Starting a Business in Utah
Utah has a strong economic ecosystem that includes a strong and upcoming technology industry. This industry is supported by the groups of entrepreneurial minds that have come together to build a strong community. The state also boasts a balanced tax system and regulatory fairness (even though business like applications can take some time). The biggest industries in Utah are Agriculture, Data Centers, Petroleum Manufacturing, Financial Products, Transportation, Multimedia, Information Technology, and Mining. Other industries such as Tourism and Manufacturing have also experienced substantial growth in many cases due to Utah benefits programs. The most common programs are given through tax credits, exemptions, grant programs, and benefits to companies who reside inside a Utah Enterprise Zone.
STEPS TO STARTING A BUSINESS IN UTAHBefore looking into benefit programs, you would first need to have a company. This can be accomplished with the Utah Secretary of State who shows you how to conduct administrative filings. After you select a business name and setup a company with their office, you can move onto other tasks such as obtaining a Federal EIN. The Utah State Tax Commission governs tax policies and oversees their enforcement. They can help you deal with any tax collection issues you have and give you schedules for tax returns. You can register online for a Utah Sales Tax License (Seller’s Permit) in order to collect sales tax. Other tasks that can be completed after starting a business in Utah are looking up a Utah sales tax rate to pay Utah sales tax, checking on the status of Form TC-69: Business Registration, and searching for the appropriate Business Licenses to be legally compliant. There has been significant change in legislation in recent years regarding the collection of out of state sales tax. You may need to apply for a SST streamlined sales tax certificate for the monies you receive from your out of state clients if you meet baseline thresholds. Utah companies can reap the benefits of many different opportunities. Below are some of the incentive programs extended:
- To further research and development activities, Utah has a tax credit program that is offered to a business for R & D investments that it expends.
- Credits are taken as a percentage (5%) above the predetermined base that the company incurs in the current tax year.
- Any payments made to an eligible organization for research activities can also be credited at a rate of 5% above the predetermined base amount. These are taken in the current tax year, but can be carried forward.
- General eligible research expenses can be credited at a rate of 7.5% within the current taxable year.
- Utah has various workforce development programs used to help a company with its employee training expenses as well as hiring needs. These are comprised of the Utah Custom Training, Talent Ready Grants and the Utah Works Program.
- The first is used towards new employee training expenses and covers up to half of all costs.
- The second program bridges higher education and industry by administering grants to organizations that promote economic expansion.
- The Utah Works Program provides grants to businesses that are creating job growth and workforce systems.
- The Utah Enterprise Zone Program was created to help promote economic expansion into economically underdeveloped areas. The objectives are to create jobs and bring them to these vulnerable areas, invest in equipment and rehabilitate infrastructure.
- A credit is offered to a business that invests into depreciating equipment and machinery. The maximum credit offered is $75,000.
- An investment of up to $200,000 into a vacant building will yield a 25% credit. If the building is used as a manufacturing facility, an additional 10% credit is given on the first $250,000. Any investment in excess of $1 million will receive a topped off 5% credit.
- The final enterprise credit is taken against corporate income tax for any new jobs created inside the enterprise zone. The standard credit rate is $750 per newly created job unless the pay exceeds 1.25 times the average wage then an additional $500 per job is given.
- Utah offers various tax incentives and Sales Tax Exemptions to a business engaged in certain functions.
- These include a Utah Sales Tax Exemption on utilities such as natural gas, water, and electrical power of consumed tangible personal property.
- A Sales Tax Exemption is available for the purchase of parts used in the servicing of maintenance contracts. If these parts end up not being used and resold then a sales tax permit will be needed.
- A Sales Tax Exemption is given on new or replacement equipment used in the manufacturing and distribution process.