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What Do Therapists Need to Know About Taxes in Utah?

Utah is straightforward in terms of tax rates, but that doesn’t mean your private practice setup should be an afterthought. Whether you're just getting started or looking to clean up your entity and deductions, this guide walks therapists through how to run a compliant and tax-efficient practice in Utah.


Who this guide is for

This guide is for:

  • Licensed Utah therapists (LCSWs, LMFTs, CMHCs, psychologists, etc.)
  • Solo and group practice owners
  • Therapists offering in-person, telehealth, or hybrid services
  • Anyone looking to reduce taxes, stay compliant, and keep clean records

Step 1: Pick the right structure for your practice

The structure you choose determines how you’re taxed and how protected your personal assets are.

Sole Proprietorship

  • No legal separation between you and your practice
  • No registration required unless using a DBA (doing business as)
  • Profits taxed as self-employment income
  • Low-cost, but high-risk option

PLLC (Professional Limited Liability Company)

  • Utah allows licensed therapists to form PLLCs
  • Offers liability protection
  • Default taxation is pass-through (like a sole prop)
  • You can elect S Corp status once income grows
  • Must register with the Utah Division of Corporations and licensing board

S Corporation

  • Helps reduce self-employment tax through salary + distributions
  • Must run payroll and file W-2s
  • Adds administrative work but saves money once you’re netting $75K+
  • You’ll still file a Utah business return annually

Professional Corporation (PC)

  • Allowed in Utah, but used more often for group or multi-provider practices
  • Can elect S Corp tax treatment
  • More rigid and less flexible than PLLC

Step 2: Know your state tax obligations

State income tax

  • Utah has a flat 4.65% income tax rate
  • Applies to all pass-through income from sole props, PLLCs, and S Corps
  • File this on Utah TC-40 (your individual income tax return)

Annual reports and fees

  • PLLCs, PCs, and S Corps must file an annual report with the state
  • Filing fee: $20
  • Required to stay in good standing with the state

Local licenses

  • No statewide business license, but most cities and counties require one
  • Salt Lake City, Provo, and others may require a separate license or zoning clearance for home-based therapy
  • Always check with your city business licensing department

Step 3: Pay taxes throughout the year — not just in April

Estimated taxes

  • If you expect to owe $1,000+ to the IRS or $500+ to Utah, you must make quarterly payments
  • Deadlines: April 15, June 15, Sept 15, Jan 15
  • Pay federal estimates via IRS, and Utah estimates via tap.utah.gov

Self-employment tax

  • 15.3% applies to sole props and default PLLCs
  • Electing S Corp helps reduce this via salary/distribution split

Filing requirements

  • Sole prop: Schedule C + Utah TC-40
  • PLLC: Annual report + pass-through income reported on TC-40
  • S Corp: IRS Form 1120-S + Utah TC-20S + W-2s for salary

Step 4: Track and claim your deductions

The more organized you are, the more you can deduct — legally.

Deductible expenses for therapists

  • EHR and telehealth platforms
  • Office space or % of your home office
  • CEUs, license renewals, supervision
  • Malpractice and general liability insurance
  • Marketing, ads, and website
  • Business internet, phone, software
  • Retirement contributions (Solo 401k, SEP IRA)
  • Self-employed health insurance

Step 5: When it’s time to consider an S Corp

S Corp becomes a smart move once your profit hits ~$75K annually.

  • Run payroll and pay employment taxes on your salary
  • Remaining profit comes to you as distributions (not subject to SE tax)
  • Still taxed at Utah’s 4.65% rate
  • You'll file extra returns, but likely save thousands per year

Step 6: Common mistakes therapists make

  • Forgetting to file the annual report with the Division of Corporations
  • Not registering for a local business license
  • Electing S Corp but skipping payroll
  • Missing estimated tax deadlines
  • Using personal accounts for business spending
  • Not tracking CEUs or supervision as deductible expenses

Step 7: Our recommendations by income level

Net Income Range

Suggested Action

Under $50K

Sole prop or PLLC is fine; track expenses and pay estimated taxes

$50K–$100K

Consider electing S Corp; automate payroll; tighten bookkeeping

Over $100K

Use full S Corp setup; contribute to retirement; do quarterly CPA reviews

Need help figuring this out?

We help Utah therapists register correctly, clean up their books, and build tax plans that don’t leave money on the table — or risk noncompliance.

Book a consult or email us at david@leichtercpa.com

Disclaimer:
This guide is for informational purposes only and does not constitute legal, tax, or financial advice. While we make every effort to keep the content accurate and up to date, state laws and regulations can change without notice. You should consult a licensed professional in your state before making any decisions based on this information. Leichter Accounting Services is not liable for any errors or omissions, or for any actions taken based on the contents of this guide.