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How to Form an Idaho LLC: Everything You Need to Know to Get Started

It’s not easy to start a business, but doing so in Idaho provides many benefits to small business owners because it’s a great state to do business in. The business operating costs in Idaho are low, there’s a predictable tax structure, plus the state government offers companies a wide array of workforce training grants, tax incentives, and property tax exemptions.

This makes Idaho a very attractive place for those looking to form a limited liability company, also known as an LLC. The LLC is Idaho’s most common type of business entity as it offers not only the option to do business in Idaho but also, business owners will be protected by the LLC. In the case of debts or lawsuits, personal property is kept separately if things don’t go according to plan. This means that your personal assets will remain safe if your business isn’t successful.

Business owners start LLCs in Idaho because the process is relatively simple, the registration fees are low, and an LLC offers valuable protection for the owner’s personal assets. If you need help to form an LLC, you should contact an LLC formation professional at LLC Formations. We can help you with the process of starting an LLC in Idaho so you can focus on growing your actual business.

Why Form an LLC

How to Form An LLC In Idaho

Starting an LLC in Idaho is a fairly straightforward process. Once you have identified a business opportunity, all you have to do is select a name for your business, register it with the Idaho Secretary of State, and then you can begin offering your excellent products or business services.

There are several basic steps you are required to take to complete the process of registering your LLC in Idaho:

  1. Choose a business name
  2. File your Articles of Organization
  3. Create an Operating Agreement
  4. Obtain an employer identification number
  5. Obtain all necessary licenses and permits
  6. File the appropriate forms
  7. Submit annual reports
  8. Pay all required taxes

Once you complete these steps, you have fulfilled the legal requirements necessary to operate a limited liability company in the state of Idaho. Your next task is to find as many ways as possible to make it a profitable enterprise.

What Is A Limited Liability Company(LLC)

Before you begin the process of setting up a limited liability company, it’s essential to understand what it is and the benefits it provides. A limited liability company is one of the four common types of legal business organizations. They are:

Sole Proprietorship: A business owned and operated by one person.

Partnership: A business owned by two or more people.

Corporation: A company protected by the laws of incorporation and owned by stockholders.

Limited Liability Company: A business owned by one or more members whose personal assets are protected against lawsuits.

An LLC conducts daily business activities just like a partnership, however, like a corporation, the personal assets of the members who own and run the LLC are protected from lawsuits over the company’s debts and liabilities. Plus, an LLC isn’t taxed by the IRS. Like sole proprietorships and partnerships, the profits and losses appear on the personal income tax returns of the people running the company. This type of operational, management, liability shield and tax flexibility is what makes an LLC very attractive as a type of business entity for any business owner.

1. Choosing A Business Name

When forming an LLC, the first step is choosing an LLC name. The name you choose should provide insight into the type of products and services that your LLC in Idaho offers. The name of your LLC must also be unique. No other LLC registered with Idaho Secretary of State can have the same name.

The name must also end with limited company, limited liability company or the abbreviation LLC per Idaho Business Organizations Code section 30-21-301. The Idaho Secretary of State office will let you know if the name you chose is available. You can also reserve it with the Idaho Secretary of State for a small fee until it officially become yours.

Choosing A Distinguishable LLC Name

You can search the database of the Idaho Secretary of State office on the business search page to see if the name you want for your Idaho LLC is available. If the name you choose is too similar to a pre-existing LLC name, you can be guilty of infringing and be forced to change it or pay damages. Plus, an LLC name cannot have a designator like Inc. that makes it appear to be a completely different type of business entity. Take your time and choose the right LLC name for your Idaho LLC. Many people are forced to file an amendment with the Idaho Secretary of State to change the name of their LLC down the line.

Hassles of Filing An Amendment

A major reason why it’s important to carefully select a name for your Idaho LLC is because the process for amending a name is a major hassle. When businesses amend the name of their Idaho LLC, they must pay a filing fee, they must contact the Idaho Secretary of State office, the IRS, the Idaho State Tax Commission, their bank, credit card companies, and their vendors. The repeated state filing fees can become quite costly, so this isn’t ideal.

Businesses must also change their business cards, website, online registrations, and anything else that their Idaho LLC is involved in. It can take months and create a whole host of headaches. When you’re ready to form an LLC, make sure that you choose a name you’ll be happy with.

2. Select A Registered Agent

Once you have chosen a name for your Idaho LLC, you must decide who will be your Idaho registered agent. An LLC’s registered agent is the person or other entity to whom any legal mail or official state notices are sent to. In order to form an Idaho business, you’ll need a registered agent who resides in Idaho and has a legal mailing address. This can be an office address or a home address.

All important mail will be sent to this mailing address and the registered agent must then get it to the business owner. Your Idaho registered agent must have a street address within Idaho in order to represent your business structure as the Idaho registered agent. Mailboxes and P.O. boxes are not acceptable for a registered agent address. A physical street address is required so Service of Process or any other type of documents can be received personally.

