In Idaho, starting a new company can be both exciting and stressful. You’re probably excited to open your doors and begin engaging with customers or clients, but there’s paperwork to be filed first, and you must ensure that all legal requirements are met.
At first, the process of forming an LLC can seem complex, and it is easy to get bogged down in red tape and information. ZenBusiness is here to assist you and show you how to form an LLC in Idaho in a simple and cost-effective manner.
All of the necessary steps of forming an LLC are set out in this guide in a structured manner so that you can get the big picture of what you need to do as well as all of the related information. A thorough understanding of the criteria to form an LLC in Idaho will put you on the right track to launching your new business quickly and efficiently, helping you to navigate the bureaucracy with ease.
Learn how the right LLC partner will help you navigate this process and add value to your business once it’s up and running. If your Idaho LLC has been created and all of the paperwork has been completed, you can concentrate on your business without concern.
Allow this guide to simplify LLC formation for you so you can get started running your company as soon as possible.
Benefits of an Idaho LLC formation
When considering the advantages of forming an LLC in Idaho, it is important to first consider the advantages of an LLC and then consider why Idaho is a great place to start a company.
An LLC combines the corporate rights of a company with the tax advantages of a partnership or sole proprietorship. In Idaho, an LLC is described as:
- LLC is regulated by the Idaho Uniform Limited Liability Company Act or operates under an Operating Agreement drafted by its members.
- Individual shareholders are protected from personal responsibility for the company’s behaviour. In most cases, they are not directly responsible for the company’s debts, commitments, or liabilities.
- LLC is taxed as a sole proprietorship (if there is only one owner) or as a partnership (if there are several owners).
- LLC Is a clear corporate structure with easy filing, management, enforcement, rules, and administration.
When compared to other states, there are numerous benefits of an Idaho LLC formation. There are some examples:
- Idaho is ranked first in the country for job growth and third for company friendliness.
- Idaho has a high-performing economy with one of the lowest business prices.
- Idaho has one of the lowest living costs in the world.
- Idaho is home to a number of main industries, including advanced manufacturing, engineering, food processing, and tourism, and has 12 major metropolitan areas and a growing population of nearly 2 million people.
- There are various benefits available, including tax credits, grants, funding, and workforce growth.
How much does it cost for LLC formation?
The precise sum of forming an LLC is determined by the type of company you are beginning, the documents you submit, and any consultancy fees. In the very least, you must pay the $100 electronic filing charge for your LLC Certificate of Organization. The following additional fees may or may not apply:
- If you file the Certificate of Organization of your LLC on paper rather than electronically, you will need to pay an extra $20 (in addition to the $100).
- The cost of reserving your company name online is $20, and the cost of reserving by paper form is $40.
- Any expedited filing will cost you $40.
- Any same-day service will cost you $100.
- Fees for any business licenses that are needed
- Fees for the service of a registered agent
- Notary fees for assisting with the creation of an Operating Agreement
Filing the Certificate of Organization for LLC in Idaho
Read on to learn more about each LLC Certificate of Organization requirement. It is necessary to remember that the information of LLC you give to the Idaho Secretary of State becomes a permanent part of the public record.
1. Business Name
You must use the phrase “Limited Liability Company” or an abbreviation such as “LLC.” You cannot choose a name that is the same as or too close to one that is already in use in Idaho.
2. Business Address
This must be an Idaho street address (no PO Boxes). When you recruit Northwest, you can avoid providing a home or personal address and instead use our Idaho address as your primary address.
3. Registered agent
To accept legal notices for your Idaho LLC, your Idaho registered agent must be available during business hours. You have the option of listing a noncommercial agent (such as yourself) or a commercial agent (like Northwest).
If you mention a noncommercial agent, you must include the Idaho street address where your registered agent must be available. Would you rather not include your personal home or office address on this public form? You may employ a commercial agent by simply selecting their name from the authorized commercial agents’ list.
4. Governor of the LLC in Idaho
You must supply the name and address of at least one governor for your Idaho LLC. The word “Governor” refers to an individual with decision-making authority—in the case of an LLC, this would be a manager (if the LLC has managers) or a member. Have at least one Idaho LLC governor’s name and mailing address.
It is important to remember that you do not need a personal address, only a mailing address (which can be our address when you hire us).
5. Organizer of Idaho LLC
Your organizer (or approved individual) is simply the person who fills out and submits your certificate. LLC Organizers must provide their name and signature. This does not have to be anyone from your LLC—when you recruit Northwest, we will place our details in this section, allowing you to keep your personal information private.
