Small business owners have many responsibilities. One of the most important is to file and pay business taxes properly. If you’re just launching a new business, you might wonder:
How much are business taxes in Utah?
It’s essential to grasp your tax obligations to ensure you don’t overpay or underpay.
CMP’s business clients count on us to help them avoid tax overpayments and comply with state and federal law. Utah has a flat income tax, which can benefit business owners. Depending on your business type, you may also need to be concerned with sales and property taxes. We’ve created this guide to help you understand what you need to do and when you need to do it.
What Taxes Do Small Businesses Pay in Utah?
Utah small businesses must worry about three categories of tax. They may not all apply to your business, but you should know about all three to understand how much business tax you’ll need to pay.
Corporate Income Tax
Utah’s corporate income tax is flat, the same as its individual income tax. According to The Tax Foundation's State Business Tax Climate Index, Utah is one of the top ten best states for small businesses.
Sales Tax
Sales tax in Utah is different from that in other states. The state tax code specifies a state sales tax and caps local sales tax. We’ll reveal the specific rates below. Some states, including New Hampshire, Alaska, Oregon, Montana, and Delaware, don't have any sales tax.
Property Tax
Business owners who own business real estate must pay property taxes. If you use personal property for business, you may also be required to pay personal property taxes. You can review Utah’s Classification Guide to estimate your property taxes.
What is Corporate Income Tax in Utah?
Utah has a corporate income tax, and many businesses must file and pay taxes. However, depending on your business entity, there are some exceptions.
What is Utah’s Corporate Tax Rate?
The corporate income tax in Utah as of 2024 is a flat rate of 4.65%, the same as the individual income tax rate. A flat rate can be advantageous to businesses as they grow since they don’t need to worry about their taxes increasing with their profits. Pass-through business owners must report business income on their personal tax returns.
Are Any Business Tax Credits Available in Utah?
Utah’s Economic Development Tax Increment Financing (EDTIF) tax credit incentivizes Utah businesses to make positive contributions to the state and its economy. The EDTIF is updated regularly to adapt to new challenges. Businesses that meet the requirements can deduct up to 30% of new state revenues.
Other tax credits include the following.
- High-Cost Infrastructure Tax Credit
- Research Activities Credit
- Rural Economic Development Tax Increment Financing Credit
- Technology & Life Sciences Tax Credits
- Enterprise Zone Tax Credits
How Do I File My Corporate Tax Return in Utah?
Here are the steps to file your Utah corporate tax return.
- Create a TAP login by visiting the TAP Access Point.
- Get Form TC-20 and other forms you may need here.
- File your taxes electronically or by mail.
You may want to work with a tax professional to ensure you take advantage of all available tax credits.
Are Filing Extensions Available?
Utah offers a six-month grace period to file taxes without requesting an extension. Keep in mind this is a filing extension only. It is not an extension to pay your taxes, so you should estimate and pay what you owe on time.
Don’t let the pressure of tax deadlines overwhelm you. Learn how to file a business tax extension and make sure you're fully prepared. Even in states like Utah, understanding the process can be crucial for avoiding penalties and staying on top of your financial obligations. Explore the benefits and gain peace of mind knowing you're covered.
What is Sales and Use Tax in Utah?
The sales and use tax may be a requirement for businesses that sell goods and services in Utah.
Explanation of Sales and Use Tax in Utah
Utah's sales and use tax is a transaction tax, meaning that the sale itself, not the product or service sold, is taxed.
The rules regarding who must pay sales and use tax and who is exempt are complex. Utah’s publication explains the rules here.
What is the Sales Tax Rate in Utah?
The Utah state sales tax for consumers is a flat rate. There may also be local sales taxes on a county-by-county basis.
- The state sales tax in Utah is 6.10%.
- The maximum local sales tax in Utah is 2.95%.
As noted above, the rates may vary depending on your business entity, who your customers are, and the types of goods or services you sell. The publication we linked in the previous section is the best resource to determine how much sales tax you’ll pay.
How Do I Pay My Sales and Use Taxes in Utah?
Your sales and use tax may be paid online using TAP. Payment and filing due dates are based on your previous year’s tax liability.
