If you are a Utah small business owner, you already know that taxes are an important component of keeping your business legally compliant, so you can continue doing what you love to do. Failing to pay state business taxes or misfiling them can result in fines and other negative consequences, and the thought can rattle even the most experienced entrepreneurs. But we are here to help. Read on to learn the basics of how to file small business taxes in Utah, what taxes might apply to your business, and how we can help make the process smoother when tax time rolls around.
One of the most difficult parts of entrepreneurship is staying organized with all your state requirements. Our Worry-Free Compliance Service can help you stay on track and in the loop with upcoming filings from an easy-to-use dashboard.
If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses to learn more.
Step 1: Establish your Utah business’s corporate income tax obligations
Your business entity type will determine how your Utah small business is taxed. Corporation income is taxed at a flat rate of 4.95% with a minimum amount of $100. This applies only to C corporations and limited liability companies that have elected to be federally taxed as corporations.
The Utah business tax rate for pass-through entities is the standard state income tax rate, which is also 4.95%. Pass-through entities include S corporations, limited liability companies, partnerships, and sole proprietorships. These types of businesses don’t pay taxes as a company. The tax obligations for business income “pass through” to individuals according to their percentage of interest in the business, who then pay their portion of taxes on their personal income.
Step 2: Determine your Utah business’s withholding taxes
Utah employers must withhold income tax anytime employees receive a wage. This applies to both employees working in Utah and resident employees working outside the state. If the employee is working in another state, you may reduce the Utah tax by the tax withheld in another state. Utah law states that withholdings are mandatory for any employer doing business in Utah for more than 60 days.
As a Utah employer, you must submit an annual withholding reconciliation for each year (or partial year) you have a Utah withholding tax account. This is still true even if you have no employees or withholding to report for the year. Businesses that file taxes quarterly must still file annual withholding reconciliations.
Step 3: Establish your Utah business’s additional state tax obligations
Business income and withholding taxes may not be the only Utah small business taxes that you’re responsible for paying. Depending on the nature of your business, some of these may apply.
Utah sales tax is applied to transactions for the sale of goods, lease of tangible personal property, electronic products, and certain services. If your business engages in any of these types of transactions, you will apply the tax to the customers’ purchases and remit this payment to the state either monthly, quarterly, or annually.
Some states charge a privilege tax for the privilege of conducting business in the state. Utah doesn’t have a privilege tax.
Utah employers must pay unemployment tax. This helps pay wage replacement benefits for employees who are let go. New Utah employers are subject to a fixed rate for their first year of reporting. After the first year, the employer “earns” the unemployment Utah business tax rate using a specific formula for earning calculation. The tax rates do change, but most recently, the overall tax rate is .2% and the maximum overall tax rate is 7.2%. Employers in Utah have the option to make quarterly or annual unemployment tax contributions.
Utah excise taxes apply only to specific industries such as tobacco, alcohol, and fuel. This flat per-unit tax is paid directly to the state by the business before the goods can be sold to the end consumer. These rates vary by product.
Step 4: Prepare to file and pay your Utah business taxes
Pay all Utah small business taxes to the Utah State Tax Commission. The easiest and most efficient way to file your Utah small business taxes is to use the state’s online filing system. This system is called Utah’s Taxpayer Access Point (TAP). You will need to create an online profile for your business and prepare all necessary business information. Some taxes, like sales tax, must be filed online.
You can pay business income taxes in person at one of the Utah State Tax Commission Offices or via mail to their office in Salt Lake City. It’s important to note that if you file via mail, it may take up to 90 days for your tax return to be processed.
In the spirit of accuracy and efficiency, gather all necessary information before starting the filing process. This includes all business receipts, accounting records, legal documents, invoices, and other information relating to company finance. These items scatter pretty easily. We can help you keep track of invoices and transactions with our ZenBusiness Money App.
Not sure how to stay compliant? Learn more about legal compliance for small business owners.
Do I need an accountant?
Taxes are hard enough under the most basic circumstances. Most small businesses do need professional accounting assistance to make sure taxes are prepared and filed correctly. There are consequences for failing to file your taxes or making errors, whether they’re accidental or purposeful.
Penalties and fees will be assessed for late payment or underpayment of Utah small business taxes. In the best case, this can be a penalty of 10% in addition to the total owed. If you continue to omit payment, this could result in a third- or second-degree felony.
It’s a good idea to make sure your Utah small business taxes are done right the first time. Not all tax preparers have the same skill set. There are different types of tax professionals that do different things. The Internal Revenue Service has a resource guide to tax preparer credentials and qualifications to help you determine what you need.
How We Can Help You Stay Compliant in Utah
When running a small business, you can often be pulled in multiple directions trying to get everything done. There’s no need to feel overwhelmed. We’re here to help.
Our ZenBusiness Money App allows you to track transactions and view customer profiles from your personal dashboard. It allows you to easily send custom invoices, accept credit card and bank transfer payments, and manage your clients.
No matter what stage your business is in, we have the tools and services to support your goals.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
- How much can a Utah small business make before paying taxes?
You may not need to pay taxes if you don’t have any income for the business but may still need to submit applicable tax forms. Individuals with pass-through business entities must file taxes based on their percentage of interest and the standard income rate for Utah.
- What percentage does a Utah small business pay in taxes?
Both C corporations and pass-through entities pay the standard income tax rate.
- How does a Utah small business pay taxes?
Use the state’s online filing system for convenient filing. This system is called Utah’s Taxpayer Access Point (TAP). Some taxes, like sales tax, must be filed online.
You can pay business income taxes in person at one of the Utah State Tax Commission Offices or via mail to:
Utah State Tax Commission
210 North 1950 West
Salt Lake City, UT 84134-0266
Filing via mail is a slower process. Anticipate up to 90 days for your tax return to be processed.
- Do I have to file taxes for my small business in Utah?
All registered Utah businesses pay business taxes in the state.