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When you plan to start your business in Idaho, you can, potentially, protect your personal assets from business creditors by forming a Limited Liability Corporation (LLC). Additional reasons for forming an LLC include easier management of compliance and regulatory matters, and more favorable tax treatment.
In Idaho, there are numerous business incentives that are offered to every business. Depending on your company, you could qualify for one or more tax incentives, business loans, and other savings. Be sure to review the Idaho Department of Commerce website for additional information on business incentives and loans, which may be available to those who are starting a business in the state.
Many of the forms you’ll be required to fill out will ask you for information regarding the members of your LLC. Be prepared for these questions by having names, addresses, telephone numbers, and email addresses for each member.
Here are the steps you’ll need to take in order to get your LLC in Idaho.
Below, you’ll find a detailed explanation to walk you through each step.
Idaho has specific guidelines for naming a business. These guidelines must be followed carefully to avoid having issues with the state. The guidelines are explained in Idaho Business Names and Conventions Policies.
Some of the specifics about naming your business you need to know are:
Once you’ve decided on a name for your business, the next step will be reserving the name. Idaho has a specific application for reservation of legal entity name, which may be filed online. If you opt to file the paper form for your reservation, you will have to download the form from the Secretary of State website, request by telephone by calling (208) 334-2301, or by emailing [email protected]. In addition to the $60 base filing fee, paper forms will require a $20 processing fee.
If you intend to conduct business under any name except the LLC’s name, you should file an Assumed Business Name form. The filing fee for this form is $25 and there is an additional $20 processing fee. The form must be typewritten, filled in accurately and mailed to 450 N 4th Street, PO Box 83720, Boise, ID 83720-0080 with the required fees. The form may also be filed electronically.
Keep in mind, an Assumed Business Name is not a requirement of operating an LLC in the state of Idaho. Some LLCs operate using the name of the LLC vs. using an assumed name.
Before registering your trademark, you should verify your mark is unique. This can be done online by using USPTO’s trademark database (Trademark Electronic Search System, or TESS).
Once you have verified your trademark is unique, you may use the online filing system, or you may opt to download the documents necessary, fill them out completely and mail them in.
The filing fees for online documents are $30, but if you file in person or by mail, there is an additional $20 processing fee—and certification of your trademark is an additional $10. If filing by mail or in person, you will have to provide printed copies of your trademark; if filing online, your trademark should be provided in an acceptable picture format.
In general, the following makes up the articles of organization:
Name: The LLC name that you have selected in accordance with Idaho’s rules.
Purpose: A statement of purpose that indicates what your business goal is. You should consider keeping this statement generic, so you’re not bound to a single type of business dealing.
Duration: If you intend to use the LLC for only a limited period of time, you will want to include the time frame. If you opt to not include a specific duration, you can use a statement that indicates it will be perpetual, or until the parties agree it should end.
Place of Business: The legal address your business will be operated from. If there is no physical office, you may opt to use your home address, which may provide you with additional tax relief. This address may not be a Post Office Box (PO Box).
Registered Agent: The name, address, and contact information for an LLC. Remember, Idaho requires a registered agent, and in some cases, if you intend to do business in states other than Idaho, you may need multiple Registered Agents. If that is the case, all Registered Agents should be listed.
Management: You should indicate whether the LLC will be managed by the members or have an outside manager. Outside managers are often used when an LLC has numerous members or when some of the members of the LLC wish to remain passive investors.
The filing fees for the required documents for an LLC in Idaho include:
All requirements are spelled out in the various documents which must be filed. Specifically, you will need:
All documents required to file an LLC in Idaho may be completed online, using the Secretary of State’s portal.
All forms may also be printed out, typewritten, and mailed to the Idaho Secretary of State at 450 N 4th Street, PO Box 83720, Boise, ID 83720-0080 with the required fees for both the filing and the processing ($20 per document fee for processing). Be sure to follow all instructions and fill forms out completely to avoid unnecessary delays.
Idaho requires a Registered Agent for LLCs. The purpose of this is to ensure there is someone always available during normal business hours to receive mail, service of process, or packages.
The Idaho statutes governing registered agents Title 30, Chapter 21, Part 4 should be reviewed carefully. In general, a Registered Agent will cost your business between $50 to $300 per year. Anyone over the age of 18 with an Idaho street address can be named as a Registered Agent. Hiring someone with experience, however, may help your business in the long run.
While Idaho does not require an LLC to have an Operating Agreement, it’s a good idea to consider preparing one.
Operating Agreements can help you avoid internal disputes with other members of the LLC. Having this in place at the beginning of your business also ensures each member of the LLC is working towards the same goal and has the same business venture in mind. It is strongly recommended that every LLC create an Operating Agreement.
An Operating Agreement is a legal document outlining the ownership and operating procedures for an LLC. While it is not required, it can help you avoid conflicts between LLC participants in the future.
In effect, your operating agreement might protect you, as well as all investors in the LLC. This is an internal document only and need not be filed with the Secretary of State.
You will be required to file annual reports online with the Idaho Secretary of State. Your business will be notified about the due date associated with the annual report and it must be filed online annually.
Depending on the type of business you are operating, you may be required to obtain specific licenses, permits, or seller’s permits. You can verify this information with the local government offices to ensure you are in compliance with local laws. Certain sales may require you to verify whether a seller’s permit is required from the Idaho State Tax Commission as well.
Every business entity should have an EIN (Employer Identification Number). This is a requirement of the Internal Revenue Service (IRS) for all businesses registered in the United States.
