What taxes apply to a new small business?

Taxes Applicable to a New Small Business in Utah

When starting a small business in Utah, understanding your tax obligations is essential for smooth operations and compliance. Below are the primary taxes that typically apply to new small businesses in Utah.

1. State Income Tax

Utah imposes a state income tax on business earnings. Most small businesses structured as corporations, LLCs, or sole proprietorships must file state income tax returns. The state uses a flat income tax rate applied to net income.

2. Sales and Use Tax

If your business sells tangible goods or certain services, you must collect Utah sales tax from customers. The current statewide sales tax rate is supplemented by local taxes, so rates vary by location. You must register for a sales tax license and file regular sales tax returns.

3. Employer Payroll Taxes

If you hire employees, you are responsible for payroll taxes including:

• Federal payroll taxes: Social Security, Medicare, and federal unemployment tax.
• Utah state payroll taxes: State unemployment insurance (SUI) and state income tax withholding.

Proper employee classification and payroll setup are critical to avoid penalties.

4. Property Tax

Businesses owning real or personal property in Utah may owe property taxes assessed at the county level. Ensure accurate recordkeeping and timely payments to local tax authorities.

5. Other Applicable Taxes

Depending on your business type and industry, additional taxes may apply such as:

• Excise taxes on specific goods (e.g., fuel, tobacco).
• Transient room taxes if operating lodging services.

Operational Tips

• Register your business with the Utah State Tax Commission to obtain a tax ID and sales tax license.
• Use bookkeeping and accounting software to track taxable sales and payroll accurately.
• Automate tax filings and payments where possible to maintain compliance and avoid late fees.
• Consult with a tax professional familiar with Utah business taxes to optimize your tax strategy.

As of 2026, tax rates and filing requirements may change, so regularly review Utah State Tax Commission updates to stay current.