The registered agent is a key member of any limited liability company. When forming an LLC, it’s important to consider hiring an Idaho registered agent service to take care of this position for you. The registered agent service can provide a safe office address to have all paperwork shipped to.

Although you can choose someone to be a registered agent from your company, a registered agent service is the most professional way to go about the process. A registered agent service is guaranteed to always be available during business hours, and a registered agent service will know how to handle all of your mail appropriately. Hiring a registered agent is also helpful because it keeps the personal address of the LLC owner private. Instead of having to list your personal home address, you’ll simply need to list the office address of your registered agent.

The LLC Formation professionals at LLC Formations can get you started with choosing the best registered agent for your Idaho LLC. The registered agent is a crucial part of your LLC formation process, so why not leave it to the professionals.

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3. File for Your Idaho LLC

The next step of the LLC formation process is to prepare the Idaho LLC Certificate of Organization and file it with the Secretary of State. To file the Certificate of Organization for your Idaho LLC, you must provide the name of the Idaho LLC, its mailing address, the names of its members, and its registered agent.

There are a number of professionals who can help to make the Certificate of Organization process faster and easier. You can complete the Idaho LLC registration process online or by mail. In Idaho, the LLC filing process for the Certificate of Organization requires a one-time filing fee of $100. Handling the filing process online is much easier and you will be able to continue your LLC formation much more quickly.

Complete the Certificate of Organization Filing for Your Idaho LLC

In order to complete the Idaho LLC Certificate of Organization filing process online, you must create a SOSBiz account. From this account you will be able to file for everything online for your Idaho LLC. The processing fee may be different when you file online through the SOSBiz account for your certificate.

You can also file by mail, but the process will take a lot longer. You will get a response by mail anywhere from 7-10 business days from when you sent the document. It is recommended that all filings are done online so you can get your business up and running quickly.

Idaho LLC

Complete the LLC Operating Agreement

The LLC Operating Agreement lists the rules for the Idaho LLC ownership and business operation. Typically, the LLC Operating Agreement also includes the size of each member’s percentage of interests in the business, along with the rights and responsibilities of each member of the Idaho LLC and information about management, voting, profits and losses.

An Operating Agreement is a necessary part of running an LLC. The Operating Agreement protects not only the members, but also the business. If everything is organized and agreed upon in the Operating Agreement, then the chances are that the business will run smoothly.

Once you have filed the paperwork with the Secretary of State for your Idaho LLC, you will get confirmation of the approval in 7-10 calendar days. The Secretary of State office will send a stamped Certificate of Organization, along with a filing receipt via email for your Idaho LLC.

4. Employer Identification Number

Applying for an EIN is the next step of forming your Idaho LLC. An EIN has to be obtained through the IRS once the Secretary of State has approved your Idaho LLC. This is your LLC’s Federal Tax ID Number, which is like a social security number for your Idaho LLC. There is no filing fee required to obtain an EIN for your Idaho LLC.

The IRS uses your EIN to identify your LLC for tax filing purposes. Every Idaho LLC needs an EIN in order to open a business bank account, register with the Tax Commission, and also to process employee payroll. The unique tax classification of an LLC means that the IRS will actually tax its members based on the profits and losses they show on their personal income tax returns.

If you have any questions about how to obtain an EIN for your Idaho LLC, contact the professionals at LLC Formations.

Partnership LLC

In Idaho state, when a couple forms a multi member LLC, they can choose to use a special means of taxation that’s referred to as a Qualified Joint Venture. A multi member LLC that’s owned by spouses can elect to be taxed like a Sole Proprietorship and not a Partnership. When you have more than one member, your LLC is taxed a little differently.

EIN Responsible Party

The IRS must have a “contact person” when companies apply for an EIN. In a single-member LLC, the principal is the EIN Responsible Party. If the LLC has multiple members, any of them can be designated as the Responsible Party for the Idaho LLC.

Three Ways To Get An EIN When You Form an LLC

An application for an EIN can be handled in one of three ways. A person with a social security number can apply online for an EIN. In some cases people may be able to use a paper form, Form SS-4, in order to get an employer identification number. This paper form will be sent by mail so it will take longer to receive a response.

You can also contact the IRS by mail to request an EIN for your Idaho LLC. This process may take up to six weeks. The IRS will contact your registered agent by mail and provide the agent with a certificate which contains the provided number for the Idaho LLC.

5. Obtain All Necessary Licenses And Permits

Once you have registered your LLC with the Idaho Secretary of State and received your EIN from the IRS, you have to take one more step towards forming an LLC in Idaho. However, you still must obtain all of the required permits and licenses required in Idaho when starting a new LLC.

There are a few different required licenses and permits a new LLC needs to have. These permits can include a business license or a seller’s permit if the Idaho LLC plans to sell products. Depending on the type of business activities your LLC will be involved in, there may be other business license requirements.

For example, if someone works in social work, physical therapy, veterinary medicine, or real estate, there are specific permits that need to be obtained in order to do legal business in Idaho.

