Starting a business in Idaho can be an exciting time. Before selling your product or service though, the nuts and bolts of licenses, registrations, and taxes must be completed.
The guide below will show you the DIY process of forming an LLC in Idaho. However, you can also use an online LLC service that will handle the paperwork for you. We reviewed and ranked the 7 best available.
The Top 2 Worth Considering:
- Northwest Registered Agent is a great option if you are looking for premium customer support.
- IncFile is ideal if you are looking for the best pricing with excellent features.
Step 1: Name Your LLC
Selecting a name for your Idaho LLC is a first step, yet a very important one. A name that is unique and easy to remember is helpful in finding potential clients or retaining customers.
The name should indicate the product or service. It should also follow guidelines set forth by the state of Idaho.
The name of an LLC will likely appear on business cards and stationary, marketing materials, a website, legal contracts, business bank accounts, invoices and/or a building directory.
Idaho law requires that the business name includes the words or abbreviations, “Limited Liability Company,” “Limited Company,” “LLC,” “L.L.C,” “LC” or “L.C.” “Ltd.” or “Co.” may be substituted for “Limited” or “Company.”
The name must be different than other names already registered. Keep in mind the following guidelines:
- Different keywords would be considered distinguishable.
- The suffix identifying the type of business entity would not be a distinguishable feature.
- The name cannot state or imply an association with the government (unless an association exists).
Let’s imagine that someone is considering opening a flower shop in Boise, Idaho. The name she is considering, Flowers by Fanny, is already in use. Instead, she decides to legally name her business Fanny’s Florals and Design, LLC.
Determine if the Name is Available
Following the selection of a name but before filing the Certificate of Organization, check to ensure that your name is unique on the Business Search page of the Idaho Secretary of State’s website. Searching in other places, such as online, is also a good idea.
After you have determined that your chosen name is “distinguishable,” the name can be registered in order that you have exclusive rights for four months.
Optional: Name Reservation
Sometimes a situation may arise where an individual wants a particular name but needs time to organize his/her company before filing paperwork to create an LLC. In this case, a name can be reserved for four months in the state of Idaho.
The downside is that it does cost $2o for the reservation. The reservation will usually process in three to five business days. Expedited processing (within 48 hours) is available for an additional $20. The office of the Secretary of State recommends filing the Business Name Reservation Application online. An additional $20 fee will be charged if it is not completed online.
To file a reservation go to the SOSBiz page of the Secretary of State’s website. If you do not have an existing account, creating one is a one-time process and will enable you to complete a variety of tasks online.
If you do decide to file a hard copy, you will need to include an attached copy and a check payable to Secretary of State. If you are paying using a pre-paid customer account, be sure to include the account number in your filing material. The hard copy application can be sent or delivered to the following address:
Office of the Secretary of State
450 N 4th Street, PO Box 83720
Boise ID 83720
Name reservation filed online – $20/regular processing or $40/expedited processing
Name reservation filed with hard copy – $40/regular processing or $60/expedited processing
Step 2: Choose a Registered Agent
Every LLC in Idaho is required to have a registered agent. This agent can be an individual or a company.
The role of the registered agent is that of a contact person between the LLC and the state. As stated on the Secretary of State’s website, the registered agent “is the person named to receive service of process on behalf of the corporation if litigation occurs.”
Simply put, the process agent receives communications or documents from the state involving such things as taxes or lawsuits and communicates them to the LLC.
Some may wonder why an Idaho registered agent is necessary. The importance of the agent is to ensure that someone is always available to receive important documents even if the business owner leaves the office, goes on vacation, or is otherwise away. Also, having a registered agent is especially important if a physical office does not exist in Idaho.
The owner of the LLC can designate a registered agent on the Certificate of Organization application. The registered agent’s address must also be listed. If the office of the Secretary of State verifies that the address listed is a UPS store, PMB, or PO Box, the LLC is subject to dissolution.
Individual as Registered Agent
Most importantly, the individual must be a resident of the state of Idaho. An LLC cannot act as its own registered agent. However, you can act as your LLC’s registered agent.
Still, using a third party ensures that nothing falls through the cracks. The third party can be an accountant, an attorney, or even a friend. The agent must have a physical and mailing address in Idaho.
Registered Agent Service
If using a service, the registered agent must be a business or professional. We recommend either using an LLC formation service (like Incfile or Northwest Registered Agent) which gives you a free registered agent or ordering a registered agent service by yourself if you choose to DIY your Alaska LLC formation.
Step 3: File the Formation Documents with State
Let’s assume that fictional Fanny has selected both the name for her LLC and the registered agent. She is ready to complete the paperwork (called the Certificate of Organization) that actually creates Fanny’s Florals and Design, LLC in Idaho.
This step can be completed either online or by mailing a hard copy through USPS. The filing fee is $100. When you are ready, it is important to note a few details about each method to ensure that your application is fully completed in the time frame in which you need it.
The Secretary of State recommends online filing. For those who choose not to file online, an additional fee of $20 will be charged. In order to complete an online application, go to the SOSBiz page of the Secretary of State’s website. If you do not have an existing account, creating one is a one-time process and will enable you to complete a variety of tasks online.
