Utah has a reputation for being a business-friendly state with low tax rates. Understanding Utah’s tax laws and regulations is essential for small business owners if they want to assure compliance and stay out of trouble. In this post, we’ll talk about Utah’s small business tax rates and take a look at the sales tax percentage for the next year. The Utah Small Business Tax
The kind of business entity and the amount of money earned determine the small business tax rate in Utah, which varies. The tax rate for sole proprietors is dependent on the rate of personal income tax. Depending on the income received, the individual income tax rate for the 2020 tax year ranges from 5% to 4.95%. The tax rate is dependent on the entity’s income and is computed at a flat rate of 4.95% for partnerships, LLCs, and S corporations.
Small businesses in Utah must pay a state sales tax in addition to the state income tax. Utah currently has a 6.1% sales tax rate, which is less than the national average. However, in some places, local sales tax rates might raise the overall sales tax rate. For instance, the overall sales tax rate in Salt Lake County is 7.25%.
It is significant to keep in mind that some business kinds can be liable to additional taxes. Businesses who sell tobacco products, for instance, must pay an excise tax to the state equal to 86% of the wholesale cost. Additionally, a state liquor tax that varies based on the type of alcohol sold is imposed on establishments that sell alcohol.
As was already noted, Utah’s sales tax is 6.1%. It’s crucial to keep in mind that this rate could vary. Utah has a track record of changing its sales tax rate. As an illustration, the 2019 sales tax rate was 4.85%. But in April 2019, it was raised to 6.1%.
Local sales tax rates might vary in addition to the state sales tax. In Utah, local governments are free to set their own sales tax rates, which in some cases can raise the overall sales tax rate. For instance, the current total sales tax rate in Salt Lake City is 8.85%.
In conclusion, the kind of business entity and the quantity of income earned affect the small business tax in Utah. Even though the state’s income tax rate is relatively modest, small firms must additionally pay a sales tax and, depending on the nature of their industry, perhaps even additional taxes. Understanding tax rules and regulations is crucial for Utah’s small business owners in order to stay compliant and avoid penalties.