Steps to Form an LLC in Idaho
In order to form an LLC in Idaho, you must first file your Certificate of Organization with the Idaho Secretary of State. This provides a public record of the LLC and helps the state to control and engage with it on important issues.
Before you fill out and file the required paperwork for your LLC, you must make some important decisions. Following the filing of the Certificate of Organization with the Secretary of State, additional steps must be taken, such as drafting an Operating Agreement, obtaining the requisite professional licenses, and preparing the business to file taxes at the federal, state, and local levels.
To keep everything clear, these steps have been broken down in this section. We’ve put together a step-by-step guide to answer any questions you may have in the hopes of simplifying the process of an Idaho LLC formation.
1. Create a name for your Idaho LLC
When selecting a name for the Idaho LLC, your first concern should be that it is distinct from any other company in Idaho. You can quickly and easily perform a name check on the Idaho Secretary of State’s Office business search page to ensure that the business name you want is accessible and not already in use.
To be in compliance with Idaho state law, the name of the corporation must end with the words “Limited Liability Company,” “Limited Company,” or the abbreviations “LC,” “LLC,” or “L.L.C.” Nothing in the name of the LLC may state or suggest that it was created for a reason other than that specified in the Certificate of Organization.
If you are not yet ready to file your Certificate of Organization with the Secretary of State but want to ensure that your preferred business name is protected, you can file an Application for Reservation of Legal Entity Name. This form allows you to reserve the company name for four months, ensuring that no one else uses it until you complete the rest of the paperwork.
Filing to reserve a name costs $20 if done online and $40 if done by paper. You can also get expedited service for an extra $40 or same-day service for an extra $100.
If you want to file your Certificate of Organization with the Secretary of State immediately or are not concerned that anyone else will take your company name before you do, you do not need to file an Application for Reservation of Legal Entity Name and will name your business when you file your Certificate of Organization.
If you want to separate services under different titles or advertise under a name that doesn’t include the necessary “LLC” after the title, you can file a Certificate of Assumed Business Name (commonly referred to as a DBA or “Doing Business As”) after you register your business with the state of Idaho. Filing this form costs $25, and any extra fees are the same as for the name reservation form.
2. Choose a Registered Agent for your Idaho LLC
The state of Idaho allows an LLC formation to have a registered agent for service of process, which means that your LLC in Idaho must have an agency that offers to physically accept legal papers on your company’s behalf if it is sued.
An Idaho registered agent may be either an individual or a service. The most important condition is that they have a physical address in Idaho and consent to accept and forward legal notices to you.
The address cannot be a P.O. Box or something else of the sort. Although you can be your own Idaho registered agent, doing so is usually not recommended because it can cause conflict or place you in the uncomfortable position of receiving legal paperwork in front of customers.
An Idaho registered agent must consent to perform the following duties:
- Any procedure, note, or demand concerning your company that is served on or obtained by the registered agent will be forwarded to you.
- If the Idaho registered agent is a noncommercial registered agent, they must keep their name and address up to date with the most recent registered agent filing for the company.
- If the Idaho registered agent is a commercial registered agent, they must keep their contact details up to date.
It’s a lot to keep track of, so it’s always a smart idea to consider hiring an outside Idaho registered agent service. The following are some of the advantages of using a Idaho registered agent service:
If you are ever sued, the papers will be served on your Idaho LLC registered agent rather than you, which will help you prevent humiliation in front of your staff and clients.
It is easier to travel for work or even take a sick day when a registered agent is assigned to work the conventional 9-to-5 schedule.
- Less work
If your LLC address changes (say, to a larger or better location), you won’t have to update your address with the state because you’ll have a designated registered agent.
3. File Idaho Articles of Organization
To legally form your LLC in Idaho, you must complete the Certificate of Organization and file it with the Idaho Secretary of State. This can be done online for a filing fee of $100 or on paper for a fee of $120. To file online, you must first build an Idaho SOSBiz account, which will allow you to log in and file a variety of other types.
For an additional $40, expedited service is available, and same-day service is available for an additional $100. Paper forms are mailed to the office of the Idaho Secretary of State and must be accompanied by payment in the form of a check made payable to the Idaho Secretary of State.
If you want to mail your Certificate of Organization of your LLC, please send all paperwork to:
Office of the Idaho Secretary of State
450 N 4th Street
P.O. Box 83720
Boise, ID 83720-0080
For a $1 processing charge, both large credit and debit cards may be used to make online payments.
You will need to include the following details to complete the paperwork of your LLC:
- Your LLC’s name
- The street and postal addresses of your LLC main office
- The name and address of the registered agent for your LLC
- The name and address of at least one LLC member or named manager in charge of the company’s management (note that the form refers to such an individual as a “governor”).
