Utah Small Business Tax Guide: What You Need to Know

Running a small business in Utah means navigating both federal and state tax obligations. While Utah is generally considered business-friendly with a flat tax rate and reasonable regulations, understanding your specific requirements helps you stay compliant and minimize your tax burden.

This guide covers what Utah small business owners need to know about state taxes.

Utah Business Tax Overview

Utah has several characteristics that make it attractive for small businesses:

Flat income tax rate (both personal and corporate)
Reasonable sales tax rates
No franchise tax
Business-friendly regulatory environment

But you still have obligations. Let’s break them down.

Utah Income Tax

Personal Income Tax (Pass-Through Entities)

Most small businesses are pass-through entities:

Sole proprietorships
Partnerships
LLCs
S corporations

Business income passes through to your personal return and is taxed at Utah’s individual rate.

Utah individual income tax rate: 4.65% flat rate (as of 2025)

This applies to all taxable income regardless of amount. No brackets to navigate.

Corporate Income Tax

C corporations pay Utah corporate income tax:

Rate: 4.65% flat rate

Utah corporate tax applies to income apportioned to Utah. Multi-state businesses use apportionment formulas.

Filing Requirements

Individuals (pass-through owners):

File Utah Form TC-40 (Individual Income Tax Return)
Due date: April 15 (same as federal)
Extension available (follows federal extension)

Corporations:

File Utah Form TC-20 (Corporation Franchise and Income Tax Return)
Due date: 15th day of 4th month after year end (April 15 for calendar year)

Partnerships and LLCs:

File Utah Form TC-65 (Partnership/LLC Return)
Provides information to Utah about partner distributions

Estimated Tax Payments

If you expect to owe $1,000 or more in Utah tax, make quarterly estimated payments:

Due dates:

April 15
June 15
September 15
January 15

Calculate: Estimate annual Utah tax liability, divide by four.

Utah doesn’t have a separate estimated payment form—pay electronically through the Utah Taxpayer Access Point (TAP).

Utah Sales Tax

Overview

Utah sales tax applies to:

Retail sales of tangible personal property
Certain services
Lease or rental of tangible personal property

State rate: 4.85%

Local rates: Vary by jurisdiction, typically adding 1-3.5%

Combined rates: Usually 6.1% to 8.35% depending on location

What’s Taxable

Taxable:

Most physical products
Prepared food and beverages
Hotel and lodging
Admission to events
Certain services (janitorial, landscaping, fabrication, etc.)

Exempt:

Groceries (taxed at reduced 3% state rate)
Prescription drugs
Medical equipment
Most professional services (accounting, legal, consulting)
Manufacturing equipment (under certain conditions)

Registering for Sales Tax

If you sell taxable goods or services in Utah:

Register with the Utah State Tax Commission
Apply through Utah OneStop Business Registration
Receive your sales tax license number
Collect and remit sales tax

Filing and Payment

Filing frequency depends on your tax liability:

Monthly Tax	Filing Frequency
$1,000+	Monthly
$200-$999	Quarterly
Under $200	Annual

File through: Utah Taxpayer Access Point (TAP)

Due date: Last day of the month following the reporting period

Destination-Based Sales Tax

Utah uses destination-based sourcing:

Tax rate is based on delivery location
For shipped goods, use customer’s address
For in-store sales, use store location

This means you may need to track and remit to multiple jurisdictions.

Online Sellers

If you sell online to Utah customers:

Economic nexus threshold: $100,000 in sales OR 200 transactions
Once you exceed thresholds, you must collect and remit Utah sales tax
Marketplace facilitators (Amazon, eBay) often collect on your behalf

Employment Taxes

Utah Withholding

If you have employees, withhold Utah income tax from wages:

Rate: 4.65% flat

Register: Through Utah OneStop Business Registration

Filing frequency: Monthly, quarterly, or annually based on liability

Forms: Use federal W-4 for Utah withholding (Utah accepts federal form)

Unemployment Insurance (UI)

Utah employers pay unemployment insurance tax:

New employer rate: 1.0% (may vary) Taxable wage base: First $47,000 per employee (2025) Experienced employer rates: Vary based on claims history

File through: Utah Department of Workforce Services

Workers’ Compensation

Utah requires workers’ compensation for most employees:

Obtain through private insurer or state fund
Rates vary by industry classification
Some exemptions for small operations

Business License and Other Requirements

State Business Registration

Business name registration
Tax accounts (sales tax, withholding)
Unemployment insurance

Local Business Licenses

Many Utah cities and counties require local business licenses:

Salt Lake City: Business license required Salt Lake County: Separate license Other municipalities: Check local requirements

Costs and requirements vary by location and business type.

