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Guide to Forming an LLC in Idaho

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Follow our free guide to form an LLC in Idaho

Before you start your business, review our comprehensive guide on how to form an LLC in Idaho, as well as the pros and cons of starting a business in the state.

Pros and Cons of Forming an LLC in Idaho

idaho llc guide


Pros

No Cost for Annual Report
Idaho is one of only a few states that do not charge for an annual report. However, LLCs are still required to file the report every year.

Growing Economy
Idaho’s economy has been moving up over the recent years; the state’s GDP has grown by almost $14 million since 2012. Boise is considered the fastest growing metro region in the U.S. and the state median income has risen by over 4% in less than a year.

Low Crime Rate
Idaho is one of the safer states in the nation with a violent crime rate that is almost 40% lower than the U.S. average. According to a recent FBI report, property crimes in Idaho were also down, by over 30%.

Cons

High State Income Tax — 6.925%
Even with a recent deduction, the state income tax rate of 6.925% is still on the higher end of the scale and still makes it one of the higher rates in the country. The state’s sliding tax scale jumps from 1.125% to 6.925% for all taxable income over $11,280. 

Less Privacy for Owners
Idaho requires full disclosure of an LLC’s members/managers in the filing paperwork. Information about members/managers of the LLC is available for competitors and potential partners to view—a disadvantage for most LLCs.

Cost of Doing Business

  • $100 filing fee / $0 annual report
  • 6.925% corporate tax

Phase One: Starting Your Idaho LLC

There is a process of forming an LLC in Idaho, but with the right help, it does not have to be confusing or complicated. The beginning steps for starting an LLC business are listed below: 

Step 1: Name Your Idaho LLC

The first step in forming your Idaho LLC is to choose a name your business. There are state and federal guidelines concerning what words you can/cannot use in business names. There are also some regulations and restrictions regarding the use of certain words.

Tip: Use a free business name search tool to ensure your company’s desired name is available.

Business Name Guidelines

  • The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C.
  • Your business name cannot be intentionally misleading to consumers
  • The name of your new LLC must not be similar to another organization’s name/trademark

Restrictions

  • “Lottery” and “Bank” are ineligible for use (any state)
  • Terms that represent educational or Veterans’ organizations are restricted
  • Terms related to the Armed Forces or civil servants (police, EMT, fire)

LLC business names associated with government and/or financial entities are not always restricted - it depends on the state. Additional paperwork may be required.

URL Availability
You should also give your LLC an online presence by building a website. You can easily check domain name availability at a number of online web services sites.

Step 2: Establish Ownership

The owners of an LLC are called members and managers. All LLCs will have members, but not every LLC will have managers —  the difference depends on the chosen management structure of the business.

LLC Management Structures:

  • Member-managed: All members participate in operating and making decisions for the LLC
  • Manager-managed: An appointed manager oversees the daily operations of the LLC and the members are not actively involved. 

Idaho LLC Member Guidelines

Required Number of Members
There must be at least one member or manager to form an LLC in Idaho.

Member Disclosure Requirements
Idaho is among the states that require full disclosure of an LLC’s members in the incorporation paperwork.

Age Restrictions
LLC members in Idaho may be of any age.

Residence Restrictions
There are no residency restrictions imposed on LLC members in Idaho.

Step 3: Find a Registered Agent in Idaho

Having a registered agent is necessary for any business formed in Idaho. Your LLC will not be considered official without this position.

What is a registered agent?
A registered agent is a party (person or business) who is authorized to accept official notices and correspondence on behalf of the LLC. The agent is meant to be the primary contact for the LLC.

Why do you need a registered agent?
Idaho state law requires all LLCs to appoint a registered agent so that the state government has a consistent way of contacting the business. The agent must be available during standard business hours.

Who can be a registered agent in Idaho?

  • A state resident with a physical address in Idaho
  • An LLC or corporation that is licensed to conduct business in Idaho

Can I be my own registered agent for my business?
You are legally allowed to be your own registered agent as long as you have a physical address in Idaho.

Is being my own registered agent discouraged?
Since the registered agent’s name and address are publicly listed, LLC business owners who choose to be their own registered agent risk compromising their personal information.

Tip: Avoid the hassles and choose Swyft Filings to fill the registered agent needs for small businesses in Idaho. Find more information here.

Step 4: File the Certificate of Organization

The most important step in creating your Idaho LLC is filing the Certificate of Organization with the Secretary of State.

What is the Certificate of Organization?
The Certificate of Organization is a legally binding document that is filed with the state government to officially and legally form your LLC.

Why do I need the Certificate of Organization?
Your LLC business in Idaho will not be legally recognized by the Secretary of State without filing this document. Consider the Certificate of Organization as part of your LLC’s foundation.

What is the cost of filing the Certificate of Organization?
The filing fee for Idaho is $100.

What information is included in the Certificate of Organization?

  • The name and address of the LLC
  • The contact information of the members/managers
  • The name and location of the registered agent
  • The preferred address for the annual report notice

Additional Idaho Filing Requirements — Professional Service Businesses

Idaho is among the states that have specific guidelines for professional service businesses that wish to form a business — this type of LLC is known as a Professional Limited Liability Company (PLLC).