There are also benefits to having an EIN versus using your personal social security number, including:
Applying for an EIN is free and fast. Simply go to the IRS website and fill out the form SS-4 for an LLC EIN. You will be required to answer specific questions and will also need to have the social security number of the principals. You must also use a physical address for your LLC, which may be the address of a principal or that of your Registered Agent.
Your EIN number will be used for all tax and business purposes. Some of the ways this number will be used include:
One of the challenges all business owners face is ensuring compliance with all state tax requirements. Here are some general guidelines about how your LLC must handle taxes.
You will be expected to pay both state and federal taxes on the income your LLC receives.
Remember, when you make payments to the principals of the company, their income is distributed and accounted for by your financial professional. Each disbursement made to a person who is part of the LLC is considered income and therefore is subject to income tax at both the state and federal level.
It is strongly recommended that you hire a tax professional to help with tax preparation. Taking this step will help you avoid running into problems with state or federal tax filings and will ensure you are maintaining good tax records. Tax records must be maintained for a period of no less than 7 years.
In addition to corporate tax filings, you will also be required to file your personal taxes. It’s important to make sure you remain up to date with all taxing guidelines and understand what deductions you may be entitled to take as a member of an LLC. This is another reason why it is highly recommended you work with a tax professional for all your needs.
All Idaho businesses can expect to pay 6.5% on taxable income. You can read more about these taxes in the Idaho statues, specifically Idaho Code section 63-3082. Idaho does provide comprehensive tax guides for all businesses, which may be found on the Idaho State Tax Commission website.
Certain businesses will be required to pay sales taxes depending on what goods they are selling. The sales tax forms may be found using the Idaho State Tax Commission website. A list of required sales taxes is included on the website.
Failure to comply with all sales tax requirements could put your company in financial and legal jeopardy. Additionally, avoiding making the required payments could result in your business license being suspended.
You need not file an estimated self-employment tax with the State of Idaho; it is optional. However, should you determine this is your best option, you may do so by using Form 51, or Estimated Payment of Idaho Individual Income Tax Quick Pay online (no login needed).
Self-employment taxes must also be paid to the IRS for federal taxes. As a self-employed individual, you will be responsible for Social Security and Medicare taxes.
Currently (as of 12/2021), the rate of taxation on the federal level is 15.3%. These taxes are required to be paid as you earn money throughout the year. Therefore, if you take a withdrawal from earnings of your LLC, you may need to file a quarterly tax return.
The IRS divides the tax year into 4 payment periods. You may send estimated tax payments with Form 1040-ES by mail, or you can pay online, by phone or via mobile device using the IRS2Go app.
If you have employees, you will be required to withhold payroll taxes for each employee. Wages, supplemental wages, and some other benefits are taxable on the state level. Your LLC should set up a withholding account which is not transferrable to another business. Compliance with all payroll tax deductions is a necessity to avoid paying fines.
Most businesses in Idaho must also pay $10 towards the Permanent Building Fund. You can learn more about Taxes for Businesses in Idaho by reviewing these documents and videos:
Idaho Code Title 63, Chapter 30 – Income Tax
How will my LLC be taxed? (VIDEO)
Do not forget to verify your federal tax obligations and filing rules for your LLC. How you prepare and file your taxes will be dependent upon how your LLC is structured. More information about federal tax guidelines for LLCs may be found on the IRS website.
In order to ensure you have accurate accounting of business income, maintain a separation between your personal assets and that of your business, and to establish credibility, you should open a bank account immediately.
All income from your business should be deposited into your business bank account. Any payments for debts owed by your LLC including taxes, filing fees, supplies needed to operate your business, and business operation fees (e.g. legal consultation, Registered Agent payments, etc.) should be paid from this account.
All disbursements to members of the LLC should also be made from this account. Remember, this will require you to issue 1099s at the end of the year for each member, for them to file their federal taxes.
Once your LLC has been set up, you will be required to file an annual report with the Idaho Secretary of State. This report does not cost anything to file and will be due 60 days immediately preceding the first day of anniversary month in which your business was formed.
You will have to meet several financial requirements to keep your LLC in full compliance with state and federal regulations. The best way to do this is to hire a legal firm with experience handling finances for an LLC, or by hiring an accountant to handle your taxes on your behalf.
By hiring a professional, you can feel confident that you will be in full compliance with sales tax, income tax, and withholding tax. In addition, having an outside party handling your finances will be helpful so that you aren’t trying to do everything on your own.
In some cases, Idaho Registered Agents are qualified to handle the financial aspects of your business. In all cases, you should ensure you hire someone who has the appropriate knowledge of all Idaho tax guidelines, federal tax guidelines, and an in-depth knowledge of how LLCs function financially.
Every Idaho business must verify the requirements in their specific jurisdiction regarding business permits and licensing. Idaho provides a convenient Business Wizard that will advise you of any specific licensing requirements for your business.
Verify all requirements with local towns and municipalities. There may be restrictions regarding what type of business you may conduct from your home, what materials may be stored on the grounds of your business or other local regulations.
In some instances, a town or city may require specific permits. Remember, remaining in compliance with local regulations is a necessity to ensure you are not subjecting yourself to potentially steep fines for failure to comply. You can find a list of all Town Clerks Offices in Idaho on the Business Portal in Idaho.
Every business in Idaho will also require insurance. The business section of the Idaho state website refers every business owner to the Insurance Information Institute for specific small business insurance requirements. However, it is still a requirement if you are doing business in Idaho to maintain the insurance coverage which is required by law in the state. If your business has employees, you will also be required to maintain worker’s compensation coverage for your employees.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.