Does hiring in Utahcreate permanent establishment risk.
Teamed employs your Utah workers under its own entity, so your company avoids the tax filings and nexus exposure that come with running payroll there.
At a glance
What a Utah entity would owe on its own
If your company formed and ran its own entity in Utah, it would face a corporate income tax of 5.0% on income earned there and a minimum franchise tax of $100 even in a loss year. There's also a formation or registration fee of $59 to get the entity on record with the state. Teamed's EOR model absorbs all of that under its own Utah registration, so none of it lands on your company's books while you use it.
- Corporate income tax
- 5.0%
- Minimum franchise tax
- $100
- Formation / registration fee
- $59
How nexus works
How Permanent Establishment Risk Shows Up in Utah
Permanent establishment risk means a state decides your company has enough of a footprint there to owe corporate tax, file returns, and register as a foreign entity doing business. Hiring a single employee in Utah can be enough to trigger that question, depending on what the employee does and how long the arrangement lasts.
Teamed removes that question by employing the worker under its own Utah-registered entity. Your company signs a services agreement with Teamed, not an employment contract with the worker, so the payroll, the withholding, and the state's corporate income tax exposure sit with Teamed, not with you.
This matters most in the early stage of testing a state, when you do not yet know if the role will last a year or five. Whether and when that changes depends on salaries and how long you intend to stay, which is exactly what the crossover calculator is built to work out.
Going it alone
What Owning the Entity Would Cost You Directly
If you decide to register your own entity in Utah, the state charges a formation or registration fee of $59 to file. Once registered, the entity owes Utah's corporate income tax at 5.0% on its Utah-sourced income, and it owes a minimum franchise tax of $100 in any year it does not clear that floor through the income tax itself.
None of these are large numbers by themselves, but they come with the ongoing work of filing, tracking apportionment, and keeping the entity in good standing every year, whether or not the Utah team is growing. That administrative load, more than the dollar figures, is usually what decides the timing.
The honest answer
When an EOR Is the Right Call, and When It Isn't
An employer of record is sometimes the better answer, not a lesser one, especially for a small or still-changing headcount in Utah or when you're testing whether the market is worth a permanent presence. It is a fair, deliberate choice for that stage, not a stopgap you should feel behind on.
Talk to a member of the team about where your Utah plans actually stand, and run the numbers through the crossover calculator before you commit either way.
Your own entity, when it's time
Your own entity, when it's time. We set it up, migrate you in, and hand it back intact.
When a Utah team grows into something that clearly justifies its own tax presence, Teamed handles the move through Global Entity and Employment Operations, which we call GEMO. We register the Utah entity, transfer employment contracts and payroll history across cleanly, and step back once it is standing on its own, across 100+ countries.
Before you commit
Sometimes an employer of record is the better fit
An employer of record is sometimes the better answer, not a lesser one, especially for a small or still-changing headcount in Utah or when you're testing whether the market is worth a permanent presence. Talk to a member of the team about where things stand, and use the crossover calculator to see what the numbers actually say before you commit either way.
Contractors, employer of record and your own entity all run on one platform at Teamed, so moving between them later does not mean changing provider or re-onboarding anybody. Real HR and legal experts handle the work rather than a ticket queue.
Talk to a member of the team and we will tell you plainly which one suits where you are. If you would rather look at the numbers yourself first, the crossover calculator models it on local salaries and employer costs rather than on a headcount rule of thumb.
Who carries it
Your own entity, when it's time. We set it up, migrate you in, and hand it back intact.
Global Entity and Employment Operations, which we call GEMO, is how Teamed forms your company, registers it for tax and payroll, runs it month to month and keeps its filings current, across 100+ countries. You stay the employer. We do the work behind it.
For a Utah team, that means Teamed files the formation paperwork, gets the entity in good standing with the state, and moves your existing employees and their records over without a gap in pay or benefits. The entity you end up owning is one that was actually run correctly from day one.
They set up our EU entity and moved hires across without missing a payroll.
Questions
Utah tax presence questions
Does hiring one employee in Utah create a permanent establishment for my company?
It can, depending on what the role does and how long it runs, because Utah does not need a large team to consider a company present for tax purposes. Using Teamed's EOR model avoids that question entirely, since the employee sits under Teamed's Utah entity rather than yours.
What would my company owe if it registered its own entity in Utah?
A Utah entity owes corporate income tax at 5.0% on Utah-sourced income, plus a minimum franchise tax of $100 in any year that tax does not clear that floor. There is also a one-time formation or registration fee of $59 to set the entity up with the state.
How does Teamed avoid creating a taxable presence for my business in Utah?
Teamed employs the Utah-based worker through its own registered entity, so the employment relationship, payroll, and any resulting tax nexus belong to Teamed. Your company holds a services agreement with Teamed instead of a direct employment relationship in the state.
When does it make sense to move from an EOR to our own Utah entity?
It depends on salaries, headcount, and how long you plan to stay in Utah, not on a fixed employee count. Run those specifics through the crossover calculator or talk to a member of the team to see where the balance actually tips.
Does Utah's minimum franchise tax apply while we use an EOR?
No. The minimum franchise tax of $100 applies to entities registered in Utah, and while you use Teamed's EOR service, your company has no registered entity there to owe it.
Where these figures come from
Sources
These figures come from the Utah State Tax Commission's TC-20 corporation franchise and income tax instructions and the Utah Division of Corporations and Commercial Code.
Looking for a job in Permanent Establishment Risk yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.