Starting a construction business in Utah takes more than skill on the job site; it requires building the right foundation behind the scenes. From deciding on your business structure and registering with the state, to obtaining your contractor license and setting up business/health insurance, each step plays a role in setting you up for success. At Contractors School, we guide you through every stage so you can focus on growing your business with confidence.
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Step 1: Choose the Right Business Structure
The first decision every contractor faces is how to structure their business. Your choice will impact your taxes, liability, and potential for growth.
Most Utah contractors compare these options:
- Sole Proprietorship: Simple to start but offers no liability protection.
- LLC (Limited Liability Company): Popular among contractors for its liability protection and tax flexibility.
- S-Corp: Provides additional tax advantages and may benefit growing businesses with employees.
A common pitfall is starting as a sole proprietor and failing to separate personal and business finances, which can cause tax issues and even licensing problems later. That’s why many contractors in Utah opt for LLCs or S-Corps from the start.
👉 Not sure which is best for you? Our entity setup service (in conjunction with Integrated Companies) can help you choose and file the right structure for your goals.
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Step 2: Register Your Business in Utah
After choosing a structure, you’ll need to make it official with the state. We will handle your registration through the Utah Division of Corporations and Commercial Code. Certain steps must be completed before you can apply for your contractor license.
Key requirements include:
- Filing your entity with the state.
- Designating a Registered Agent, who ensures you don’t miss legal or tax notices (we handle this for many contractors).
- Applying for an EIN (Employer Identification Number) with the IRS, which you’ll use for taxes and banking.
This paperwork sets the legal and financial foundation for your business. We handle this process top-to-bottom for you, taking the busywork off your plate. Get started on our New Business Setup page.
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Step 3: Get Your Contractor License
In Utah, nearly all contracting work requires a license from the Division of Occupational and Professional Licensing (DOPL). Licensing ensures you meet state standards for safety, compliance, and accountability.
The process generally includes:
- Pre-license course: A 25–30 hour class covering business management, construction law, and best practices.
- Experience requirements: At least two years of verifiable, relevant work history is required for all general contracting licenses. Subcontractors do not require prior experience.
- Business & Law exam: Demonstrates knowledge of contracts, liens, and Utah law. Not all license classifications require testing. Contact us to discuss your specific situation.
- Insurance and bond: General liability coverage and bonding are mandatory. We can help you get insured through our partner, Integrated Companies.
- Application submission: We handle filing with DOPL, including documentation of experience, education, and insurance.
While licensing is one of the biggest steps, it’s only part of the larger journey of starting your business.
👉 For full details, see our article about How to Get Your Utah Contractor License, or explore our complete list of Utah license types.
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Step 4: Meet Tax and Compliance Requirements
Taxes are often where new contractors get tripped up. Misclassifying workers, failing to collect sales tax on materials, or overlooking payroll requirements can cause headaches that delay projects.
Utah contractors may face:
- Income taxes on profits.
- Sales tax obligations on materials and certain services.
- Payroll taxes if you have employees.
To stay compliant, it’s best to work with a CPA who specializes in contractor businesses. Our sister company provides contractor-focused accounting services, ensuring you avoid penalties while maximizing deductions.
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Step 5: Secure Insurance & Bonding
Insurance protects your business from costly risks, and bonding is a requirement for licensing. At a minimum, Utah contractors need:
- General Liability Insurance: Covers property damage and injury claims.
- Workers’ Compensation Insurance: Required if you have employees.
- Bonding: A state-mandated safeguard to ensure financial responsibility.
Through our partner, Integrated Companies, we streamline this process and help you secure coverage tailored to contractors.
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Step 6: Get Your Local Business License
Your state license allows you to operate anywhere in Utah, but many cities also require a local business license before you can pull permits or start jobs.
Examples:
- Salt Lake City: Requires a city business license in addition to your Utah license.
- St. George: Enforces city-level licensing and zoning compliance.
We help contractors cut through the red tape and ensure all local licensing is in place. Contact us for help with this.
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Step 7: Build for Long-Term Success
Once your business is licensed and insured, the focus shifts to growth and stability. Long-term success comes from staying compliant while building a strong reputation.
Areas to plan for:
- Continuing education: Utah requires CE hours to renew your license. See our Utah CE page for more details.
- Bookkeeping and payroll setup: Keeps your finances clean and investor/lender ready. Our partner, Integrated Companies, can handle your bookkeeping and payroll.
- Marketing and lead generation: Even a small online presence can make a big difference in attracting projects. See our article about effective social media marketing for construction businesses.
We support contractors beyond licensing by offering education, compliance, and business growth tools.
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FAQs
Do I need experience before starting a construction business in Utah?
It depends on which license you’re pursuing. Utah general contractor licenses require at least two years of verifiable experience in construction, but subcontractor licenses do not.
If you’re pursuing a general contractor license, you can set up your business (LLC, S-Corp, taxes, registered agent) while gaining experience. Use this time to work with a CPA and prepare for tax obligations so you’re ready to apply once eligible, without additional delays.
Many people also start with a subcontractor license, which does not require prior experience, and upgrade later.
Contact us to discuss your situation.
What’s the difference between getting licensed and registering my business?
Business registration legally creates your company through the Utah Division of Corporations, allowing you to pay taxes and operate as an entity. See our New Business Setup page to get started.
Licensing, managed by Utah DOPL, proves you’re qualified to perform contracting work and requires education, exams, and insurance. See our Utah License Types page to find the classification you need.
Can I expand from residential into commercial construction later?
Yes. Many contractors start with an R100 residential license and later upgrade to a B100 general contractor license once they gain additional experience. Choosing the right business structure early makes future expansions much easier.
If you plan to grow from residential into commercial, let us know so we can choose a business structure for you that can scale. This makes adding or upgrading license classifications much easier down the road.
Can out-of-state contractors start a business in Utah?
Yes. Out-of-state contractors must still obtain a Utah license (via reciprocity or full application) and register locally in the Utah city where they plan to operate. We offer services specifically to help out-of-state contractors.
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Why Choose Contractors School for Business Setup?
At Contractors School, we’re more than a test prep provider—we’re your one-stop shop for building your contracting business from the ground up. From entity setup and licensing to CPA and insurance support, we make the process clear and manageable so you can focus on what you do best: building.
Join over twenty-thousand people who have trusted us to guide them through licensing and business setup.
