Advantages of Incorporating a Business in Utah
Since, Utah is considered to be an excellent state for start-ups or new businesses; it is also home to some really great upstarts like Tranont with revenues of $11.4 million. The Silicon Slope is definitely the right place for a start-up company in Utah although you can explore other areas like finance, tourism, and manufacturing. Some of the other top start-up businesses in the state include Beddy’s (a three year growth of 1,817%), American Business Brokers (2017 revenue of $9.6 million), Blue Fire Leads (a three year growth of 2,307%), Slingshot (2017 revenue of $3.4million), iServe (2017 revenue of $121.3 million), Skullcandy , Boomsourcing , and Taft among others.
Advantages of setting up an LLC or Corporation
Yes, the Beehive State has a great business climate but are there any specific advantages or benefits available if you register a new company in Utah? There are plenty of incentives and benefits made available through a variety of programs orchestrated by the state government and local agencies. In fact, the incentive programs are integral to Utah being named Forbes “Best State for Business” for a third consecutive year. Let’s look at some of the advantages or benefits of forming an LLC or a business corporation:
Advantage#1: Salient benefits of Corporation or LLC
- Economic Development Zone Increment Financing (EDTIF): This is a tax credit program for new and expanding businesses and it is being administered by Governor’s Office of Economic Development (GOED). The salient aspect of this program is that it provides post-performance, refundable tax credit for a maximum of 30% of new state revenues that include sales, corporate, and withholding taxes from employees paid to the state. This tax credit is applicable over the life of any new commercial project valid for a maximum period of 20 years. The life of this business incentive varies from 5 to 10 years and in a single year, any business can benefit from a maximum of 50% credit.
- Pass through taxation: If you register a new company in Utah as an S corporation then the corporation or firm will not pay any income tax. Instead, the income or loss of the corporation will be passed on to the stockholders.
- Independent Life: One of the salient advantages of an S Corporation in Utah is that it enjoys an independent life. The death or incapacitation of a stockholder will not disturb operations of the business.
- Foreign Trade Zone (FTZ): If you register a new company in Utah Foreign Trade Zone as an LLC, you will be able to benefit from this incentive program. Salt Lake City also known as the “Crossroads of the West” is considered to be the primary hub for this program. There are several benefits of the FTZ and these include:
– Businesses can easily satisfy exportation requirements
– There are no “time constraints” on storage
– Businesses can enjoy increased security as well as lower insurance costs
– Being situated in an FTZ means reduction in dutiable tariff on imported parts
– Businesses benefit from reduction in fees related to direct delivery as well as weekly entry
– A business can potentially avoid any supply chain delays
– It helps in consolidating customs reporting
Check how much savings a business can make in a Utah FTZ zone using this Calculator.
- Flexible Profit Distribution: An LLC has the benefit of being able to select different ways of distribution of profits.
- Limited Liability: If you register a new business in Utah as a LLC then you will be able to enjoy limited liability protection. This means claimants can sue the LLC and not the owner or investors.
Advantage#2: Other Business Incentive Programs
There is a variety of business incentive programs including innovation incentives and financing programs available for small and medium enterprises or a start-up company Utah. Let’s look at some of the top programs in Utah.
Recycle Market Development Zone (RMDZ)
It is not surprising that the amount of raw materials or consumer-end products being recycled in the U.S. since 1980, has grown from a mere 9% to over 33%. This growth has created a highly valuable market for recycled goods or products. If you register a new business in Utah that is involved in the process of recycling and if you are looking for an opportunity to expand then the Recycling Market Development Zone is where your business needs to be located. The Utah Recycling Market Development Zone Program was created by Utah Legislature keeping in mind this specific need of businesses. The Program will assist businesses that are into collection, processing, and distribution or use of recycled materials in their manufacturing processes. The possible benefits for businesses are in the form of tax credits like:
- A state income tax credit of 5% on the cost of equipment and machinery
- A state income tax credit of 20% or up to $2,000 on eligible operating expenses
- A variety of local incentives including discounted business license fees, zoning assistance, etc.
- Technical assistance provided by the state recycling economic development professionals
The program has been implemented in Salt Lake City. Check Map of Zone
Utah Enterprise Zone Program (EZ)
An enterprise zone comprises of an area that has been created by the Utah Governor’s Office of Economic Development (GOED) for encouraging economic growth and development in specifically identified distressed areas. In order to avail of the benefits of this program, you will need to register a new company in Utah EZ. You will be eligible for tax credits that can be carried over a period of three years. The tax credit can vary from $200 to $750 for each new full time position filled. There are additional tax credits on investments made in the EZ.
View Enterprise Zones | Download Application
Are there any Disadvantages of Incorporating in Utah?
When you register a new business in Utah, you can be rest assured that there is a wide variety of business incentives that you can leverage. The big question is: are there any disadvantages? Yes, there are a few and they are limited to the type of business entity you form. For instance an LLC requires more paperwork and has a complex structure as compared to a partnership or sole-proprietorship. Similarly, disagreements or conflicts among the stockholders of a business corporation may immobilize overall decision making. These minor disadvantages will not affect business growth keeping in mind the incentives and a robust platform for economic growth that is being offered by the Beehive state.