Idaho is in the northwest corner of the United States. With a population of about 1.8 million people, it is a diverse state. Manufacturing, mining, agriculture, forestry, and tourism are only a few industries that exist; there are many more opportunities. An LLC formation is the simplest and fastest way for someone to start a business in Idaho. A limited liability company (LLC) is a type of corporation that preserves its shareholders’ assets and is suitable for start-ups and small to medium-sized companies. If we want to discuss the benefits of forming an Idaho LLC, we should look at the following:
- The LLC distinguishes your liability and debts from your company liabilities and debts
- The filing process is fast and easy
- The tax filing procedure is simple and can offer tax benefits
Step 1: Obtain a name for your LLC and register it
The company’s name is the first and most critical move. You must ensure that the name complies with all Idaho state requirements. Bear in mind that the name should be conveniently searchable by future clients when naming it. You may be required to follow the following guidelines:
- The expressions limited liability corporation or the abbreviations LLC must appear in the name.
- You must be careful that the LLC’s name is not confused with a government agency such as the FBI, State Department, Treasury, or others.
You can double-check that another organization doesn’t already take your name. To be specific, use the company search tool on the Idaho Secretary of State’s website. Corporations, LLCs, businesses, and other entities can be found using their names and further details. You would be unable to register a name if you discover that it is already in practice and unavailable. You’ll have to find a new name at this stage.
Idaho naming rules
Once you’ve decided on a name, check to see if it complies with Idaho Secretary of State naming guidelines.
- Your LLC must have a unique name
- It should not be confused with the name of another company
- The LLC name must include words like limited, corporations, and so on
- There might be several other limitations in general
Check out the government’s website to get all the information.
Registration of a business name
If you’ve decided on a name for your company, you can record it in one of the following ways:
• If you want to place a hold on your company name because you don’t want to form your LLC right away and are afraid that someone else may use it, you can do so through the Idaho Secretary of State. You must complete an Application for Name Reservation and submit it along with your SOS ID.
Reservation of a name
We’ve already discussed reserving the company’s name. If you cannot start your LLC right away, there might be some paperwork or forms that need to be completed before you can begin. It’s understandable to be bothered that someone could take your dream name. You can hold the name for four months in this situation. For this procedure, go to the State Secretary’s SOSBiz website and click on Forms. After that, go to the application for reservation of the legal entity name. If you don’t already have an account, create one and log in. The method costs $20, plus an additional $20 if you want it to be completed faster. However, if you are dissatisfied with the online process, you can mail or send the form to:
Office of the Secretary of State
450 N 4th Street, PO Box 83720
Boise ID 83720
Paper copy price is $40 and takes 7 to 10 working days, but you can order an accelerated facility for an extra $20. Let’s take a look at the expenses:
- Reservation of a name online costs $20 for standard processing and $40 for accelerated processing.
- The reservation with paper submission: $40 for periodic processing, $60 for accelerated service
Step 2: Pick an Idaho Registered Agent
This move is both essential and crucial. You must appoint a Registered Agent for your Idaho business before filing your organization’s certificate. If your LLC is sued, a Registered Agent is someone who receives legal mail on your behalf. Alternatively, the licensed agent serves as a general point of contact for legal records, tax notifications, reminders, and other correspondence. Under the Idaho Secretary of State, someone with a physical address in Idaho may be a registered agent. You may also use a legitimate business entity with a physical address in Idaho that is registered with your LLC. These businesses, however, charge a fee for their services. As a result, you should go to your preferred entity and sign a representation agreement before naming them as your Registered Agent.
Idaho requirements for a Registered Agent
When choosing an Idaho Registered Agent service for your business, there are a few things to bear in mind:
- If the Registered Agent of your LLC is a person, they must live in Idaho.
- If the agent is a company, it must be licensed to do business in Idaho.
- Your LLC’s representative must have a physical address in Idaho.
- The LLC’s Registered Agent must be present in person during regular business hours to sign for any correspondence.
- The Registered Agent’s speech does not have to be the same as the Idaho LLC’s business address.
The Benefits of Using an Idaho Licensed Agent
What is the job of a registered agent? The agent’s primary responsibility is to accept official documents and correspondence. Among their contributions are:
- receive mail from the Secretary of State of Idaho
- be served with procedure notifications
- Handle official notices and correspondence from the Idaho state and federal governments.
- Manage tax forms and demands to finish reports, business filings, and permits.
In Idaho, who can act as your registered agent?
You can choose from three options:
- You may act as the Registered Agent for your business.
