on making it this far in building your startup business from the ground up. You’ve only got to develop your rockstar team and establish your brand from here.
While conducting interviews and building your team, report any new hires to the Utah Department of Workforce Services within 20 days of a new employee’s first day of work. You can find the form here. Additionally, the state of Utah offers many resources for employers trying to smooth the process of building their Utah business team.
For some business owners, this is when they’ll pull out the stops to establish their brand online, on social media, and in the community. If this is you, lock down any social media handles and domain names you have in mind and print business cards. Finalizing a budget for social media ads or spotlights with local media outlets could be something to consider, as well.
For others, it’s enough to have made it this far, and they’ll work on slowly building their presence in the community—and that is okay, too.
After you’ve done all the hard work of collecting your licenses and permits, registering your business, and paying your taxes, it only makes sense to secure your progress thus far with comprehensive small business insurance. From workers’ compensation insurance (which all Utah business employers must have) to general liability and beyond, Huckleberry is here to protect your hard work with the best small business insurance. It’ll only take a few minutes to get a quote—and it’s more than worth the peace of mind.