Starting a Business in Utah in 7 Steps
If you want to be your own boss and you’re ready to roll up your sleeves and get to work, starting a business may be the right choice for you. Starting a business in Utah takes determination, savvy, and plenty of drive.
A little planning can go a long way toward making your Utah-based business a success. From creating a business plan to securing funding, this guide will teach you everything you need to know to start a business in Utah. Keep reading for helpful tips.
How to Start a Business in Utah in 7 Simple Steps
Step 1: Write a Business Plan
Writing a business plan is hard work, but it’s a step that will help guide you and provide focus as you build your company. A business plan can also show stakeholders such as investors, lenders, and potential partners where your business is heading.
You don’t need an MBA to write a strong business plan; in essence this process will provide you with structure to organize your ideas, plans, goals, services or products, financial plans, and operational structure. Getting these ideas all down on paper serves as a roadmap to help you plan and review the work you’ve done so far. While you can customize your business plan to suit your needs, it should generally contain the following information.
- Executive summary: This first section does not need to be longer than a page or two, but it is important. The executive summary should outline your business’s purpose, where it currently stands, where you see your business in three to five years, and why your business will succeed.
- Company overview: A company overview is an elevator pitch of sorts. You’ll explain what your business does, give a look at the industry and marketplace that your business is a part of, and lay out the structure of your business, as well as share your value proposition.
- Market analysis: Here, you’ll share an in-depth analysis of your industry, market, and competitors. This is an especially important step, as it will influence what type of business you start, who your audience is, and how you can effectively market to them.
- Business organization: You’ll explain who does what in your business, what everyone’s background is, and how their past experiences benefit the team. If you’re a one-person operation, this section won’t take long.
- Products and services: Provide an in-depth look at exactly what your business will be selling, whether it be services or products.
- Marketing and sales plan: Explain how you’ll market and sell your products or services.
- Financial plan and projections: Provide at least three years of financial projections as well as any financial data from your business’s past performance. You’ll want to prove that you have a plan to take your business from an idea to a profitable enterprise.
- Appendix: The last section of your business plan will include any supporting information you didn’t include in the meat of your document. Such as any data points, charts, footnotes, or further explanations.
It’s a lot of information to pull together, but completing your business plan will ensure you have a strategy to develop and grow your business and will guide you through the process of starting a business in Utah. You can also use a business plan template or business plan software to help you arrange your ideas and make everything look professional and polished.
Step 2: Choose a Business Entity
The business entity you choose will affect your taxes, level of risk, and more. When it comes time to choose a business entity, the state of Utah recommends consulting an attorney, accountant, financial advisor, tax advisor, or banker to decide which form would be most suitable for your business. You’ll also want to consider the fees required for the different types of businesses registered in Utah.
The state of Utah lists the following business entities as the five most commonly chosen options:
- Sole proprietorships: An unincorporated business that has only one owner or is owned jointly by a married couple.
- Partnerships: You may want to consider a general partnership, limited partnership, limited liability partnership, or a limited liability limited partnership.
- Limited partnerships: A registered business that is composed of both active, general partners and passive, limited partners.
- Corporations: There are multiple forms of incorporated businesses to choose from, such as C-corporation, B-corporation, S-corporation, and professional corporation.
- Limited liability companies (LLC): A type of registered business with limited liability for all members.
You’ll also notice in the above fees that there is also a cost for business name registration, also noted as DBA. It’s important to note that a DBA, or “doing business as” is not a business entity in itself, but is something you’ll file if you want the public-facing name of your company to be something other than the name you registered with the state of Utah. This is most common with sole proprietorships or general partnerships, as these business entities do not actually have to register with the state and the business name will default to the business owner’s full legal name.
Step 3: Name and Register Your Business
You may have already decided on a business name, but if you haven’t yet, now is the time to. Once you have an idea of what your business name should be, you will need to make sure it hasn’t already been taken by another Utah business. Do a quick search in Utah’s business database to see if your desired name has already been taken by another business in your state.
You’ll also want to make sure your chosen name properly follows business naming requirements in your state (the requirements will be based on your chosen business entity). Utah rounded up their naming requirements here. Once you’ve chosen a name, you’ll need to register your name with the state using this form.
Step 4: Understand Tax, Licensing, and Employer Requirements
All businesses have varying tax, licensing, and employer requirements. Learning about these requirements before you start a business in Utah will help you avoid costly and time-consuming mistakes. Location, as well as the type of business you’re operating, can affect your business’s needs.
Let’s get the least fun part out of the way: taxes. You know they’re inevitable, so it’s best to prepare for them.
- EIN: In order to file federal and state reports, your business may need an EIN, also known as an employer identification number or business tax ID number. You can apply for an EIN online from the IRS.
- Business tax liabilities: You should become familiar with some of the most common business taxes so you have an idea of what you’ll be responsible for. Again, it’s a good idea to consult a tax professional here.