- The mailing address at which you want to receive annual report notifications
- Where you can be contacted (phone number and email address)
4. Draft an operating agreement for your Idaho LLC formation
An LLC Operating Agreement is a contract that spells out all of the details involved in the company’s day-to-day operations. It addresses issues such as who owns what percentage of the business, how gains and losses are allocated, and how decisions are taken.
Creating an Idaho Operating Agreement lets you and your business partners establish ground rules before your venture takes off. It assists you in avoiding disputes and making sound decisions.
Although Operating Agreements are not needed for LLC in Idaho, they are strongly advised. The following are some of the advantages of maintaining an Operating Agreement:
- Personal asset security
By specifying which properties and affairs are related to the company and which are not, you create another layer of legal protection between what happens to your business and what happens to you personally.
- Clearly established ground rules
In the absence of an Operating Agreement, Idaho sets default guidelines for how things operate in an LLC. An Operating Agreement is a good way to stop going with the norm and making it clear how the business can work.
- Assign ownership
The agreement should explicitly specify what percentage of the corporation each member owns, as well as how much money they invested and how any costs and income should be shared. This will help you prevent future conflicts with your partners.
- Succession and dissolution
The arrangement will also provide specific information about who gets your share of the company if you die or how things are split if the business dissolves.
- Business funding
In order to obtain business loans or lines of credit, a bank can request an Operating Agreement to ensure that you have given your business serious consideration.
Having an Operating Agreement puts you in the right frame of mind to start an LLC. It forces you to consider various possibilities and prepare accordingly.
In the state of Idaho, an LLC Operating Agreement is considered a legally binding document. This implies that it should be carefully drafted. The right partner will assist you with an Operating Agreement at a relatively low cost, using an existing customized template to speed up the process. It’s a wise investment just for the sake of peace of mind.
5. Apply for an EIN
If you have more than one LLC member, staff, or meet any other requirements, you will need an IRS Employer Identification Number (EIN). You will get an EIN by filling out the application on the IRS website.
Your LLC may be required to register with the Idaho State Tax Commission. The exact taxes that your organization will be receiving and/or has been collecting from the state, as well as whether or not you have employees, will determine whether or not you need to take this measure.
Visit the Idaho State Tax Commission’s Business Basics Hub for information about how to register your LLC to pay taxes and what types of taxes you might be required to pay in order to stay in good standing.
The Idaho Business Registration System website will assist you in registering with the Department of Labor, Tax Commission, and Industrial Commission to ensure that you are set up for any sales or usage tax, income tax withholding, unemployment insurance, and other requirements.
What to do after you start an LLC in Idaho?
1. Establish a business bank account
Since an LLC is a separate entity from its members, it has limited liability. If you combine your personal and company finances, you will lose your liability protections. We strongly advise you to open a separate business banking account in order to keep your business and personal finances fully separate.
This is important because it protects your personal assets while still making tax filing much easier. When you obtain your EIN from the IRS, you will be able to use it to open an account at your favourite bank or credit union.
2. Purchase Commercial Insurance
Any Idaho LLC with employees is required to obtain unemployment and workers’ compensation insurance. Idaho, like many other states, pays for unemployment benefits by taxation. More details can be found here.
Employers, on the other hand, are expected to carry worker’s compensation insurance; you have four options for accessing the insurance, which you can read more about on Idaho’s Business Basics page. Once you’ve received the legally necessary plans, you can possibly look at general liability insurance as well as certain industry-specific policies.
3. Recognize income reporting
Income reporting is just what it sounds like: it is the process of reporting the income earned by your company. It is important to remember that you must file this form regardless of whether you made or lost money during the fiscal year. Idaho has an easy-to-use Income Tax Hub that has all the information you’ll need on income reporting, including policies and forms.
4. Recognize annual reporting
Every Idaho LLC is expected to file an annual report to the Idaho Secretary of State. By logging in here, you can file it online. Your LLC annual report would simply serve to update the state on any relevant details about your company that has changed throughout the year.
5. Find an accountant
We do not recommend that you handle the LLC finances without the assistance of a specialist. There is far too much room for error, and a professional will potentially save you time and money by advising you on the best way to handle your LLC finances.
At the very least, recruit a specialist to help you set up the software and the processes for keeping track of your finances on a regular basis. Then, check with your accountant at least a couple of times per year – particularly during tax season – to ensure you’re keeping accurate records.
How long would it take to shape my Idaho LLC formation?
According to the website of the Idaho Secretary of State, most filings of LLC are usually processed within seven to ten days. If you file by mail, you must account for the extra time it takes for the forms to arrive at their destination. Expedited delivery is available for an extra $40 fee, and same-day processing is available for $100.
