How to Form an LLC in Idaho
Are you thinking about opening an LLC in Idaho? It’s likely that you are eager to start your own business and interact with clients or customers.
Before opening up shop and interacting with customers or clients, you will need to file paperwork for an Idaho LLC.
You must ensure that all legal requirements are met if you want to reap the benefits of an LLC such as the separation of personal assets and business assets.
This guide on starting an LLC in Idaho provides step-by-step instructions on how to file documentation, obtain tax IDs, and set up company records.
Idaho Business Resources
LLCs are the most commonly used business structure. This is because they are relatively inexpensive to set up and allow owners to be flexible. Your LLC legally creates your business, limits personal liability, gives you tax flexibility, and establishes your personal liability.
As you move through the entire process, you will be guided by the following steps.
If you want to use an LLC formation service, visit our list of the best LLC services in Idaho.
Step by Step Idaho LLC Instructions
Check Name Availability
Your LLC’s legal address may not be used in conjunction with any other registered title. A name search can help you find out if your name is available.
Name Search Idaho Secretary Of State Name Reservation Optional Suffix: The limited liability company name must include the phrase “limited responsibility company” (or “limited company”) or the abbreviation L.L.C.,” L.L.C.,” L.C.,” L.C.,” L.C.,” L.C.,” L.C.,” L.C.,” and “LC.” The abbreviations for “Limited”, or “Ltd.,” may be used. “Company” may also be abbreviated by “Co.”
Designate a Registered Agent
Before you can officially file to set up your Idaho LLC LLC, you’ll need to identify your Idaho registered agent. A registered agent allows a business to receive notices from the government and legal counsel.
The state law requires that every LLC has a registered representative. When you file Idaho articles to the organization with the Idaho Secretary Of State, the registered agent will be designated.
Idaho Certificates of Formation
Fill out the articles of incorporation to establish your limited liability company.
Agency: Idaho Secretary Of State Form:
Certificate of Organization Limited Liability Company
Filing Method Online and Mail Agency Fee $100 + optional $20 expedite cost Turnaround: ~1 week. 1 week. Law:
Idaho Statues: Title 30. Corporations. Chapter 6. Idaho Uniform Limited Liability Company Act
Notes: Two copies must be submitted
Establish Company Records
Your LLC must keep complete and accurate books and records. Your LLC’s original articles of organization will be the first document you keep. Your LLC will produce other official records like:
- Minutes from meetings
- Operating agreement
- EIN verification letter
- Amendments and other filings of the LLC throughout its lifespan
You must create the Operating Agreement
It is possible to use a template to draft an Operating Agreement. It is the governing documents for the LLC. It specifies the legalities of the LLC’s operation, such the annual meeting and the procedure for submitting it to creditors. At your organizational meeting you will review and approve the agreement.
The benefits of an operating agreement
Although operating agreements aren’t required for Idaho LLCs, they are strongly recommended. These are the benefits:
- Personal assets protection: You can add an additional layer of legal protection to protect you and your personal assets from what happens to your business.
- Clearly defined rules: In the absence of an operating contract, the state of Idaho has established default rules for LLC operations. An operating agreement is a way to prevent defaults and clarify how your company should operate.
- Assign ownership: An agreement can clearly state what percentage each member holds. This will include how much capital each member contributed, and how expenses and profits should be divided. This will prevent any disputes with your partners later.
- Succession or dissolution: The agreement may specify who will get what share of the business in case something happens. You can also specify how the business will be divided if it dissolves.
- Business financing: Banks may ask for an operating agreement in order to verify that you have given your business serious consideration.
- The Operating Agreement will help you get in the right frame of mind to start your business. You can plan for different scenarios by using an operating agreement.
Hold the Organizational Meeting
The organizational meeting, which is the initial meeting of LLC members, is the most important. In order to hold this meeting, you’ll need your operating agreements and the filed articles. Keep minutes from this meeting and place them in your company record books.
Get a federal employer identification number (EIN)
EIN is needed if the LLC will have multiple members or hire employees. EINs can also be required to open a bank or other financial account.