Professional Licensing

Certain professions require state licensing:

Contractors (DOPL)
Healthcare providers
Real estate agents
Accountants
Many others

Check the Utah Division of Professional Licensing (DOPL).

Tax Planning Strategies for Utah Businesses

Retirement Contributions

Reduce both federal and Utah taxable income:

SEP-IRA: Up to 25% of net self-employment income
Solo 401(k): Up to $69,000 (2025)
SIMPLE IRA: Up to $16,500 (2025)

Utah follows federal deductions for retirement contributions.

Health Insurance Deduction

Self-employed individuals can deduct health insurance premiums:

Reduces federal and Utah taxable income
Must not be eligible for employer-sponsored coverage

Home Office Deduction

If you qualify:

Reduces federal taxable income
Flows through to reduce Utah tax
Document regular and exclusive business use

Section 199A (QBI) Deduction

The Qualified Business Income deduction:

Up to 20% deduction on qualified business income
Reduces federal taxable income
Also reduces Utah tax (Utah starts with federal taxable income)

Entity Structure

Your business structure affects taxes:

Sole proprietorship/LLC: Simplest, all income taxed at 4.65%

S-Corporation: May save self-employment tax at federal level; Utah treatment is same flat rate

C-Corporation: Double taxation issue (corporate rate plus dividend tax); rarely beneficial for small businesses

Work with a CPA to determine optimal structure.

Timing Strategies

Year-end planning opportunities:

Accelerate expenses into current year
Defer income to next year (if advantageous)
Make retirement contributions before deadline
Purchase needed equipment before year-end

Common Mistakes Utah Businesses Make

Sales Tax Errors

Mistake: Not collecting sales tax on taxable services Fix: Review Utah’s list of taxable services; many landscaping, cleaning, and fabrication services are taxable

Mistake: Using wrong tax rate Fix: Use destination-based rates; verify rates at Utah’s Geographic Information Database

Mistake: Not registering for sales tax Fix: Register before your first taxable sale

Withholding Issues

Mistake: Not withholding Utah tax from employees Fix: Register and withhold from first paycheck

Mistake: Late deposits Fix: Know your filing frequency and due dates

Estimated Tax Shortfalls

Mistake: Not making quarterly estimates Fix: Calculate liability, pay quarterly through TAP

Mistake: Underpaying estimates Fix: Pay 100% of prior year tax or 90% of current year

Utah Tax Resources

Utah State Tax Commission

Website: tax.utah.gov
Phone: 801-297-2200
Taxpayer Access Point (TAP): Online filing and payments

Utah OneStop Business Registration

Register for all state business tax accounts
Website: osbr.utah.gov

Utah Department of Workforce Services

Unemployment insurance
Website: jobs.utah.gov

Utah Division of Professional Licensing

Professional licenses
Website: dopl.utah.gov

Working with Professionals

Utah tax compliance is manageable but has nuances. Consider professional help if:

You’re starting a new business
Your situation is complex (multiple entities, employees, multi-state)
You want to optimize your tax position
You’re behind on filings

A local CPA familiar with Utah taxes can help you:

Set up properly from the start
Identify planning opportunities
Stay compliant with all requirements
Avoid costly mistakes

Your Utah Tax Checklist

Starting a Business

Register with Utah OneStop
Obtain sales tax license (if applicable)
Get local business license
Register for withholding (if employees)
Set up unemployment insurance account
Obtain workers’ compensation

Ongoing Compliance

Collect and remit sales tax (if applicable)
Withhold and remit employee taxes
Make quarterly estimated payments
File annual income tax return
Renew business licenses annually

Year-End

Need help navigating Utah business taxes? At Profit Path Books, we help Utah small business owners stay compliant and minimize their tax burden through proper planning and clean books. Book a consultation to discuss your situation.