Starting a Business in Utah
A new business in Utah is not out of reach. Have you been wondering: how do I start a business in Utah? And more importantly, can I do so no matter what the economic conditions are? Can I start a new business in Utah during a recession?
New Business in Utah: Pros and Cons
Business Insider puts Utah as the sixth best state to start a business in, for the entire country, according to a 2016 article. It has the third highest density of startup businesses at 93.5 startup businesses per 1,000 firms. Another big benefit is potential employees’ education level in Utah. It is the second highest in America.
Slight Slippage
In 2018, Fit Small Business clocked in Utah at number nine. But keep in mind: the methodologies for Fit Small Business and Business Insider differ.
Why the small change? For one thing, Utah continues to do well in terms of taxes. And it does well with access to capital, particularly venture capital. The state does well for quality of life. And it has the third highest level of access to education in the nation. But even Fit Small Business saw a slip (from number two in 2017).
New Business in Utah: Initiatives
Utah has been focusing on increasing access to development capital for businesses operating in the state. The Governor’s Economic Development Coordinating Council works with public and private sector partners in order to coordinate policies for job development in Utah.
Plus the Utah Fund of Funds, which has an initial $300 million commitment from the state, invests in venture capital and equity funds. These, in turn, invest in promising startup companies in the state. The Fund of Funds has already given more than $200 million to roughly 35 companies. These days, the Fund holds a total of $5 billion in capital as a Utah business resource.
Start a New Business in Utah – Utah Top Industries
As might be expected, the Church of Jesus Christ of Latter Day Saints (Mormons) is very big in Utah. Hence new business owners might see opportunities in catering to this particular niche. This can be with businesses in sectors such as food service, apparel, or even publishing and book binding.
Per EDC Utah, the biggest industries in Utah are energy, financial services, and aerospace and defense. More top Utah industries are software and IT, life sciences, and outdoor products and recreation.
Start a New Business in Utah – Utah Business Ideas
Smart business owners can find new opportunities. Work with bigger industries in the state. Offer goods or services such as food service and hospitality, or trucking for any industry. Another idea is computer support in areas such as programming and data.
Here is how to start business in Utah.
Start a New Business in Utah – Utah New Business Secretary of State Requirements
Register a Business Name
Check for business name availability on the Utah Division of Corporations and Commercial Code website.
Corporations
Corporations must have unique names. Search online records and other records before incorporating. Make sure a name is not in use by another. There is a database of registered Utah corporations at the official Utah government website.
Corporate Name Reservations
It is not mandatory to have a corporate name reservation. However, if a business owner wants to reserve a name for a corporation before they incorporate, they can submit a name reservation application to the office of the Utah Secretary of State.
Download the name reservation application form at Reserve a Utah Corporation Name on the Utah government website. The name will then be reserved for a period of 120 days. There is a filing fee of $22.00 for a name reservation application.
Business Permits and Licenses
The Division of Occupational and Professional Licensing website can tell you all about professions that need licenses.
Local Permits and Licenses
All contacts for city and county offices are in a comprehensive PDF from the Utah government.
Start a New Business in Utah – Business Registration
Utah has a One Stop Online Business Registration website. Forms are also at the Utah Division of Corporations and Commercial Code.
Tax Registration
Go to the Utah State Tax Commission and their “Tax Information for Business” page for tax guides. Then you can register on the Utah One Stop Online Business Registration page.
Start a New Business in Utah – Virtual Offices
Alliance Virtual Offices offers Utah virtual business office space in Provo, Salt Lake City, South Jordan, and St. George. Go to Regus for Draper or Lehi. For Utah virtual business offices in Farmington, Ogden, Orem, or Sandy, go to DaVinci.
For other areas of the state, try local business owners. Also ask computer user groups for help in this area. Other options may be virtual business office space in nearby state. These are Idaho and also Wyoming to the north. Nevada is to the west. Arizona and also New Mexico are to the south of Utah. Colorado is to the east.
Start a New Business in Utah – Establish Business Credit
Small business credit is credit in a business’s name. It doesn’t tie to a business owner’s individual credit, not even when the owner is a sole proprietor and the only employee of the company.
Hence, an entrepreneur’s business and individual credit scores can be very different.
