LLC Idaho: Take Advantage of Tax Advantages

If you want to form an LLC in Idaho, the first question on your mind is probably, “What are the benefits of forming a company?” Let’s explore what that question means and answer it once and for all.

Starting an LLC in Idaho is easy; just follow these simple steps:

STEP 1: Name your Idaho LLC:

First things first, you need to give your limited liability company (LLC) a name. If the name is available, Idaho will approve it right away.

Just make sure the secretary of state can verify the availability of your business name by using one of their convenient search engines like USCorporates.com.

Naming requirements:

  • can not contain the words “limited liability company” or “limited company.”
  • must be distinguishable from other names on file in Idaho
  • can use your social security number, but not required

STEP 2: Choose a Registered Agent in Idaho

Once you’ve chosen your name, it’s time to choose an Idaho registered agent. You must have a physical address in Idaho for this job.

This will be your home address or business address in most cases, but if you are forming multiple LLCs in different states and don’t want your mail flooding into one mailbox, you can use a service like 123-REG.com.

Remember, it’s important to choose an address in Idaho so that your official paperwork can be received and filed here!

The registered agent must:

  • be a living, breathing human being 
  • be 18 or older
  • have an ID card or driver’s license issued in Idaho
  • own residential property in the state of Idaho

The registered agent can not:

  • closely associated with you or your business (they cannot be listed as a member/manager/president of your LLC)
  • have a criminal record

STEP 3: File the Idaho LLC Certificate of Organization

Now that you have a registered agent and business name, it’s time to file the certificate of organization with your merchant services provider.

This document is used to record all information about your company, and a copy will be transmitted electronically within minutes to the Idaho Secretary of State (SOS).

The fees are straightforward: $50 for 1st-year registration and $50 for every subsequent year after that. You can pay with a credit card; it’s fast and easy!

STEP 4: Create an Idaho LLC Operating Agreement

This document is optional, but it’s highly recommended. Among other things, an operating agreement will protect your business from future lawsuits or legal disputes. An operating agreement can help you set the rules for your company and ensure all parties are on board with any potential changes to those rules.

If you’re looking for a simple template to help you get started, use this free Idaho Operating Agreement from 123-Reg.

STEP 5: Get an EIN for your Idaho LLC

Your Social Security Number is not enough to conduct business in Idaho. You will need an Employer Identification Number (EIN) issued by the IRS. 

An EIN may also be required when you make an LLC filing with any state other than your own or if you ever hire employees, so it might be wise to get one even if you don’t need it right away.

The IRS will assign you an EIN number through their online portal in just a few minutes. It’s fast, easy and you can do it from home!

STEP 6: File the Statement of Information (BOE-51)

You must file a BOE 51 within 120 days of forming your LLC. Business owners who fail to file this document will be fined $100 per month until filed. Also, an LLC with no registered agent and/or delinquent filings could be in default and subject to dissolution or other legal action.

You can file your Statement of Information online using the Idaho Secretary of State website. It’s fast, easy and usually free! It costs money only when you use a payment service like PayPal or Bill Me Later to pay for it.

STEP 7: Register your Idaho LLC with the County Clerk of Ada County

Now that you have filed all of the paperwork, it’s time to register your business with the county clerk. This process costs between $10-$20, depending on if you pay in person or online.

The ID website has a little “pinpoint” program that will let you know exactly what you need to bring.

It’s also a good idea to call the clerk and give them a heads up that you are coming in. They can help answer any questions about business licenses or fees associated with doing business in Idaho, although most of these things are handled by the state of Idaho now.

Pros and cons of Idaho LLC formation

There are certain pros and cons to forming an LLC in Idaho, but the primary advantage is anonymity or privacy. This makes sense given where we live, in a state that values individuality and free will.

If you do everything correctly, as explained above, there should be no way for anyone to find out who is actually behind your company.

Pros:

  1. Idaho LLCs are NOT required to disclose member information: The state of Idaho does not require any sort of disclosure for members and managers. This is different from most other states, where public records may make it easy for anyone to find out who owns a company by searching through various databases.
  2. No annual report state fees: An LLC in Idaho are not required to submit an annual report, with a few exceptions. This is another reason why so many people enjoy using the LLC as a business structure.
  3. No public disclosure: No public records are kept that show how your company is run or managed. The names of owners and managers will be kept private unless someone files for bankruptcy or does something else that requires a public record to be made.
  4. This is also great news for multi-national companies who are looking to expand to Idaho but do not want anyone to know about their presence in the state. Offshore businesses can also use this structure since there is a cap on how much of your company you can own before being required to file public records.
  5. Idaho LLCs are inexpensive and easy to maintain: Even though an annual tax must be paid, the cost per year for continuing ownership of your corporation is only $150 ($10 if you don’t have employees).

