How to Form an LLC in Idaho

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Idaho LLC Quick Facts

Idaho LLC Costs

Initial LLC Filing Fee – $100

LLC Processing Time

It normally takes 1-2 weeks for the LLC paperwork to be approved in Idaho.

Expedited processing is also available for an additional fee.

Don’t want to form an LLC by yourself?

Let IncFile or IncAuthority guide you through the LLC formation process, so you know everything was done right. Only pay state fees!

Quick Reference

The Limited Liability Company (LLC) is a popular business structure.  The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in Idaho yourself without an attorney or spending a lot of money.

Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

 

The LLC filing fee is $100, and approval for the LLC typically takes 1-2 weeks.

Guide to Forming an LLC in Idaho

Forming an LLC can be both affordable and is something most people can do themselves. Entity formation companies like IncFile or IncAuthority help guide you through the process and make sure there are no mistakes.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

To get started, create a SOSBiz account with the Idaho Secretary of State.

Then select Start a Business

How to Form an LLC in Idaho

After that, select Certificate of Organization Limited Liability Company and then “File Online.”

Idaho LLC Certificate of Organization

Step 1: Name the LLC

If you previously reserved a name, you can select to proceed using that name in the LLC filing.  It isn’t required to have a name reserved before filing the LLC, as that option will be available on the next screen.  If a name has been reserved, select “Yes”; otherwise, select “No.”

Idaho LLC Reserved Name

If the name has not been reserved, enter the name you wish to use.  The LLC’s company name also has to differ from other entity names registered with the Secretary of State.  You can check on LLC name availability before filing.

The name of the LLC must include one of the following words or abbreviations at the end of the business name:

  • Limited Liability Company
  • L.L.C.
  • LLC
  • L.C.

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

Before finalizing a name, learn more about LLC Name Requirements in Idaho. You may also want to see if a domain name is also available to have a matching website address.

If there is a name you want to use but not ready to form the LLC, the name can be reserved.  A name can be reserved for up to four months by filing the Reservation of Legal Entity Name can be filed with the Secretary of State.

Enter the name you want to use and again to ensure it was entered correctly.

Register an LLC name in Idaho

Step 2: Entity Address

In this section, enter the street address, city, and zip code of the initial principal office.  This address can be the physical address of the business, an address where business records are stored, or the address of a registered address.  A PO Box may not be used.

Idaho LLC Principal Office Address

Step 3: Principal Office Mailing Address

If you want correspondence from the Secretary of State to be sent to a different address than the principal office, enter that address here.  A PO Box is acceptable.  If the address is the same as the principal office, select the copy button to fill in the fields automatically.

ID LLC Mailing Address

Step 4: Registered Agent

To have an LLC in the state of Idaho, a Registered Agent must be identified to receive service of process.  The Registered Agent is either a resident of Idaho (select Noncommercial or Individual under Agent Type) or a registered agent service (select Commercial under Agent Type and search for the company).  The agent must have a physical street address in the state to act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc. on behalf of the LLC.

You are not required to pay for a registered agent. Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed.  Hiring a company like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.

Learn more about the requirements of a registered agent in Idaho.

Idaho LLC Registered Agent

Step 5: Governor Information

The Governor is either a member (owner) of a manager-managed or member-managed LLC.

  • Manager-Managed LLCs have managers hired by the members to run the LLC, similar to a CEO of a corporation.
  • Member-Managed LLCs have members (owners) that are active in the day-to-day operations of the business.

Most LLCs are member-managed.

At least one governor has to be listed.

Click on Add until all of the governors of the LLC are listed.

Idaho LLC Select Governor

Step 6: Confirm

Confirm that all of the information is correct.

Step 7: Declare and Sign

The organizer agrees that the information being entered is public information and will appear online. The organizer’s signature is used to certify the information in the Certification of Organization as it is entered.

Have only one of the organizer’s sign.

Learn more about who can be an LLC Organizer.

Step 8: Pay and File

Pay and file the Certificate of Organization.

In approximately 1-2 weeks, the LLC will be approved.

If you have questions, contact the office of the Idaho Secretary of State:

Main Office
450 N. 4th Street
Boise, ID 83702

Phone – 208-334-2301
Email – business@sos.idaho.gov

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Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare an LLC Operating Agreement

The operating agreement is a document that governs the framework and operating procedures of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Idaho operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Federal Tax Identification Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file tax returns, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original Idaho LLC formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • In some cases, an Idaho Certificate of Existence may be needed to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses, and permits may be needed for starting your business. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start.
  • Professional License – Certain services such as daycares, appraisers, salons, and others must be licensed.
  • Seller’s Permit – To sell products and certain services, registration with the Idaho State Tax Commission.

Related: What Business Licenses are Needed in Idaho?

File Annual Reports

LLCs are required to file an annual report with the Idaho Secretary of State.  The annual report updates ownership information and other details.

Related: How to File an Idaho LLC Annual Report