LLC Formation in Idaho

How to Start an LLC in Idaho

Start your dream business as an LLC in the fast-growing, business-friendly state of Idaho, known as the Gem State. With low taxes and reliable infrastructure, it's a great place for business.

But how do you form an Idaho LLC? LLCs provide personal limited liability protection to owners (referred to as "members") like a corporation, with the tax benefits and flexibility of a partnership or sole proprietorship.

Unlike a typical corporation, LLCs avoid double taxation, where profits are taxed at the business and personal levels. An LLC has a simpler structure and fewer reporting requirements compared to a corporation, while protecting owners' personal assets in the event of lawsuits or debt.

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1. Name Your LLC in Idaho

Idaho law requires LLC names to include the phrase "Limited Liability Company," "Limited Company," or the abbreviations "L.L.C.," "L.C.," or "LLC." The name must also be distinct from existing business entities on file with the Idaho Secretary of State. You can check name availability by searching the Idaho Secretary of State's business name database and reserve a name for up to 4 months by filing a Reservation of Legal Entity Name for a fee of $20 ($40 for postal mail).

Using an Assumed Business Name

You can use a different name for your business transactions, called an assumed business name, DBA, or trade name, instead of your official LLC name.

To register an assumed business name in Idaho, file a Certificate of Assumed Business Name with the Secretary of State either online or by postal mail. The fee is $25 ($45 for postal mail) and registration is mandatory, but does not grant ownership rights.

2. Designate an Idaho LLC Registered Agent

Idaho Secretary of State requires you to appoint a Registered Agent for your LLC in your Certificate of Organization.

A Registered Agent is a person or a company designated to receive official notifications and legal documents (Service of Process) on behalf of your LLC in case of a legal proceeding.

The Registered Agent must have a physical street address within Idaho (PO Boxes or mailbox rentals are not acceptable), where Service of Process and other important documents can be received.

Who Can Serve as Your LLC's Registered Agent?

You have 3 choices:

  • Option 1: You can serve as your own Registered Agent.
  • Option 2: A friend or relative can be your LLC's Registered Agent.
  • Option 3: Hire a Commercial Registered Agent. Hiring a Commercial Registered Agent is a good option if you want to keep your personal address confidential or if you do not have a physical address in Idaho.

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3. File the Certificate of Organization for Your LLC

To officially establish your Idaho LLC, you need to file a document called the Certificate of Organization, also known as Articles of Organization in some states. This document outlines the basic information about your LLC. Filing the certificate is straightforward and can be done either online or via mail with the Idaho Secretary of State.

The process involves filling out a simple form with information such as:

  • LLC name
  • Registered agent's name and address
  • Principal office's street and mailing address
  • Mailing address for future correspondence
  • Name and address of at least one "governor" in the LLC (manager in a manager-managed LLC or member in a member-managed LLC)
  • Signature of the person forming the LLC Once you file the certificate, the Secretary of State will review it and if approved, your LLC becomes a legally recognized business entity.

4. Make an Operating Agreement for Your LLC

While not a legal requirement for forming an LLC in Idaho, it is strongly advised to create a thorough operating agreement for all new limited liability companies. The operating agreement should:

  1. Outline the structure of the LLC's business
  2. Specify the responsibilities and obligations of each LLC member
  3. Detail the operations of the LLC
Without a clear operating agreement defining the roles of its members, an LLC may face significant legal and operational challenges. After all members have signed the final operating agreement, have the signatures notarized to solidify its legal standing.

Filing the agreement with the Idaho Secretary of State or any other entity is not necessary, simply store it securely along with other business-related documents."

5. Get an EIN for Your Idaho LLC

Your Idaho LLC can obtain an EIN, also known as an Employer Identification Number, FEIN, Federal Employer Identification Number, or Federal Tax ID Number, from the IRS once it is approved by the Idaho Secretary of State. Think of your Idaho LLC's EIN as its unique "social security number," which the IRS uses to identify it for tax and filing purposes.

An EIN is necessary for various tasks, including opening a bank account for the LLC, registering with the Tax Commission, and processing employee payroll (if applicable).

When it comes to taxes, the IRS does not have a specific classification for LLCs, but an Idaho LLC can be taxed in 4 different ways.

By default, 2 of these tax options are applied after obtaining an EIN, while the other 2 require a special election through filing a form after obtaining the EIN. It's recommended to research "How is an LLC taxed" before getting an EIN.

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