Cons:

  1. Foreign owners will need to file a Statement of Information: Anyone with more than 10% ownership in an Idaho LLC must also file another document called the Statement of Information. The form is short, simple, and shouldn’t cost you anything, but it is still something that needs to be done within 120 days after your company was created.
  2. The LLC has been used for questionable business practices: Over the years, Idaho LLCs have been known to be popular in controversial activities like money laundering or tax evasion. While these are technically not illegal, they are certainly frowned upon by many people.
  3. The LLC is not a pass-through structure: The owner of an LLC is responsible for paying local and federal business taxes. This means that, unlike with a corporation, you will be responsible for paying your own income tax from the profits of the LLC – no matter how much or how often they are distributed to you.
  4. Another disadvantage is that non-U.S. citizens or resident aliens cannot form an LLC. Furthermore, American companies who want to form a subsidiary or business that will be used in other countries must still file as a corporation.

The cost of starting an LLC in Idaho

All LLCs in Idaho must appoint a Registered Agent. You can choose to be your own registered agent, but hiring someone else for this duty is better (and cheaper). In order to register an Idaho LLC, you will need the following things:

  • Registered Agent Service – $40/year
  • State of Idaho filing fee – $35
  • Idaho Tax ID Number- $30/year
  • Initial tax filing – $150

The total cost to start an LLC in the state of Idaho is roughly $245. That may sound like a lot, but it is actually quite low compared to other states. And this doesn’t even include the cost of having someone handle your earnings, bookkeeping, or taxes for you.

Separate Your Personal and Business Assets

Not everyone agrees with this, but professional asset protection lawyers generally recommend never having a personal and business bank account in the same place.

If you have assets that you want to keep safe from lawsuits, using different banks can go a long way towards helping your assets be protected. The way it works is that if someone sues you and wins, they can only get the assets that are in your name. If you also have business accounts, then they cannot take those either.

Not only can this keep someone from taking all of your money if they sue you, but it is also a good idea for tax reasons. Since there are different categories for how much tax you pay on each type of income, you will want to make sure that you are not deducting business expenses on a personal return.

1. Opening a business checking account:

Of course, you want to first talk with the bank that you will be using to make sure they have an account package that fits your needs. There are several things you will want to look for when opening a business checking account.

Business Bank Account Tips:

  1. First of all, always keep one personal and open a business bank account. Even if your business is not making any money, you never know when one day it will. By keeping them separate, you minimize your risk in the event of a lawsuit.
  2. Second, look for an account package that allows multiple owners – simple and straightforward. Some banks allow both business and personal accounts to be on the same debit card so they can link purchases back to individual accounts if needed.
  3. Third, look for a package that allows you to have multiple signers and does not require signatures on checks over a certain amount. This is important because as your business grows, you may want to hire employees or contractors who will be able to pay bills for the company. And if there is ever an issue regarding ownership of funds in the account, the business owners won’t need to be involved at all.
  4. Fourth, check the bank’s reputation in relation to fraud and embezzlement. If a company or bank has an above-average number of complaints – this may mean that your business will not be protected as well as you would like it to be.
  5. Lastly, make sure that there are not any fees attached to the account. Opening a business checking account can be complicated and confusing for someone who never has set one up before. The last thing you want is to have to pay extra fees due to mismanagement or lack of knowledge.

2. Getting a business credit card:

If your business is small, it may not be a good idea to get a credit card. But if your company starts to grow, you will most likely want to get one.

A lot of banks offer a business credit card as part of their checking account package but make sure the cards are handled separately and that there are no fees or interest charges attached.

3. Hiring a business accountant:

If you run a business, hiring an accountant is one of the best decisions you ever could make.

They will know how to spend your money wisely and can even help you get it all for free by taking advantage of tax-deductible expenses.

Get Business Insurance for Your Idaho LLC

Getting the proper type of insurance can help your business grow faster and more effectively.

1. General liability:

If you own an Idaho LLC, it is very important to make sure that you have general liability coverage for your building or office location and any other property that you may be responsible for.

Without this, a customer could sue you and win a large monetary award because you are responsible for your customers’ safety and well-being.

2. Business interruption:

This insurance will take care of any lost income if you or one of your employees becomes ill or disabled and is unable to work.

It also covers the difference if your business has to close early because it was damaged by fire, weather, or some other reason.

3. Property:

Manager’s and officers’ liability insurance is a type of coverage that will protect your LLC’s members, managers, and directors from lawsuits against them by customers or employees.

It helps ensure that they have access to funds if there is an incident that causes financial hardship to anyone at the company.

4. Short-term disability:

If one of your employees is unable to work due to illness, injury, pregnancy, or childbirth, then short-term disability insurance will replace their income whilst they are off work.

This type of insurance can be very valuable in helping you run your business and protect the well-being of those who work for you.

5. Health Insurance:

Business health insurance helps provide medical coverage and care provided by all types of specialists, hospitals, and more.

If a member experiences an illness or injury that prevents them from working, it covers costs as well as lost wages.

Choosing the right kind can ensure that your employees are cared for when they need help most. Make sure you look into the different types of coverage and make sure that you choose one that is right for your business.

6.Workers’ Compensation Insurance Coverage:

Allows employees injured on the job to receive certain benefits until they can return to work or, in some cases, be given monetary compensation.