- $1,000 or less: pay annually; due dates are January 31 for the previous calendar year.
- $1,001-$50,000: pay quarterly; due dates are January 31, April 30, July 31, and October 31.
- $50,001-$96,000: pay monthly; due dates are the last day of the month following the period.
- $96,001+: Pay monthly, and make mandatory EFT payments.
You can find full instructions here.
Does Utah Have Any Sales Tax Exemptions?
There are some sales tax exemptions in Utah. We can’t fully cover this complex topic here, but you can read this publication to understand whether your business is exempt.
Overview of Business Property Taxes
If you own business real estate, you’ll pay property taxes in the county where the property is located. You may also be required to pay taxes on personal property, such as office furniture, that you use for business purposes.
Do Any Property Tax Exemptions Apply?
Utah has rules outlining which types of personal property may be exempt from business personal property tax. Here are some examples.
- Merchandise inventory
- Farm machinery and equipment
- Livestock
- Property used for irrigation purposes
- Household furnishings
You can read more here.
How is Personal Property Valued?
Personal property used for business purposes is valued based on the Utah Property Classification Guide.
Forms of Business Entities in Utah
Several types of business entities may be formed in Utah. Here’s an overview of how they pay business taxes.
How Are Sole Proprietorships Taxed in Utah?
Sole proprietorships benefit from pass-through taxation, meaning they don’t pay corporate income tax. All income from the business is passed through to the individual who owns it. Owners must report all business income on their personal tax return. The same rule applies to partnerships.
As a small business owner, it's also crucial to understand how profit sharing in your 401(k) can benefit both you and your employees. Profit sharing 401k plans offer a flexible and tax-advantageous way to contribute to your employee's retirement savings. Discover how these plans work and the advantages they can bring to your business. Equip yourself with this vital knowledge to optimize your retirement strategy and boost employee satisfaction.
How Are LLCs Taxed in Utah?
By default, LLCs are taxed as pass-through entities in Utah, the same as sole proprietorships. You can elect to have an LLC taxed as a sole proprietorship, a partnership, or an S corporation at both the state and federal levels. Electing to be taxed as a partnership or S corporation would require you to file business tax returns and pay income tax at the individual level.
How Are Corporations Taxed in Utah?
Corporations must pay the corporate tax rate of 4.65%. If your business is organized as a C corporation, you are required to pay the Utah state business income tax.
FAQs on Small Business Taxes in Utah for 2024
Here are some frequently asked questions to help guide you:
Does Utah Require Estimated Payments of the Franchise and Income Tax?
Yes, all businesses with a tax liability of $3,000 or more in the current or previous tax year must make estimated quarterly payments. Payments are due on April 15, June 15, September 15, and December 15.
Does Utah Have a Pass-Through Entity Election?
Sole proprietorships, partnerships, and LLCs (generally) are considered pass-through entities by default. If your business is an LLC, you may elect to be taxed as an S corporation.
Do Utah Businesses Have Withholding Obligations?
Utah businesses must withhold state income taxes from employees’ pay if they:
- Pay workers for work done in Utah
- Pay workers for work done in another state (they may subtract out-of-state withholdings from Utah withholding)
You may be exempt from withholding if you do business in Utah for at least 60 days per year. The withholding rules are here.
Do Partnerships and LLCs Pay Utah’s Corporate Franchise and Income Tax?
Partnerships and LLCs are generally taxed as pass-through entities. That means the owners must report business income as personal income and file and pay accordingly. An LLC can elect to be taxed as an S corporation.
What Other Taxes Do Small Businesses Pay in Utah?
What taxes do small businesses pay? Utah rules require that business income be reported as personal or business income. Small businesses may also be required to pay sales tax, business property tax, and other taxes. You’ll also need to withhold and pay federal income, Social Security, and Medicare taxes for yourself and your employees.
Get Assistance with Business Taxes in Utah
Running a small business in Utah requires owners to understand, pay, and file taxes. The rules can be complex. This guide provides an overview and useful resources, but you may want to consult a tax professional to ensure you’re meeting your obligations.
Do you need assistance with your Utah business taxes? Schedule an appointment with one of our experienced tax professionals today!
