Back to Tax Training Workshops and Online Classes
Welcome to Starting a Business in Utah, prepared by the Utah State Tax Commission. This online workshop is designed for people interested in starting a business and new business owners. The workshop includes an overview of Utah State Tax Commission resources, types of business entities, registering a business in Utah, tax compliance, taking care of state taxes (sales and use tax, withholding tax, income tax) and record keeping requirements.
Visit the Utah State Tax Commission website at http://tax.utah.gov to access forms and publications, file returns online, learn about Utah taxes and more.
Many online services are available from the Tax Commission. Visit the online services site to file Utah tax returns, pay Utah tax liabilities, register a business, request a tax license, or access motor vehicle services such as renewing vehicle registrations.
The Tax Commission’s website includes a Research Library. Use the Research Library database to search rules, decisions, rulings and bulletins. There is also access to state legislation affecting taxes, the Utah Code and U.S. Tax Code.
Go the Tax Commission website to learn about free tax workshops.
Representatives in the Taxpayer Services Division are available to assist taxpayers from 7:00 a.m. to 6:00 p.m. Mountain Time, Monday through Thursday, excluding state holidays.
Taxpayers can call (801) 297-2200 or 1-800-662-4335 with tax inquiries. For information specific to sales and use tax, taxpayers are encouraged to:
Please note that email is not secure. Do not include account numbers, social security numbers, or request account changes when corresponding through email.
Publication 38, Doing Business in Utah is ann excellent resource for new business owners and people interested in starting a business. Several Utah government agencies, including the Tax Commission, and the federal government contribute to this publication. It has information on how to evaluate a business idea; create a business plan; finance a business; forms of business entities; requirements of local, state and federal governments; and a directory of resources.
There are many forms of business ownership. A business can be a established as a sole proprietorship, partnership, limited liability corporation (LLC), or corporation.
The type of business entity you select will affect legal and tax issues. Each business entity has advantages and disadvantages. Before you decide the type of business entity you want to establish, you can:
Most businesses need a Federal Employment Identification Number (FEIN) from the Internal Revenue Service (IRS). To see if your business will need a FEIN, go to the IRS website at http://www.irs.gov and search for FEIN.
There are three ways to register your business in Utah: online, in person, or by mail.
To streamline the registration process, go online to OneStop Business Registration. At this site you can obtain your FEIN and register with all state agencies including the Utah State Tax Commission, Utah Labor Commission, Utah Department of Commerce, Utah Department of Workforce Services, and Utah Department of Environmental Quality.
When registering online, you will receive license and account numbers needed to contact your county and/or city for business license information. Your state licenses will be mailed to the address you list during registration.You have registered with federal, state and local governments, and are ready to launch your business. Congratulations! As you begin, please remember – compliance is key to the success of your business.
Businesses can get in financial trouble due to non-compliance with Utah law. Errors such as not filing tax returns, not paying tax due, and other non-compliance issues can be very costly.
The Tax Commission can assess interest and penalties for failure to file a tax return, failure to pay taxes by the due date, under-payment of taxes due, and failure to file an information return. For more information, please see Publication 58, Interest and Penalties.
Refer to page 75 of Publication 38 for a list of due dates for the IRS, Tax Commission and Department of Workforce Services.
Be sure to contact the city and county governments for your business location to understand local government requirements.The information in this section is from Pub 25, Sales and Use Tax General Information and the online Sales and Use Tax Workshop.
A seller is charged with collecting sales tax from the purchaser and remitting the tax to the state. If the seller does not collect sales tax on a taxable transaction, the tax becomes use tax and the purchaser is responsible to report and remit the use tax. Admin. Rule R865-19S-1.
Sales and use taxes are transaction taxes. Admin. Rule R865-19S-2. The tax is not on the item, but on the transaction and the purchaser (final consumer) is the actual taxpayer.
Sales and use taxes are trust fund taxes. This means the funds collected by the seller may not be used for any other purpose. The seller holds the collected tax in trust for the state until remitted to the Tax Commission.
The same exemptions and tax rates apply to both sales and use tax. The two taxes complement each other and both taxes cannot be applied to the same transaction.
Sellers are required to obtain a sales tax license if they have:
If required to obtain a sales tax license, sellers have four options:
There is no fee for a sales tax license; however, granting a sales tax license is conditional. Applicants or fiduciaries of applicants with a history of filing and paying late are required to resolve past delinquencies and/or post a bond.
After the Tax Commission processes the application, a sales tax license is mailed to the address on your application. You are now ready to make sales and collect sales tax from customers on taxable transactions.
A sales tax license is not transferable. If a business is closed, sold or ceases to operate, the sales tax license must be closed. To close a sales tax account, notify the Tax Commission in writing at:
Utah State Tax Commission
210 North 1950 West
Salt Lake City, Utah 84134
The point of sale location, which is the geographic location where the sale occurs, determines the tax rate collected from the final consumer. The point of sale location also determines whether sales tax or use tax applies.
If the point of sale is from an inventory in Utah, sales tax applies. If the point of sale is outside Utah and the item is shipped or delivered to Utah, use tax applies.
The same exemptions and tax rates apply to both sales and use tax. The two taxes complement each other and both taxes cannot be applied to the same transaction.
The point of sale location determines the tax rate to calculate the amount of sales tax collected on each taxable transaction. For sellers with one or more fixed places of business, sales are sourced at the place of business where the sale occurs.