- a relative or an acquaintance
- You have the option of appointing a Registered Commercial Agent.
Step 3: File Idaho Articles of Organization
The Article of Organization is a necessary step in formally forming your LLC in the state of Idaho. The Certificate of Organization must be completed and filed with the Secretary of State. This procedure can be completed either online or on paper. To apply online, you must first establish an account on Idaho SOSBiz and pay a fee of $100. The price for offline mode is $120. For an extra $40, you can use the expedited service. Same-day delivery is available for an additional $100. If you use the paper form, you must mail it to the Secretary of State’s Office along with the fee in the form of a cheque.
Provide the following details to complete the paperwork:
- The company’s name
- The main office’s street and mailing address
- The registered agent’s name and address
- The name and address of the company’s named manager, or at least one member who is in charge of the company’s management
- The address to which the annual report notice will be mailed
- Your contact details, including your phone number and email address
Filing Forms Online
You can handle the electronic submission process via the State’s SOSBiz website. Select Forms and then go to Certificate of Organization Limited Liability Company. If you don’t already have an account, you’ll need to build one. The cost of the form is $100.
The State of Idaho imposes a fee of $20 for manual processing of hard-copy applications, bringing your total cost to $120. You must download the form, print it, and send it to the following address:
Office of the Secretary of State
450 N 4th Street, PO Box 83720
Boise, ID 83720
Delivered by hand
Are you a resident of Boise? If yes, you can also deliver your application to the address mentioned above if you prefer. This procedure takes approximately 7 to 10 working days. However, if you want it to complete quickly, you can pay an additional $20 for an accelerated service for your application to be processed in eight business hours.
Step 4: Design an Operating Agreement for your LLC
An LLC’s operating agreement serves as the guiding document. It is the cornerstone of your LLC, deciding how it will function, such as holding an annual meeting. It’s a legal document that lays out the rules and procedures that govern how the LLC operates. Every member’s and manager’s duties are outlined in the operating agreement. It also serves as a guide for day-to-day operational and financial decision-making in your business. The operating agreement is similar to the bylaws of a company.
As a consequence, we may assume that it acts as your LLC’s bylaws. An Idaho LLC operating agreement is the only way to completely identify each member’s responsibilities and control the management and ownership structure. If a disagreement arises, as these disagreements are expected, this document will provide you with a reference point.
The following information must be covered in the operating agreement:
- A description of each member’s duties
- Information on new member admissions, transfers, and terminations
- Capital Accounts and Contributions
- Gains, losses, and distributions are all allocated.
- Method of voting
If you don’t have an operating agreement in effect, your LLC would be subject to the state’s default rules, which can be very different. Besides, the lack of an operational understanding can lead to member disputes or misunderstanding, and there is no mechanism in place to resolve these issues. So, for the vital functioning of your LLC, you do need an operating agreement.
What are the rules that apply by default?
Every state holds its collection of rules outlining how the LLC is required to function. These laws refer to matters not protected by the LLC’s operating agreement. For example, in the event of a company’s breakup, the operating agreement specifies what will happen to the LLC’s assets, liabilities, and debts. However, if the operating agreement makes no mention of it, the state decides for you. Since default laws aren’t customized to a specific company, they typically don’t favor LLCs. So, it’s best to stop them and make your operating agreement comprehensive for your own sake.
Now that you understand the agreement’s meaning and want it for your LLC, there are two choices. You have the choice of doing it yourself or hiring an attorney-at-law. Writing your agreement is not difficult, as there are many templates available online to guide you through the process. On the other hand, the solicitor is the best choice if you are reluctant and don’t want to miss even the tiniest detail. He or she will draft a flawless operating agreement that includes all of the details.
Step 5: Get a Federal Employer Identification Number (EIN)
EIN (Employer Identification Number), FTIN (Federal Tax Identification Number), or FEIN (Federal Employer Identification Number) is the company’s equivalent of a Social Security number (SSN). Federal and state agencies use it to monitor your business operation. An EIN is required to register with the IRS. An EIN is necessary when filing and paying taxes, paying workers, and submitting payroll details. The IRS will provide you with an EIN.
What position does the EIN play? It comes in handy when you need to:
- Open a bank account for your company.
- File both state and federal income taxes.
- Employ people.
Is an EIN required?
This is a concern that most people have. So, let’s check if you still need it. Can you hire people? Or do you run a company, a limited liability company, a partnership, a corporation, or a non-profit? If you replied yes to all of the questions, we would also answer yes. An EIN is needed.