The following professions generally form a PLLC:

  • Accountants
  • Attorneys
  • Physicians (general, surgeon, podiatrist, dentist, optometrist, chiropractor, physical therapist)
  • Professional Counselors and Psychologists
  • Architects and Engineers
  • Geologists
  • Veterinarians
  • Social Workers

Important Points:

  • All members of the PLLC must be licensed in the profession of the business.
  • The PLLC is only allowed to provide services for which the business was formed.
  • The members are still subject to whichever licensing boards govern the PLLC’s profession.

Step 5: Create an LLC Operating Agreement

Although it may not be legally required, an LLC Operating Agreement is a necessary part of your business’s continued success.

What is an LLC Operating Agreement?
The LLC Operating Agreement is a legal document that defines the rights of each member and lays out the details involving the LLC’s operating procedures.

Why do I need an LLC Operating Agreement?
Operating Agreements provide structure for the business, protect business assets, and reduce internal disputes and lawsuits.

Do I need to file the LLC Operating Agreement?
You do not need to file the Operating Agreement with the state; it is for the benefit of your LLC and remains in-house.

What goes into an LLC Operating Agreement?
While there is not a set rule of what must be included in your LLC Operating Agreement, most documents include the following information:

  • List of the members/managers and their roles
  • Designation of authority in the LLC
  • Initial capital contributions of the members
  • Voting designations and percentages of the members
  • Member transfer/addition rules and restrictions
  • Distribution of profits
  • Meeting schedule

Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.

Step 6: Register for an EIN

Most businesses formed in Idaho must register for an EIN. Your Idaho LLC will not be able to conduct business without this ID.

What is an EIN?
The EIN is a nine-digit number that is assigned to your business by the Internal Revenue Service (IRS) and identifies your business like a personal Social Security number.

What does EIN stand for?
EIN is an acronym for Employer Identification Number. It is also known as a Federal Tax ID.

Are all businesses required to have an EIN?
Federal law dictates that certain types of business entities register for an EIN:

  • Any business with employees (even if owned by one person)
  • Any business with more than one member
  • A partnership (LLC or C-corp)

Please Note: A sole proprietorship is not required to have an EIN, but it is still recommended.

Why does my LLC business need an EIN?
The more common reasons you would need an EIN are:

  • To hire employees
  • To open a bank account in the U.S.
  • To file your company’s taxes
  • To pay independent contractors

In short, if you make money through your business and it has employees, you must have an EIN.

Is the EIN publicly listed?
The EIN for your LLC will be part of public record.

Can I use my Social Security Number as the EIN?
If you are a sole proprietorship who wants an EIN for your business, you can elect to use your social security number; however, your EIN is part of public record.

Swyft Filings offers EIN services for small businesses in Idaho. Find more information here.

Phase Two: Maintaining Your Idaho LLC

Beyond the steps of forming an LLC in Idaho, you still have more to do to make your business compliant and ready to officially operate.

The Next Phase:

Step 1: Register for Idaho State Taxes

In the state of Idaho, all businesses are required to pay a corporate tax of 6.925%, with a minimum of at least $20 due.

State Income Taxes
Idaho’s state income tax rates are listed in the table below:

Corporate Tax Information
You can also choose to have your LLC taxed as a corporation; if so, you will be responsible for paying the 7.6% corporate income tax rate on your business’s earnings.

Additional Tax Information
Other taxes your LLC may need to pay include:

  • Sales and Use Tax at 6%
  • Employee Withholding Tax
  • Unemployment Tax

Step 2: Obtain Business Licenses and Permits

The licenses and permits required for an LLC in Idaho can vary, depending on a number of variables:

  • Location (city and county)
  • Type of Business
  • Industry

Tip: If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.

Step 3: File an Annual Report

All businesses formed in Idaho are required to file an annual report with the state government.

What is an annual report?
An annual report, which is also called a periodic report, is a legal form that is filed with the Secretary of State on a periodic basis that is designed to keep your business’s information current with the state.

What kind of information is in the annual report?
The information requested in the annual report is similar to what is in the Certificate of Organization:

  • The name and address of the business
  • The name and address of the registered agent
  • The business’s EIN

Is the annual report part of public record?
The annual report filed on behalf of your LLC is a matter of public record.

Fees and Due Date

Fee: $0
Due Date: The anniversary month of the LLC’s formation
Implications of Late Filings: Eventual dissolution by the state

Swyft Filings provides stress-free solutions to keep your LLC compliant. Let us file your annual report today.

Step 4: Obtain a Certificate of Good Standing

Your LLC is almost completely ready to go — all you need is a Certificate of Good Standing.

What is a Certificate of Good Standing?
The Certificate of Good Standing is a notification that confirms your business is properly formed according to state regulations.

Who issues the Certificate of Good Standing?
The Certificate of Good Standing is generally issued by the Secretary of State.

When can I request a Certificate of Good Standing for my business?
Request a Certificate of Good Standing after your LLC is officially formed through the Secretary of State.

Why do I need a Certificate of Good Standing?
Having a Certificate of Good Standing adds credibility to your new LLC for banks, financial institutions, and other businesses.

Does the Certificate of Good Standing have an expiration date?
The Certificate of Good Standing does not expire/does not need to be renewed.

Swyft Filings can create a Certificate of Good Standing for your Idaho LLC. Click here for more information.


Additional Idaho Resources

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