For example: A seller has a business with outlets (stores) in Park City and Logan. A customer purchases an item at the Park City store and requests delivery to Moab. The item is located at the Logan store and shipped from Logan. The sales tax rate for Park City is collected and reported because that is the point of sale where the transaction occurred.
For sellers with a non-fixed place of business (e.g., vending machine operators, mobile tool companies, etc.), the point of sale is each location where a sale occurs.
Depending on the type of business, some sellers may also be required to collect sales-related taxes from customers.
For example: If the restaurant tax is imposed at the point of sale location, a seller will collect this sales-related tax in addition to sales tax for sales of prepared food in a restaurant.
Click here for more information on sales-related taxes.
Tax rates vary by geographic location. Click here for a listing of all sales and use tax rates and sales-related taxes in Utah.
Tax rates can change quarterly. The Tax Commission publishes Sales and Use Tax Rates and tax rate changes on its website. Sellers are encouraged to check the rates on a quarterly basis.
Utah law provides specific exemptions from sales and use tax. Some exemptions require the use of an exemption certificate. The most commonly used exemption form is TC-721, Exemption Certificate. For complete details on exemptions, refer to Utah Code §59-12-104.
There are three types of sales tax exemptions:
Sales tax returns can be filed on paper, or filed electronically using the Online Sales and Use Tax Return application. The sales tax license number is used to file sales tax returns monthly, quarterly or annually. Filing frequency is determined by the amount of tax liability. If the due date falls on a Saturday, Sunday or legal holiday, the due date becomes the next business day.
Every valid sales tax license holder files form TC-61, Sales and Use Tax Return. Other forms – such as TC-61 Schedule PS, Point of Sale, TC-61 PSD, Point of Sale Detail, and sales-related returns – may be required depending on the business type and structure.
Sellers may remit sales and use taxes by mail with a check or money order, in person at any Tax Commission location, or online through PaymentExpress. If using PaymentExpress to pay tax due, you must also submit a return - either electronically or on paper.
The information in this section is from Pub 14, Utah Withholding Tax Guide and the online Withholding Tax Workshop.
An employer must withhold Utah income tax if the employer:
Withholding taxes are trust fund taxes; the funds collected may not be used for any other purpose. The employer holds the collected tax in trust until remitted to the Utah State Tax Commission.
Every employer required to withhold Utah income taxes must obtain a withholding tax license. There are four options to request a withholding tax license:
There is no fee for a withholding tax license; however, granting a withholding tax license is conditional. Applicants or fiduciaries of applicants with a history of filing and paying late are required to resolve past delinquencies and/or post a bond.
After the Tax Commission processes the application, a withholding tax license is mailed to the address on your application. A withholding tax license is not transferable. If a business is closed, sold or ceases to operate, the withholding tax license must be closed. To close a withholding tax license, notify the Tax Commission in writing at:
Utah State Tax Commission
210 North 1950 West
Salt Lake City, Utah 84134
For each pay period, refer to the charts in Pub 14, Utah Withholding Tax Guide to determine the amount to withhold from an employee’s gross wages.
The amount of withholding taxes collected from each employee will vary depending on the frequency of payroll, amount of employee’s gross wages, employee's marital status, and the number of allowances declared by the employee. Employee’s marital status and number of allowances are found on the employee’s IRS form W-4 completed upon the employee’s hire.
The Tax Commission will annually mail a booklet with form TC-96, Employer's Return of Income Tax Withheld to each withholding tax license. In the booklet are the forms needed to file returns and report withholding tax.
Filers may request approval to electronically file withholding tax information and payments. To request electronic filing status, refer to Pub 43, Withholding Tax Electronic Funds Transfer.
The withholding tax license number is used to file monthly, quarterly or annual returns. Filing frequency is determined by the amount of tax liability.
In addition to periodic returns, all withholding tax license holders must file an annual reconciliation (year-end reporting). The annual reconciliation is filed using TC-96R, Employer's Income Withholding Annual Reconciliation Return.
The annual reconciliation return can be submitted on paper or electronically. If filed on paper, the return and associated documentation is due February 28. If filed electronically, the due date is March 31. Information on the annual reconciliation process is available in Pub 32, Annual Reporting and the online system is available at W-2 Online File Transfer.
If a due date falls on a Saturday, Sunday or legal holiday, the due date becomes the next business day.
Withholding tax license holders may remit taxes by mail with a check or money order, in person at any Tax Commission location, or online through PaymentExpress. If using PaymentExpress to pay tax due, you must also submit a return.
As discussed in Section 4, a business can be a established as a sole proprietorship, partnership, limited liability corporation (LLC), or corporation. The type of business entity selected will determine which income tax return is filed with Utah.
TC-40, Utah Individual Income Tax Return due by April 15
If all members of the partnership or LLC are Utah residents and the LLC is taxed as a partnership, a Utah tax return is not filed.
Partnerships and LLCs with non-resident members must file TC-65, Partnership/Limited Liability Return. The return is due the 15th day of the fourth month following the close of the fiscal year, or by April 15th for a calendar year business.
Corporations will file TC-20, Utah Corporation Franchise or Income Tax Return; TC-20S, Utah S Corporation Franchise or Income Tax Return; or other forms. The return is due the 15th day of the fourth month following the close of the fiscal year.
If a due date falls on a Saturday, Sunday or legal holiday, the due date becomes the next business day.
Every business or person doing business in Utah is required to keep complete records to determine the amount of tax liability. Records are retained for three years from the filing date of the tax returns and must be available to the Tax Commission upon request.
Additional information is available at the Record Keeping Online Workshop.