You may apply for an Employer identification number in a variety of ways, including:
If you want the fastest way, you should go online. On weekdays from Monday to Friday, between 7 am and 10 pm, you can apply. You will receive your EIN instantly after completing the process.
The second choice is to submit a fax. Use this tool, download Form SS4, fill it out, and fax it to (855) 641-6935. Your EIN will arrive in four working days.
The final option is to submit a letter. This approach is not the most popular because it is the most delayed. It takes about four weeks to complete the sorting. However, if you want to pursue this option, you must complete Form SS-4 and submit it to:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Now, we’ve completed most of the steps needed to form an LLC up to this stage. However, a few points are there that need to be addressed. Have patience; we’ll get there eventually, and you’ll be able to take your company to new heights.
Step 6: Filing Annual Report
After you’ve completed all of the steps mentioned above, your LLCs will be approved. Nonetheless, it’s essential to keep an eye on the future. To keep the LLC running smoothly, some maintenance is needed. All LLCs in Idaho are expected to file an annual report, and if you fail to do so, you could face fines or even dissolution. Make a rest stop for filing the notice if your company is going strong, as forgetting it would not be suitable for you. The Secretary of State needs a way to make sure they have the most up-to-date and reliable information about you. You must file an Annual Report of your LLC by the end of the anniversary month, minus the year your LLC was created. There is also no filing charge. The report can be submitted online via the SOSBiz website. While on the homepage, click on the annual report, log in using your credentials, or create an account if you don’t already have one. Your LLC will be administratively dissolved if you fail to file the report within sixty days of the due date. You may apply by mail at the following address:
Secretary of State
PO Box 83720
Boise, ID 83720-0080
Step 7: Taxes and Licensing
Before commencing your enterprise, you should acknowledge the following possible LLC obligations:
Federal Income Taxes
LLCs do not have to pay government federal income taxes to the government directly. In their tax returns, the owners must include company gains and losses. Since LLCs are taxed differently than corporations, you can opt to tax your LLC as a corporation. You’d have to pay a different corporate income tax return if you wanted to do so.
State and Local Taxes
Idaho’s income taxes work in the same way as the federal taxes. Instead of a separate corporation, the owners declare profit and loss on their tax returns. However, if you want to be taxed as a corporation, the rules shift. The main thing to remember is that there are no private or franchise taxes in Idaho.
You’ll just have to pay a few extra taxes. These taxes are determined by the type of company you operate. If you sell goods, you will be allowed to pay a sale and use a fee. You must pay unemployment benefits tax if you have workers. You might also be responsible for paying local taxes to your district, city, or municipality. Since it varies by place, it’s best to check your local government’s website to get more information.
Obtaining a license
In some instances, the organization may require to acquire a license/permit. While your LLC is now legally recognized thanks to the Article of Organization, you will have to get a license before you can start your business. This is dependent on your company type. If you want to do business in Idaho as a grocery shop owner, you must first obtain an Agriculture department license. Check the state’s online services website to view which permits/licenses your company requires. The cost of ownership varies. It depends on the type of license.
Now that you’ve completed the forming process, your LLC is ready to go. But first, let’s take a look at some of the moves that will be useful in the long run.
Maintain the Personal Asset Security of Your LLC
It would be best if you pursue personal asset security, which necessitates dedicated business banking and credit accounts. Mixing your business and personal comments is not a brilliant idea. What is the reason for this? Since your properties, such as your house, vehicle, and other valuables, are at risk if someone sues your LLC.
There are, however, strategies for separating them:
- Open a bank account for your company.
Your assets will be divided from your company’s assets if you open a separate business bank account. It is needed for personal asset security, and having a business bank account would make tax filing easier. So, it is a crucial step after your LLC is up and running.
- Get a credit card for your company.
Like the business account, it aids in the separation of personal and business expenses. Your LLC’s credit history will be established with a business credit card. It will be easy to make a note of all the costs incurred by the company.
- Engage the services of an approved representative.
You must ensure that all representatives of your Idaho LLC sign all documents and that your representatives do not sign personally, which helps protect you from liability incurred by the LLC.
- Business Insurance
Insurance is the cornerstone of the organization because it assists you in risk management. If you’re insured, you can focus on growing your company without worry.
We’ve made it to the end. After reading the papers, you will proceed to the next step in forming the LLC. If you follow all the steps thoroughly, you will definitely become a proud owner of your business. We hope you have found this beneficial experience and that you will be happy in your journey.