The Advantages
Given that business credit is independent from personal, it helps to safeguard an entrepreneur’s personal assets, in the event of a lawsuit or business insolvency.
Also, with two separate credit scores, an entrepreneur can get two different cards from the same vendor. This effectively doubles purchasing power.
Another benefit is that even startup ventures can do this. Visiting a bank for a business loan can be a formula for frustration. But building business credit, when done right, is a plan for success.
Consumer credit scores rely on payments but also other components like credit use percentages.
But for company credit, the scores truly merely depend on if a company pays its invoices promptly.
The Process
Building business credit is a process, and it does not happen without effort. A business must actively work to develop business credit.
Nevertheless, it can be done easily and quickly, and it is much more efficient than building personal credit scores.
Merchants are a big aspect of this process.
Undertaking the steps out of order will result in repetitive rejections. No one can start at the top with small business credit.
Start a New Business in Utah – Small Business Fundability™
A small business has to be Fundable to loan providers and vendors.
Consequently, a business will need a professional-looking website and email address. And it needs to have site hosting from a merchant such as GoDaddy.
And, business telephone numbers ought to have a listing on ListYourself.net.
Also, the business telephone number should be toll-free (800 exchange or comparable).
A company will also need a bank account dedicated only to it, and it has to have all of the licenses essential for operation.
Working with the IRS
Visit the Internal Revenue Service web site and acquire an EIN for the business. They’re totally free. Choose a business entity such as corporation, LLC, etc.
A small business can start off as a sole proprietor. But they should change to a type of corporation or an LLC.
This is in order to limit risk. And it will maximize tax benefits.
A business entity will matter when it comes to taxes and liability in case of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. Nobody else is responsible. And never look at a DBA filing as ever being anything more than a steppingstone to incorporating.
Setting off the Business Credit Reporting Process
Begin at the D&B website and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a small business in their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s sites for the business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.
In this manner, Experian and Equifax will have activity to report on.
Vendor Credit
First you need to establish trade lines that report. This is also called vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can begin to get more credit.
These kinds of accounts often tend to be for the things bought all the time. Like marketing materials, outdoor work wear, ink and toner, and office furniture.
But first off, what is trade credit? These trade lines are credit issuers who will give you starter credit when you have none now. Terms are ordinarily Net 30, versus revolving.
Hence, if you get an approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.
Vendor Credit – It Helps
Not every vendor can help like true starter credit can. These are merchants that will grant an approval with very little effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.
You want 3 of these to move onto the next step.
Start a New Business in Utah – Monitor Your Business Credit
Know what is happening with your credit. Make certain it is being reported and fix any mistakes ASAP. Get in the habit of checking credit reports. Dig into the details, not just the scores.
We can help you monitor business credit at Experian, Equifax, and D&B for 90% less than it would cost you at the CRAs.
Update Your Record
Update the info if there are inaccuracies or the data is incomplete.
Fix Your Business Credit
So, what’s all this monitoring for? It’s to contest any mistakes in your records. Errors in your credit report(s) can be fixed. But the CRAs generally want you to dispute in a particular way.
Disputes
Disputing credit report errors commonly means you precisely itemize any charges you challenge.
A Word about Business Credit Building
Always use credit smartly! Don’t borrow beyond what you can pay back. Keep track of balances and deadlines for repayments. Paying off on schedule and completely will do more to boost business credit scores than just about anything else.
Establishing business credit pays off. Great business credit scores help a company get loans. Your lending institution knows the small business can pay its debts. They know the small business is bona fide.
The small business’s EIN links to high scores and credit issuers won’t feel the need to call for a personal guarantee.
Business credit is an asset which can help your business in years to come.
Learn more here and get started toward opening a new business in Utah.
Want to start a new business someplace else in America? Then check out our handy guide to starting a business in any state in the country.
Utah’s Response to COVID-19
This is how Utah is handling COVID-19. On March 6, Governor Gary Herbert declared a state of emergency. The Governor included the Salt Lake Chamber on the Utah Coronavirus Task Force to ensure the business community is considered throughout the current situation. Utah ski slopes closed due to COVID-19.
Utah small businesses are eligible for SBA emergency disaster loans. The city of Ogden has 0% loans of up to $10,000 available for small businesses. Furthermore, terms are 10 years with up to a 12 month deferral on payment.
