How to Set Up a New Company in Utah and Secure Workers' Compensation Coverage

Why Utah Requires Workers' Compensation for New Employers

Utah law mandates workers' compensation for all employers with at least one employee, regardless of industry. The purpose is to provide medical care and wage replacement for workplace injuries while protecting employers from costly lawsuits. New companies must register with the Utah Division of Workers' Compensation before hiring anyone.

Step 1: Form Your Business Entity

Choose the Right Structure

Typical structures for small businesses are sole proprietorships, partnerships, LLCs, or corporations. Each has different filing fees and liability implications. For most new Utah companies, an LLC is preferred because it offers limited liability with flexible tax treatment.

Register with the Utah State Registry

File a Certificate of Organization (LLC) or Articles of Incorporation (corporation) online via the Utah Division of Corporations and Commercial Code. The filing fee ranges from $70 to $125 depending on the entity type. You will receive an Employer Identification Number (EIN) from the IRS during the same period.

Obtain an EIN and Register for State Taxes

Apply for an EIN online at the IRS website; it's free. Register with the Utah State Tax Commission for unemployment insurance and state income tax withholding if you will pay wages.

Step 2: Apply for Workers' Compensation Coverage

Determine Your Class Code

Utah assigns a Class Code to each type of occupation based on injury risk. For example, a retail clerk is Class 111, while a construction worker is Class 251. Your class code determines the premium rate.

File the Initial Claim Form (IF-1)

Submit the IF‑1 form to the Utah Division of Workers' Compensation. Include:

• Business name, address, and EIN
• Estimated payroll (or actual payroll if available)
• Class codes for each employee role

Fees: The initial filing fee is $15. The insurer will calculate your premium based on payroll and class code.

Choose an Insurer

Utah has a limited list of approved insurers. You can obtain quotes from multiple carriers or work with a broker. Compare:

• Premium rate per $100 of payroll
• Deductible amounts
• Coverage limits and exclusions

Typical premiums range from $0.50 to $2.50 per $100 of payroll, depending on risk.

Step 3: Maintain Compliance and Recordkeeping

Ongoing Premium Payments

Premiums are paid quarterly. Keep invoices and proof of payment to avoid penalties.

Report Workplace Injuries Promptly

Any injury requiring medical treatment must be reported within 24 hours. Use the IF‑2 form and submit it to the insurer and the Division within the required timeframe to preserve coverage.

Annual Audits and Renewals

Utah requires an annual audit of payroll and employee counts. Submit the required documentation with your premium payment to keep the policy active.

Typical Cost Breakdown for a Small Utah Company

Common Pitfalls to Avoid

• Delaying the IF‑1 submission until after hiring employees.
• Misclassifying employee roles, which can lead to under‑or over‑payment of premiums.
• Failing to report injuries in a timely manner, risking policy cancellation.

Resources for Further Guidance

• Utah Division of Workers' Compensation website – forms and FAQs.
• Utah State Registry – entity filing instructions.
• Utah Department of Workforce Services – unemployment insurance guidance.