- Income tax returns: There are different tax forms and schedules, depending on your type of business entity, that you need to be aware of.
This guide to Utah business taxes can also help you prepare.
Licensing and Permits
Before you fully launch your business, you may need to obtain business licenses and permits. Not all business types require permits and licenses, but some may need multiple. Some types of businesses are closely regulated and require at least one business, occupational, or environmental license or permit. These licenses and permits may seem like a nuisance, but they benefit everyone. They can protect consumers and advance social goals. You can generally expect licenses and permits to achieve the following goals:
- Certify the competency of individuals that participate in a business, trade, or profession.
- Ensure both the safety and effectiveness of a business’s products and processes.
- Either encourage or restrict competition in a specific industry.
- Help prevent fraud, and ensure there is financial solvency in business transactions.
- Control market access, or control the development and implementation of new technology.
- Promote responsible use of natural resources, particularly non-renewable resources.
- Authorizes certain businesses to work for the state’s agent to collect revenue.
While you’ll want to check with both state and local agencies to ensure your business has the proper permits and licenses before you open, this guide from the SBA can also be a helpful resource.
If you plan on hiring employees, there are many aspects you will need to consider. For example:
- Who is an employee and who isn’t?
- What federal and state paperwork is necessary to hire an employee?
- What to include in an employment agreement, such as salaries, benefits, duties, and termination expectations.
- What notices you must post in the workplace for employees to review.
- What the federal and state requirements and exemptions are for wages and overtime pay.
- What the requirements for layoffs under the Worker Adjustment and Retraining Notification Act are.
Step 5: Obtain Business Insurance
Depending on the type of business you want to start in Utah, you may need to obtain business insurance in order to protect yourself. You may not need this insurance right away—especially if you have no employees or are a freelancer—but for many entrepreneurs, insurance can protect their business and employees from potential legal claims.
Insurance can help protect you from issues surrounding: extreme weather, fire, employees, illness, theft, injury, etc. Different types of business insurance can help mitigate those risks (and others) and can help your business stay afloat during difficult times. Not to mention, you’ll gain some much needed peace of mind. The following are a few basic types of insurance coverage worth considering if you want to start a business in Utah.
- Property Insurance
- Business interruption insurance (and other time element coverage)
- General liability insurance
- Product liability insurance
- Commercial property insurance
- Disability insurance
- Key person insurance
- E-insurance (only for companies that have an online presence)
If you have employees, you will be required to have workers compensation insurance, which covers medical expenses and lost wages when an employee suffers a work-related illness or injury, and unemployment insurance, which covers employees in case of a job loss or termination.
Step 6: Open a Business Bank Account
When you first start a business, a lot of your personal money probably becomes business money. You do what you have to do to make your business work. But as much as you can, you should try to keep your business and personal finances separate. An easy way to do this is by opening a business bank account. Some businesses may even be legally required to have a business bank account.
Before you open a business bank account, you have to choose between two formats. A business checking account or a business savings account. Newer businesses will want to start with a business checking account. For more established businesses that have extra cash on hand, a business savings account is preferred. That way, the money you aren’t spending can grow with interest. Having a business bank account will help your business (and personal life) run smoother, as well as simplify taxes and help keep your personal assets safe from any legal issues your business may run into.
A business credit card is something you should also consider to help keep expenses separate. There are plenty of options available on the market, but a 0% introductory APR business credit card is preferable when you need to cover startup costs for your business. Tread lightly though. You’ll want to make sure you can pay off your credit card balance before the introductory offer ends, or this helpful tool could end up costing you when the variable APR sets in.
Step 7: Secure Business Funding
Now that you know what it takes to start a business in Utah, do you have the money you need to put the pedal to the metal. It’s difficult to start a business without some form of funding available, which is where a business loan might come in handy.
Some common business funding options worth considering are:
- Startup business loans: A startup business loan can help brand-new businesses find funding before they’ve proven their value. Startup business loans can range from SBA microloans to small business grants to the credit cards mentioned previously with 0% APR offers. In general, SBA microloans are the best startup funding option as they have low interest rates with long repayment terms.
- Business line of credit: A business line of credit gives you access to a set credit limit that you can borrow against for any business expense you need to cover. You will only pay interest for the amount you borrow, not the full amount you are allowed to borrow. This can help keep your interest payments down as a small business owner.
- Equipment financing: For Utah businesses that need equipment to run smoothly, equipment financing may be an ideal option to help fund expensive equipment purchases. The equipment is the collateral for the loan, which makes it easier to qualify for this type of borrowing.
Starting a Business in Utah: The Final Word
If you’ve been wondering how to start a business in Utah for some time, now it’s time to get to work. Whether you want to learn how to start a small business in Utah or have your heart set on a business empire, hopefully this guide puts you on the right path toward success.