How to form an LLC in Idaho in 6 easy steps
If you’ve got a great idea for a new Idaho business, you’ll want to get it started as soon as you can. However, before you set up a storefront and start selling, you’ll have some questions you’ll need to answer; namely, “Should I start an LLC?”
An LLC (or Limited Liability Corporation) is a business structure that limits the personal liability of the business owners. So, in the case of bankruptcy or legal troubles, your personal assets can’t be seized as payment.
An LLC isn’t considered a separate business entity, so you can file the LLC’s profits and losses on your personal income tax return. This makes it especially useful if you’re the only person involved in your business.
If you’ve decided that an LLC is right for your company, you’ll be happy to know that LLC formation is relatively easy; you’ll just need to keep track of some paperwork and due dates and make sure you’re ready to pay a few filing fees.
Below, we’ll take you step-by-step through getting your Idaho LLC up and running!
1) Check if your business name is available
Having the perfect business name is the first step in having a successful business. You’ll want your name to be unique, easily searchable to your new customers, and that adheres to the Idaho State naming guidelines.
Your business name MUST include the term “limited liability company” or its authorized abbreviations (LLC, LC, L.C, L.L.C, LTD).
You can’t have anything in the name of the LLC that could confuse it with a government agency. Sorry, FBI’s Most Wanted Cupcakes.
Suppose you’re using a restricted title in your LLC name (the name or title of a professional service, like “Doctor,” “Hospital,” or “Therapy”). In that case, you may need to show documentation (like business licenses) that a licensed professional is part of the LLC.
If you’re using a trade name (for example, publishing under a pen name), you may need to submit a DBA. A DBA (Doing Business As) helps your customers and the Internal Revenue Service know the legal entity behind the name. DBAs help prevent fraud; gone are the days when a flim-flam man could start multiple businesses under a string of aliases. They also protect you in the case of accusations of fraud (or flim-flammery).
Once you have your name, you can submit an Application for Reservation of Legal Entity Name with the Idaho Secretary of State. For a filing fee of $20 (or $40 if you don’t file online), you can reserve your LLC name for four months (120 days)
2) Find a registered agent
An Idaho registered agent is a person or entity that is the state’s main point of contact with your business. Your registered agent will receive any legal or government documents that your company receives.
Your registered agent will need to be a resident of Idaho with a physical address or a business authorized to operate within the state.
You can act as your own registered agent and use your own business’s street address, which may seem like a simple solution, especially if you’re a single-member LLC. However, there are some drawbacks to being your own registered agent that you should think twice about.
For example, the registered agent must be present at the given address during normal business hours. If you’re a photographer that is always traveling to shoots, being your own registered agent can be next to impossible.
Also, suppose you use your business address. In that case, any service of process you might get will be served at your office or business, potentially in front of clients, which can not only lead to some major humiliation but can also ruin your business’s reputation.
Many businesses opt for a registered agent service, which will accept any legal or governmental documents at their office address and alert you when you have something that needs to be seen. Some registered agent services also post your documents online, so you can decide what’s important enough to warrant a trip to the office.
3) Write your LLC operating agreement
An operating agreement details the terms of ownership and operation for your business. Suppose you have multiple members of your LLC. In that case, your operating agreement will lay out what percentage of the business each member owns and who’s authorized to perform certain functions within the company. You can also specify whether you have a manager-managed LLC or a member-managed LLC.
Having all of these details worked out and on paper can help prevent infighting or even legal troubles if members of your LLC have a disagreement and can be useful if your company needs to go to court for any reason.
Idaho state law doesn’t require your LLC to have an operating agreement, but it’s a good idea to have one, even if you’re a single-member LLC.
For single-member LLCs in particular, an operating agreement helps outline exactly how your business is different from a sole proprietorship, so you don’t run into any issues while dealing with the Idaho State Tax Commission.
4) File your Certificate of Organization
When you have a name and a registered agent, you’ll file your Certificate of Organization with the Idaho Secretary of State. Here’s what you’ll need to have to make sure you fill it out correctly.
- The full name of the LLC (including “limited liability” or one of the approved abbreviations).
- The complete street address for your principal office (and mailing address if it’s different from the street address, like a P.O. Box).
- Your registered agent’s name and street address. P.O. Boxes or personal commercial mailboxes are NOT PERMITTED.
- The name and address of at least one governor (manager or member) of the LLC. You don’t have to specify whether they’re a member or a manager.
- Your mailing address for any future correspondence. This is where your annual report reminder will be sent, so make sure it’s valid and easily accessible to you!
You can file online for $100 or by mail for $120. Typically, processing for online applications is around 7 to 10 days, but you can get expedited filing for an extra $40 to $100, depending on how quick of a turnaround you need.
Make sure you have the state filing fees ready at the time of your application because the Secretary’s office can throw out your application for nonpayment.
5) Get your Employer Identification Number
Your Employer Identification Number (EIN) is basically like your business’s Social Security Number. It identifies your business to the IRS as a unique legal entity and allows you to include your LLC in your state income tax filing. Your EIN is what helps to keep your personal assets separate from your business assets, the main reason you probably got an LLC.
With an EIN, you can open a business bank account, and apply for a business credit card. With business accounts, keeping your business and personal assets separate is far easier, and you’re far less likely to run into issues during tax time or accusations of fraud.
Having a business credit card is also important to building your business credit, which will be different from your personal credit score, but functions in pretty much the same way. With business credit, you can apply for higher lines of credit that can help you if you need to make any big purchases or upgrade inventory.
An EIN also allows you to hire employees if you find yourself needing to delegate tasks. Remember that if you hire employees, the State of Idaho requires you to provide worker’s comp insurance.
6) Prepare for your taxes and Annual Report
While you probably won’t be paying taxes on day one of your business, you’ll want to make sure everything is in order when taxes roll around.
If you’re selling physical products, you’ll most likely need to obtain a seller’s permit through the Idaho State Tax Commission. This permit allows you to charge sales tax.
If your Idaho business has employees, you’ll need to register for Unemployment Insurance Tax through the Idaho Department of Labor and the Employee Withholding Tax with the Idaho State Tax Commission.
You’ll also need to complete your Annual Report each year on the anniversary month of forming an LLC. The Annual Report gives the State of Idaho comprehensive insight into your business’s financial health and ensures your business is still in good standing. If you miss your Annual Report date by 60 days, your business is in danger of dissolution, so make sure you get it in on time!
Get LLC insurance in minutes by following these steps
Keep your Idaho LLC up and running through the worst of surprises by getting LLC insurance with Huckleberry! Here’s how to get started:
- Head over to Huckleberry.com and hit the “Instant Estimate” button on the homepage.
- Type in your industry, and Huckleberry will show you the specific coverages they can offer.
- Answer a few questions about yourself and your business, like your location, estimated payroll, and revenue estimates. Nothing too complex is needed; we just want an overview of your business to ensure we have the right product for you.
- In the time it takes to get a cup of coffee, Huckleberry will have a quote ready for you with the coverage you need to keep your business safe and compliant.
- Still not convinced? Our quick rate estimator can get you a ballpark figure of what you’d pay for small business insurance.
You work hard to keep your business running through the best and worst of times. An unexpected disaster could spell the end of all of your hard work.
That’s why Huckleberry is here to help you get the best small business insurance coverage at the lowest rates possible. From worker’s comp coverage to liability protection, Huckleberry gets you the quality coverage you need as quickly and easily as possible.
Visit Huckleberry.com today for your free quote, and get back to what you love.