Is it possible for me to be the sole member of my Idaho LLC?
You have the option of becoming the sole member and operator of your LLC. Your LLC, on the other hand, may have additional representatives and managers. There are also management structure alternatives to consider, such as member-managed or manager-managed.
It is a good idea to consider the various functions associated with these systems and to outline the roles and responsibilities of each position in your LLC operating agreement.
Who are the owners of an LLC in Idaho?
A member of an Idaho LLC is a person or organization who created the Idaho LLC or joins the LLC by agreement of the founding individuals. An individual or organization can also become a member of an LLC by including their name in the written operating agreement, as a result of a merger, or with the affirmative vote or consent of all existing LLC members.
What exactly is an EIN, and do I need one?
An employer identification number (EIN) is a nine-digit identification number provided by the Internal Revenue Service (IRS) for federal tax purposes. Technically, no, you do not need one. However, if your LLC falls into any of the following groups, you would need to receive an EIN:
- You have staff.
- You file a job, excise, or alcohol/tobacco/firearms tax return.
- You withhold taxes on non-wage profits paid to a non-resident alien.
- You have a Koegh plan.
- You work for a trust, an estate, a real estate mortgage investment conduit, a non-profit, a farmer co-op, or as a plan administrator.
Is a business license needed for my Idaho LLC?
In Idaho, an LLC does not need a general business license. However, several companies do necessitate licenses and permits. Visit the State of Idaho Business website for more information about what licenses your business can need and how to apply for them.
What exactly is an operating agreement?
An operating agreement is a contract signed by all members of an LLC. An operating agreement outlines the LLC, such as whether it is member-managed or manager-managed, the names and addresses of any members, the name of the LLC, how it was created, the registered agent and registered agent address, what happens if a member dies, how the LLC should be disbanded, buyouts, and how to include additional members. Needless to say, it is a vital text.
Is an operating agreement required?
An operating agreement is not mandated by Idaho State Law and is not registered with the Idaho Secretary of State, but it is arguably the most critical factor in keeping your LLC going. To be as direct as possible, failing to have an operating agreement for your LLC would be a very foolish decision.
If you do not have an operating agreement and your LLC is sued, the Court will rule based on the default Idaho LLC statutes. These rules and regulations may not be the best match for your company. It is always a good idea to plan ahead of time to ensure that you are ready for any situation that might arise.
What exactly is an Idaho Annual Report?
An annual report is an information about your LLC that you provide to the Idaho Secretary of State via mail, fax, or online submission. You must file an annual report to keep your Idaho LLC in good standing. Your LLC annual report is due on the last day of the month in which your LLC was reported for the previous year.
The Idaho Secretary of State will give you a reminder card to the mailing address you gave on the Certificate of Organization of your LLC. If you fail to meet this deadline, you will be sent a warning reminder card. You have 60 days from the date the alert card was given to file an annual report of your LLC, or your LLC will be administratively disbanded.
How do I send my Idaho Annual Report?
Your annual report may be sent to the Idaho Secretary of State online, by mail, or by fax. The Annual report should contain the name and address of your registered agent, the name of at least one LLC member or manager, and the signature of an approved representative of the LLC.
How will the income from my Idaho LLC be taxed?
An Idaho LLC is a pass-through corporation, which ensures that profits are not taxed at the corporate level but are instead “passed through” to the LLC members as personal income. This method avoids the double taxation that a typical company would face. Members of an LLC must pay taxes on any personal income they receive from the LLC distributions.
What exactly is the distinction between an Idaho LLC and an Idaho Corporation?
The primary distinction between an Idaho LLC and an Idaho Corporation is that of convenience. Both organizations are the same price to create and need a lot of the same details.
An Idaho company, on the other hand, is expected to have a board of directors, conduct shareholder meetings, and keep books and records, which an LLC is not.
If a company is known as an S-corporation, its profits are taxed twice: once at the corporate level and then at the personal income level. In general, LLC is simpler to handle and more versatile in terms of composition and dividend distribution to members.
Corporations, on the other hand, are the oldest and most prestigious legal bodies. Incorporating is unquestionably serious business.
Starting a new business can be very exciting, but before you can concentrate on the day-to-day operations of your company, you must first choose a business structure. An LLC can be a good option for small companies because it offers liability insurance as well as tax advantages. It is also relatively simple to shape and maintain an LLC in Idaho if you follow the steps outlined above.
Starting a business correctly doesn’t have to be difficult. With over 15 years of experience consulting new businesses and start ups, Matthew is probably the best person to help you set a strong foundation for your business.