In order to maintain your Certificate of Good Standing, also known as your Certificate of Existence, you’ll need to make sure that all of your permits and licenses are up to date.

Review Business Licenses and Permit Requirements

To ensure your LLC has all the required permits and licenses, the principals should review the Idaho business licensing requirements. They can do so by visiting Idaho’s official business webpage at Idaho.gov: Business Essentials and click on the ‘Licenses/Permits’ tab. You can also visit Idaho.gov: Online Services Professional License.

For information on licenses and permits required by local county, city, town, and other municipalities, you have to contact each of them and inquire about it. To ensure your LLC has all the proper licenses and permits, you can use IncFile.

6. File the Appropriate Forms

Filing the appropriate forms is also essential for legally doing business as an LLC in Idaho. You should be sure you get all of the important paperwork from the Idaho Secretary of State. Towards the end of 2018, a press release was issued by Lawerence Denney, the Secretary of State of Idaho, it made it official that any forms related to starting an LLC in the state of Idaho can now be filed online.

That’s great news for many people who are considering forming an LLC in Idaho. Many people found the old process to be a little confusing, labor intensive, and it required a lot of paperwork. Many business owners hire professional LLC Formation services to register their LLCs for them for a modest fee. Contact the professional team at LLC Formations to see how we can help you with everything you need to file.

7. Submitting Your Idaho LLC Annual Report

Each year, every Idaho LLC is required by law to file an annual report. Filing the Idaho LLC annual report is free, but the penalty for failing to file your LLC’s annual report can be quite severe.

In Idaho, if an LLC does not file its annual report, the Secretary of State can decide to administratively dissolve the LLC and shut down the company. Reopening the LLC can be expensive, challenging, and time-consuming. That’s why it’s important for the members of every LLC to ensure that they have a foolproof system in place for submitting their annual reports.

We recommend marking on a calendar when your annual report is due. You need to make sure that when it’s time to file an annual report, it is submitted on time. If you need to file your annual report but are confused about the process, contact the team at LLC Formations so we can get it taken care of.

The Due Date

Each year, the due date for an LLC to file its annual report with the office of the Secretary of State is at the end of the month, a year from when the Idaho LLC was formed. Every LLC’s first annual report most be submitted 12 months following its formation.

In the past, the office of the Secretary of State had sent out reminders to each LLC to let them know that their annual report is coming due. However, as of December of 2018, that is no longer relevant, Instead, it is the responsibility of the LLC to ensure that the annual report is submitted on time using their SOSBiz account.

The process is simple. All you have to do is click on ‘My Records’, then ‘File Annual Report’ in order to get started with the process.

8. Pay All Required Taxes

An important part of your Idaho LLC Formation process is understanding the taxes. Businesses in Idaho are usually required to pay federal, state tax, and local income tax. However, because of the unique nature of the limited liability company, the LLC is only responsible for sales tax on the products and services it sells each year.

The federal, state, and local taxes the LLC would normally owe based on its profits and losses flows through to the personal, federal, state, and local income tax returns of all the members of the LLC. Depending on the number of members the LLC has, there are particular tax forms each of the members has to complete to fulfill their obligation to the federal, state, and local government and receive or make the required payment. Some LLCs may even be eligible for a tax exemption.

Taxes are an important reason to keep your business finances and personal finances separate by opening a business bank account. When you open a business bank account, you’re keeping your money and transactions organized and separate, which can make it easier on you when it’s time to do your taxes.

No Specific LLC Tax Classification

There is no specific tax classification that the IRS has for LLCs. In Idaho, the taxes charged to LLCs is based on how many members they have. Some LLCs can choose to have the government tax them as an S-Corporation. This enables each member to save money on their self-employment taxes.

A Single-Member LLC will be taxed as though it were a Sole Proprietorship. The business income of the principal will be listed on the Schedule C of their personal 1040 return. Multi-Member LLCs can choose to be taxed as a Partnership. This requires them to file a Form 1065 Partnership Return. Each member of the LLC will be issued a K-1 which they will include as income on their 1040 return.

State Tax Registration

The Idaho Tax Commission website makes it clear all LLCs must register for sales tax and all other taxes that are relevant to the way they conduct business.

Sales Tax Permit

Idaho LLCs that are involved in retail sales, must register for sales tax and collect sales tax. Plus, they are required to have a Seller’s Permit. The Seller’s Permit is related to goods the LLC sold that are delivered or shipped to customers in the state of Idaho.

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How Can LLC Formations Help You?

For many people in Idaho who dream of starting their own business, an LLC offers a simple and convenient way to do it. The Idaho LLC formation process can seem overwhelming, but with a little bit of help, you can have it done quickly so you can get your business started.

The professionals at LLC Formations can help you with the complex paperwork and tax filings while you enjoy the excitement and profit of providing people with excellent products and services. If you’re wondering how to open up an LLC in Illinois, check our Illinois LLC formation guide for more information.

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