Although forming your corporate structure in Delaware—specifically, a corporation—gives you a lot of flexibility, depending on which state you operate in, you may still need to observe local rules.
If you want to do business in Utah, you must first register with the state. We'll walk you through the steps and make it as simple as possible. But first, how can you tell if you're doing business lawfully in Utah?
When to register as doing business in Utah
The State refers to Delaware C corps and all other corporations formed outside of Utah as "foreign" corporations.
Utah statutes do not define what constitutes doing business in the state. However, Utah statutes state that the following activities do not necessitate registration with the state:
Defending or settling a legal action
Having a state-issued bank account
Using independent contractors to sell
When To Register To Collect Sales Tax In Utah
When a corporation is obligated to pay sales tax, each state has its own set of requirements. Sales tax nexus regulations are what they're called.
You may think of the nexus as a unique version of that state's border; if you do specific commercial operations within that border, you're obligated to register for and collect state sales tax.
Buying and selling products and services are common examples of these acts.
Only merchants that offer actual products or services to Utah residents are subject to the state's sales tax nexus laws.
Until 2018, selling or purchasing non-physical goods—such as streaming service subscriptions, SaaS memberships, and so on—did not normally qualify you for sales tax nexus. That changed in 2018, thanks to a significant court decision. You may now be subject to a state's sales tax nexus if you acquire or sell non-physical products or services in that state.
Utah Sales Tax Nexus (physical goods and property)
If your business has a physical presence in Utah, you will almost certainly be required to collect and remit sales tax. If you have warehouses, retail locations, or workers and/or representatives of your company in the state, you may be physically present.
Regardless of any minimal limits, you must pay sales tax if you have a physical presence. The State's website has further information on physical presence for sales tax reasons.
Utah Sales Tax Nexus (non-physical goods and property)
The new state sales tax legislation for non-physical (i.e. online) sales allow you to qualify for sales tax nexus even if you don't have a physical presence or sell tangible things. To be eligible in Utah, you must meet a particular criterion.
If you did the following in the current or prior year, you must collect and remit sales tax:
- Obtain a total of $100,000 in retail sales from Utah; or
- Have a total of 200 or more transactions in Utah
You may learn more about remote sellers on the State's website. This isn't legal advice; rather, it's a guide. If you're not sure whether you're subject to Utah's sales tax nexus, consult your legal counsel and/or an accountant who is familiar with the state's legal code and tax rules.
How To Register To Do Business In Utah
- Select a name under which to do business. This doesn’t have to be the name you registered when incorporating in Delaware, but it can be.
- Fill out an application. You’ll need to file a Application for Authority to Conduct Affairs for a Foreign Corporation to the Utah Department of Commerce.
- Pay the fee. Now you pay the Utah Department of Commerce a $70 filing fee.
- Submit your Application for Authority to Conduct Affairs for a Foreign Corporation.
- Wait. Processing typically takes two to four weeks.
Once you’re approved to operate as a qualified foreign business in Utah, you’ll need to comply with certain requirements.
Compliance as a Qualified Foreign Business in Utah
Maintaining a registered agent and completing your yearly report are two criteria to keep in compliance and continue lawfully conducting business in Utah. You'll also have to pay your corporation's franchise fee and file an income tax report.
Registered Agent in Utah
In Utah, your registered agent is your point of contact with local government officials. If your firm does not have a physical location in Utah, finding a registered agent to receive state notices on your behalf may be beneficial.
A registered office in Utah is essential for foreign firms. The office must be an actual location of your registered agent or a recognized registered agent service, not a P.O. box.
Any vital information, such as business mail, will be forwarded to you by your registered agent. A lot of companies hire registered agents on a contract basis. They usually cost between $50 and $100 each year.
Annual Reporting In Utah
You must file a statement with the State every two years, detailing any changes to the company's address or the membership of its Board of Directors and executives. You'll provide details such as:
- Your company's official name
- Your registered agent's name and address
- Board members, managers, and officials' names and addresses
The filing cost for your yearly report is at least $15.
Paying Corporate Franchise And Income Tax
Utah has a corporate franchise tax as well as an income tax. This tax combines both an income and a franchise component into one. A franchise tax is a tax charged on a corporation's net value in return for the right to do business in a particular state. A corporate income tax is a direct tax on a corporation's earnings. Please check the Utah's State Tax Commission's advice for further information on paying your corporate income tax.
Sales Tax In Utah
You must register with the Utah Tax Commission if you fulfill the requirements to collect sales tax in Utah. The Utah Tax Commission's Utah Taxpayer Access Point allows you to register with the state.
Hiring And Paying Employees In Utah
When you hire a new employee in Utah, you must report them to the state within 20 days of their first day of work, according to federal and state requirements. There's an online portal for registering new hires.
Paycheck withholdings should be handled by your payroll provider, but you must register as an employer with the State and create an online employer account. Utah offers the following information for a detailed guide to your obligations.
The Easiest Way To Register Your Business In Utah
You must keep track of a lot of moving components in order to register your business in Utah. Failure to complete the correct documents, give the correct information, or remain current on compliance regulations can result in major issues.
Capbase makes it simple. When you establish a Delaware corporation with Capbase, we will create the necessary information for you to register to do business in Utah and keep you up to speed on any required filings.
The compliance calendar in your Capbase account will alert you to any future fees, reporting, or other requirements, allowing you to maintain your startup in good standing with Utah state regulators.
Written by Beth Zhao
Beth is a second year law student at The George Washington Law School. She is a member of the Public Contract Law Journal.
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