Agency: Internal Revenue Service Form:
IRS form SS-4
Filing Method Mail, phone and fax. online. IRS fee $0 Turnaround: Online immediately, or by phone. By fax, it takes 4 business working days. 4-5 Weeks by mail Notes: The IRS website cannot be accessed outside of certain hours. Print your EIN before you close the session. IRS Pub1635: Understanding Your EIN provides additional guidance.
Idaho State Tax Identification Numbers/Accounts
An Idaho seller’s certificate is required for LLCs that make retail sales. Idaho withholding accounts will be required if employees are involved. Register for Idaho tax account by filing online. This will allow you to register your LLC with both the Idaho Department of Labor (Idaho State Tax Commission) and the Idaho Industrial Commission.
- Submit to
- Idaho State Tax Commission
- Filing Method
Online Idaho Business registration System and Permit/Account Applications
Consider Electing C-Corp and C-Corptaxation
Your LLC will be subject to passthrough taxation by default. However, most LLCs continue to keep this tax type. Some LLCs are eligible to elect S-Corp, C-Corp tax treatment.
- S-Corp can help owner-employees making more than $75,000 a year save on self-employment income taxes.
- C-Corps face double taxation. First, the corporation pays income taxes and then members pay distribution taxes. C-Corps offer low tax rates on retained earnings, which can be beneficial if you have more than $250,000 in profits per owner.
How to get a Business License & Permit
It is necessary to obtain the required licenses and permits in order for your business to be legally operated. You can easily navigate the large number of state, federal, and local requirements by searching for your business type using the Small Business Administration Business License & Permit lookup tool.
Idaho Business License
Idaho does NOT require licensure as a general business license.
Idaho does have a state-level general business license. However, Idaho often requires local licenses.
To Maintain Your LLC, You Need to File Ongoing Filings
You must file your federal and state taxes returns.
For good standing with the secretary, many states also require business entities that file an annual statement. You can see the table below for information on Idaho LLCs that must file an annual return.
Idaho Corporation Annual Requirements for Reports:
Agency: Idaho Secretary Of State Form: The Secretary Of State’s office will send you a request for a mail-in report. Filing Method Mail or . Agency Fee $0 Due: Each year by the last day anniversary month of your registration. Therefore, if you were foreign-qualified (incorporated) on March 15, your annual reports must be filed by March 31. Law:
Idaho Statutes. SS30-21-213.
Penalties: No late fee. Within 60 days, the secretary will either dissolve or revoke you business. Notes:
- Anyone with authority may apply.
Idaho LLC FAQs
How much does it cost to start an LLC in Idaho?Based on your filing method and whether you reserve your business name, the state fees to form an Idaho LLC range from $100 up to $140.
The cost of filing an extension will increase. You should note that filing fees can change at any time. For the most current filing fee schedule, visit the Idaho Secretary of State website.
What are the benefits of an LLC in Idaho?
It makes sense to consider the benefits of setting up an LLC in Idaho and then to look at the reasons Idaho is such a great place for starting a business.An LLC gives you the protection of a corporation while also offering the tax benefits of sole proprietorship or partnership.
An LLC is legal in Idaho
- It operates under an operating agreement that has been created by its members, or is governed and governed by Idaho Uniform Limited Liability Company Act.
- The company acts in their best interest. In most cases, they are not personally responsible for any debts, obligations or liabilities incurred by the company.
- If there are multiple owners, the tax is either a sole proprietorship or partnership.
- This is a simple business structure that allows for easy filing, management, compliance, regulation, and administration.
An LLC formed in Idaho has many benefits over other states. These are some of the benefits:
- Idaho is ranked No. Idaho ranks No. 1 in job growth and No. 3 for business friendliness. 3 for business friendliness.
- Idaho is a high-performing state with low costs of doing business.
- Idaho has one the lowest living costs in the country.
- Idaho has 12 metropolitan areas and nearly 2 million residents. It is also home to many key industries such as advanced manufacturing, aerospace and food production.
- There are many incentives available, including tax reimbursements, grants, financing and workforce development.