7.Paid Sick Leave:

This is a new insurance requirement that was put in place on July 1, 2017, for all LLCs in Idaho.

It states that employers must provide one hour of paid sick leave for every 30 hours worked by employees. 

8.Employer Liability Insurance:

This protects the business owner from any claims or lawsuits brought against them for an employee’s negligence or wrongful acts while on the job.

It is important to note that different insurance coverages are needed based on the type of work being done by your company. For example, if you own a restaurant, then it would require additional types and amounts of coverage beyond what a small business might need.

Working with a who is familiar with the insurance requirements can help prevent errors from being made.

Create Your Business Website

One of the best ways to get your name out there is by creating a website for your company. If you have products or services that are unique or just better than what others in your business offer, this will be one of the best ways to drive customers in.

The most important thing to remember when it comes to getting a website set up is not to rush into anything. You must choose an appropriate plan and pay attention to any hidden fees.

Make sure that you allow enough time for people and potential clients to find and share your site as well. Making mistakes can cost you thousands in lost sales, so make sure you do everything correctly from the start. 

Send Out a Press Release

While this is not exactly a cheap business tool to use, it can be useful. If you have something exciting or interesting that you would like people to hear about, then this could be the way to get the word out.

In order for your press release to work, it must be unique and interesting. If it is just another generic release that says nothing new or special, then there is no reason for anyone to read it.

Instead, make sure that your press release contains information that will help educate consumers about what your company offers in its products or services.

Print news outlets often publish releases they receive as long as they feel they are important enough and relevant for their readership. This makes a press release a useful tool to have. This may also create some free advertising opportunities as well.

Idaho LLC Business Licenses and Permits

In order to get your business off the ground, there are several things that you must do. The main thing is to look into obtaining a business license or permit. There are many types of licenses available, but you should make sure that you get one for your company’s type of work.

If you own an LLC in Idaho, then this will likely be in place. However, it is still important that you verify this and find out which types of business licenses or permits are necessary for your line of work. Doing so can help prevent fines from being levied on you and save time as well.

The best way to determine which kind of licensing requirements apply can be obtained online at the Idaho Secretary of State’s website: http://sos.idaho.gov/business/corporate.

LLC Tax Filing Requirements

When it comes to taxes, there are certain things that you need to keep in mind. Your LLC’s type of filing status will determine which forms must be filed with the IRS and when they should be done by.

While most people use a tax professional or accountant for this purpose, it can also be done online at no charge through the IRS website: www.irs.gov.

1) If you have employees, then you will need to file 941  and 940 forms every quarter for each state that contains an employee working within its boundaries. These are federal taxes, so if applicable, they must be done electronically through the Federal/State Electronic Filing Program (EFTP).

2) Business owners may choose between three different ways to file their taxes. The first is a sole proprietorship, the second is an LLC taxed like a corporation, and the third is to incorporate your business.

3) Sole proprietorships are required to use IRS Form 1040ES for Estimated Taxes,  while those using an S Corporation must submit either 1040 ES or 1120S forms (depending on whether they have taxable income).

Idaho Sales Tax

There are many reasons why you might need to learn about sales tax laws. Whether your business is small or large, understanding how you need to collect sales taxes can prevent fines from being filed against you.

Sales tax collection responsibility requirements may change depending on whether the location that the sale was made was inside or outside of Idaho state lines.

Federal regulations apply regardless of this, so if a company has nexus with Idaho, then it will be required to pay sales taxes unless they have an applicable exemption certificate (which could be obtained by submitting Form  ST-120).

Idaho Employer Taxes

If you are the owner of an LLC, then you have some extra responsibilities to deal with in regards to taxes. While these may seem overwhelming at first, it is important that you understand how they work so that you can figure out what needs to be done.

The type of tax that most business owners need to pay is called FICA (Federal Insurance Contributions Act). This works by collecting money from employees and using a portion of this as well as employer contributions for retirement and other benefits. There are also other taxes that must be complied with.

Hiring Employees in Idaho

Considerations for hiring employees will vary depending on the type of business that you have.  If your company is considered to be an S Corporation, then it may be necessary to hire additional people in order to avoid liens or judgments being filed against the business.

The taxes and fees that go along with this can cost hundreds, if not thousands, of dollars per year. It is important that you are aware of all of these before making any decisions regarding how many workers your company should have.

Employee Benefits

While employers usually offer their staff large amounts of health insurance and other benefits, there are some who still choose to work from home instead. If a person works from their home, then they are generally not required to pay state or federal taxes.

If someone is working for a business, then they will also be required to pay taxes regardless of where their home office is located (unless they are in Idaho and the workplace itself is located outside of U.S. boundaries). 

Conclusion

While running a business is easy to do, it can be very complicated and expensive if you do not have the appropriate knowledge. If you need information on starting or running an LLC in Idaho, then the above list of resources should be able to answer most questions that you might have.

Filing for your LLC will require filing with both state and federal tax agencies, so make sure that you are prepared for this and doing all things necessary to maintain your company’s records throughout the year.

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