Hard Copy Filing
The cost of filing a hard copy is $120. Expedited processing is available for an additional $20. In order to obtain a hard copy of the application, contact the office of the Secretary of State, (208)334-2301. Applications and payment can be sent or delivered to the following address:
Office of the Secretary of State
450 N 4th Street, PO Box 83720
Boise ID 83720
Processing time is usually three-five business days. Expedited processing is 48 hours.
Step 4: Create an Operating Agreement
An operating agreement in the state of Idaho is recommended though not required. The agreement is a contract that defines the operations of the LLC, includes terms and conditions, states the responsibilities of its members, and ensures legal protections of its members.
All owners of the LLC must be in agreement of the terms in the agreement and sign before a notary public.
The operating agreement is useful for both multi-member and single-owner LLCs. In both cases, the agreement provides protections.
For example, in the case of the multi-owner LLC, the terms can stipulate what should happen if a death or divorce occurs among one of its members. In the case of the single-owner LLC, the agreement could be used in court as evidence that the LLC is separate from the individual owner.
The operating agreement can be created in two ways. Some individuals may choose to write the agreement on their own, using an online template. In this case, forms are available that are specific to state. Be sure to use the correct multi-member or single-member form.
The alternative is hiring an attorney to create the document. The benefits of using an attorney are ensuring the document doesn’t exclude any important information, adheres to state law, and invalidates default provisions that may not be what you wish.
Step 5: Get an EIN
An EIN is an Employer Identification Number. Anyone who runs their business as a corporation or partnership must file for this 9-digit number in order to identify the tax accounts of a business. The number can be applied for in one of the following three ways:
Applying online is the quickest method. The process can be completed between 7 a.m. and 10 p.m. EST, Monday through Friday. When the form is completed, the information will be immediately validated and a number issued while you are still online. In order to apply online, a valid individual taxpayer number, such as a Social Security number, is required.
Form SS-4 can be downloaded, completed and faxed to 855-641-6935, twenty-four hours, seven days per week. The EIN will be provided within four business days.
If either of the above methods are unavailable, Form SS-4 can be mailed, though processing will take approximately four weeks. The form can be mailed to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Think you’re ready to open up shop now? Guess again!
Step 6: Taxes, Licensing & Income Reporting
Businesses like Fanny’s Florals and Design, LLC may be official after completing the above steps, but it is important not to overlook a few critical details.
On the federal level, most LLCs do not pay taxes directly to the government. Instead, they report income and losses on the owner’s personal 1040 tax returns. Schedule C is often used for reporting. Unless the LLC chooses to be taxed as a corporation, a single-member LLC is taxed as a Sole Proprietorship and a multi-member LLC is taxed as a Partnership.
Similarly, most LLCs will pay state tax on pass-through income via their personal income tax returns. The exception is if an election is made to tax the LLC as a corporation.
Unlike many other states, the state of Idaho does not place a tax or fee on LLCs for the privilege of doing business in the state.
If selling merchandise, your LLC may need to pay sales and use taxes. If your LLC is an employer, withholding and unemployment insurance taxes are required. In order to pay these taxes, you must first register for a permit. For more information on the taxes that apply to your LLC visit the Idaho State Tax Commission website.
Finally, an LLC may need to file and pay a local tax to a city, municipality, or county.
State and local licenses may be needed before a business can begin operations.
The State of Idaho requires a number of occupations and professions to obtain licenses. Visit the state’s website to determine if a professional license is required of your LLC. Requirements and fees vary according to the license.
In addition, licenses or permits may be required by the municipality or county where your LLC will be located. Contact your local government’s website to learn more.
After an LLC is formed, filing an annual report with the office of the Secretary of State is required. It is recommended that the report be completed online and is due at the end of the month in which your LLC was originally formed. An initial report (filed within first year of formation) is not required. When filed online, the annual report will process immediately. Unlike many states, there is no filing fee.
To file, go to the SOSBiz page of the Secretary of State’s website. If you do not have an existing account, creating one is a one-time process and will enable you to complete a variety of tasks online.
If you do choose to file a hard copy of the annual report, contact the office of the Secretary of State, (208)334-2301, in order to request one. The hard copy report will take approximately three to five days to process.
A notice of an upcoming due date for filing the annual report will be sent or emailed to the location provided on the Certificate of Organization. The notice will include an entity filing number and a pin number. Both are required for filing the report.
If filing is late, you will not be charged a fee. However, if the report is not filed within 60 days of the due date, your LLC is in risk of dissolution by the state.
When all of the mechanics of setting up an LLC in Idaho have been completed, someone like Fanny can get down to the business of setting up a website, creating a logo…or purchasing flowers!
Need Help Creating Your LLC?
We recommend LLC formation services because it allows you to knock off an important thing off your checklist so you can focus all your energy on actually starting a business.
Can you do it yourself? Absolutely.
However, a service that forms an LLC for you will help with ongoing maintenance and keep you notified of any requirements you should adhere to.
As we mentioned earlier, IncFile and Northwest Registered Agent are the top LLC services available. If you’re not familiar with them, as a point-of-reference many of our readers like to compare them to the most well known LLC service, LegalZoom.