How is an LLC taxed in Idaho?
Your Idaho LLC might need to pay a variety of taxes. These taxes include sales tax and other taxes that must be paid to the Idaho government. The IRS may also require you to pay self-employment and federal tax.
Your LLC can be taxed as a partnership, but you will not have to pay business income tax or personal income tax. This means that LLCs are considered pass-through entities.
The income from the business “passes through” to your personal income, and not at the business level. All income from your LLC will be treated like personal income if you are a single owner LLC.
If there are other members to the LLC, you must file forms detailing each member’s share. They will then be taxed on that portion of their personal tax return. Additional taxes could apply if you have employees, operate or sell certain products, or if there are any other tax requirements.
The following taxes could be your responsibility in Idaho:
- Amusement devices
- Beer tax
- Tax on business income
- Cigarette tax
- E911 prepaid wireless fee
- Electricity tax
- Estate tax
- Fuel tax
- Income tax
- Tax on mine licenses
- Tax on oil and gas production
- Property tax
- Sales and Use Tax
- Tobacco tax
- Convention and travel tax
- Tax on vending machines
- Taxes on wine
- Employer withholding tax
Visit Idaho’s Tax Types Page to learn more about each tax and which tax applies to you. The Idaho Business Wizard page is another great resource to help you determine what forms, taxes, licenses, or other items are required to comply with the law. The site will tell you what to file next by answering a series questions.
- What is the processing time to form my Idaho LLC? According to the Idaho Secretary of State’s website, most filings are processed within seven to ten days. You will need to factor in the extra time required for forms to reach their destination if you file via mail. For an additional fee, expedited processing is possible. Same-day processing is also available.
- Do I need to file my operating agreement with the state of Idaho? Idaho doesn’t require LLCs to file operating agreements with the state. These documents are not required for registration with the government but are important internal guidelines.
- Idaho might not ask for it but you should still make an operating agreement for the LLC. It is highly recommended that you create an operating agreement for your new LLC to protect yourself and ensure your company’s success.
- Even if your LLC is solely launched, operating agreements can be very beneficial to both single members and those with multiple LLC members.
- An operating agreement, as we discussed, outlines your company’s management structures and practices. It also identifies the rights, powers, and responsibilities of each individual. The operating agreement usually includes clear instructions about how to proceed in the event of certain outcomes, such as members joining or leaving an LLC.
- What tax structure should I choose for my Idaho LLC? You will be informed about the tax classification options available when you apply for an EIN. The default tax status is the most common for LLCs. This means that the owners of the business pay federal and state taxes on the income they earn. The LLC is treated as an entity and is not subject to separate taxation. Sometimes, larger LLCs opt to file taxes under the corporate umbrella. An accountant can help you determine the best tax classification for your LLC.
- Does Idaho allow a Series LLC? A Series LLC may have more than one group of members, managers, or LLC interests. Each series has its own rights, powers and duties. Each series could also have its own business purpose. They are not allowed in Idaho.
- To ensure that you do not face any legal consequences, it is a good idea to consult a lawyer before you attempt to register an LLC with another Series LLC.
- Which licenses and insurance are required for an LLC in Idaho? Idaho does not require general business licenses, but many types of businesses may need to obtain licenses or permits. It is important to search for licensing that is applicable to your industry, whether it be federal or local.
- Visit the Idaho Department of Insurance website for more information about what type of insurance you may need.
- What annual filings are required for my Idaho LLC? All LLCs in Idaho must file an annual report. The Idaho annual reports are free and can be filed online. There are two ways we can assist you in filing your annual report.
- What is the process for creating a foreign LLC in Idaho?
- How do I dissolve an Idaho LLC? The members of an LLC must vote to dissolve it before the process can begin.
Brian Wilson is the content manager and founder of LLC Radar.
Brian grew up in North Texas, just outside of Dallas, and has a bachelor’s degree in business journalism from Southern Methodist University. Since graduating from SMU, Brian has gained over 10 years of experience in business writing for several online publications.
Brian resides in Plano, Texas and he can be reached at firstname.lastname@example.org
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