Follow our free guide to form an LLC in Idaho

Before you start your business, review our comprehensive guide on how to form an LLC in Idaho, as well as the pros and cons of starting a business in the state.

Pros and Cons of Forming an LLC in Idaho

idaho llc guide


Pros

No Cost for Annual Report
Idaho is one of only a few states that do not charge for an annual report. However, LLCs are still required to file the report every year.

Growing Economy
Idaho’s economy has been moving up over the recent years; the state’s GDP has grown by almost $14 million since 2012. Boise is considered the fastest growing metro region in the U.S. and the state median income has risen by over 4% in less than a year.

Low Crime Rate
Idaho is one of the safer states in the nation with a violent crime rate that is almost 40% lower than the U.S. average. According to a recent FBI report, property crimes in Idaho were also down, by over 30%.

Cons

High State Income Tax — 6.925%
Even with a recent deduction, the state income tax rate of 6.925% is still on the higher end of the scale and still makes it one of the higher rates in the country. The state’s sliding tax scale jumps from 1.125% for income under $1,500 to 6.925% for all taxable income over $11,280.

Less Privacy for Owners
Idaho requires full disclosure of an LLC’s members/managers in the filing paperwork. Contrary to other states who do not have this requirement, information about members/managers of the LLC is available for competitors and potential partners to view—a disadvantage for most LLCs.

Cost of Doing Business

  • $100 filing fee / $0 annual report
  • 6.925% corporate tax

Starting Your Idaho LLC

There is a process of forming an LLC in Idaho, but with the right help, it does not have to be confusing or complicated. The beginning steps for starting an LLC business are listed below: 

Step 1: Name Your Idaho LLC

Naming Guidelines
One of the first steps in creating an Idaho LLC is to decide on a name for the business. As with anything else related to business, there are guidelines to keep in mind as you choose your company name:

  • The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C
  • Your business name cannot be intentionally misleading to consumers
  • The name of your new LLC must not be similar to another organization’s name/trademark

Restrictions
There are some restrictions regarding what words you use in the name of your LLC—regulations may differ from state to state.

A few examples include:

  • “Lottery” and “Bank” are ineligible for use (any state)
  • Terms that represent educational or Veterans’ organizations are restricted
  • Terms related to the Armed Forces or civil servants (police, EMT, fire)

LLC business names associated with government and/or financial entities are not always restricted—it depends on the state. Additional paperwork may be required.

URL Availability
Especially in the current culture, having an online presence for your LLC is important. After you have decided on a business name, create and reserve a website address that best fits your business.

You can quickly check domain name availability at a number of online web services sites.

Tip: Use a free business name search tool to ensure your company’s desired name is available. If the name is unavailable, try a free business name generator to help ideate alternative names.

Step 2: Establish Ownership

Once you have chosen a business name, the next step involves selecting a management structure for your LLC and designating the members/owners.

LLC Management Structures
The owners of an LLC are known as either members or managers. The difference in title depends on the particular management structure of the LLC:

  • Member-managed: the business  is divided among the members who all receive portions of the profits based on their ownership percentages
  • Manager-managed: a manager is appointed as the main business operator; the members are not actively involved in the daily business operations (usually investors) 

The specific guidelines concerning LLC ownership in Idaho include:

Required Number of Members
Idaho LLCs must have at least one member or manager in order to form a business.

Member Disclosure Requirements
Idaho requires all of the LLC members/ managers to be listed in the filing documents.

Age Restrictions
LLC members in Idaho may be of any age.

Residence Restrictions
There are no residency restrictions imposed on LLC members in Idaho.

Step 3: Find a Registered Agent in Idaho

Having a registered agent is necessary for any business formed in Idaho. Your LLC will not be considered official without this position.

What is a registered agent?
A registered agent is a party (person or business) who is authorized to accept official notices and correspondence on behalf of the LLC. The agent is meant to be the primary contact for the LLC.

Why do you need a registered agent?
Idaho state law requires all LLCs to appoint a registered agent so that the state government has a consistent way of contacting the business. The agent must be available during standard business hours.

Who can be a registered agent in Idaho?

  • A state resident with a physical address in Idaho
  • An LLC or corporation that is licensed to conduct business in Idaho

Can I be my own registered agent for my business?
You are legally allowed to be your own registered agent as long as you have a physical address in Idaho.

Is being my own registered agent discouraged?
Since the registered agent’s name and address are publicly listed, LLC business owners who choose to be their own registered agent risk compromising their personal information.

Tip: Avoid the hassles and choose Swyft Filings to fill the registered agent needs for small businesses in Idaho. Find more information here.

Step 4: File the Certificate of Organization

In order to legally and officially form an LLC in Idaho, you must file the Certificate of Organization with the Secretary of State.

The Certificate of Organization includes:

  • The name and address of the LLC
  • The contact information of the members/managers
  • The name and location of the registered agent
  • The preferred address for the annual report notice

Additional Idaho Filing Requirements — Professional Service Businesses

Idaho is among the states that have specific guidelines for professional service businesses that wish to form a business — this type of LLC is known as a Professional Limited Liability Company (PLLC).

The following professions generally form a PLLC:

  • Accountants
  • Attorneys
  • Physicians (general, surgeon, podiatrist, dentist, optometrist, chiropractor, physical therapist)
  • Professional Counselors and Psychologists
  • Architects and Engineers
  • Geologists
  • Veterinarians
  • Social Workers

Important Points:

  • All members of the PLLC must be licensed in the profession of the business.
  • The PLLC is only allowed to provide services for which the business was formed.
  • The members are still subject to whichever licensing boards govern the PLLC’s profession.

Step 5: Create an LLC Operating Agreement

Even though it is not legally required in Idaho, having an Operating Agreement for your LLC is still necessary because it creates a foundation for how your business will operate and grow. Successful businesses are structured by the Operating Agreement.

What is an LLC Operating Agreement?
The LLC Operating Agreement is a legally binding document that is kept in-house and is used to define the functions of the business and each member involved with the LLC.  The agreement details both the rights and responsibilities of the members and the foundational operations of the business.

Why do I need an LLC Operating Agreement?
Having an LLC Operating Agreement in place is good because it helps direct the business and its operations, as well as giving the LLC and its members a “playbook” to refer back to. The Operating Agreement is also helpful in solving and reducing disputes regarding the business and/or the members.

What goes into an LLC Operating Agreement?
Every LLC Operating Agreement is different because every LLC is different and has unique needs. For the most part, most agreements will feature similar information:

  • Designation of the members/managers
  • Initial capital contributions of the members
  • Voting designations and percentages
  • Member transfer/addition rules and restrictions
  • Distribution of profits

Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.

Step 6: Register for an EIN

An EIN is a necessity for any LLC formed in the state of Idaho, especially for businesses that have/will have employees. The majority of banks will expect an EIN in order to open an account.

What is an EIN?
The EIN stands for Employer Identification Number. Also called a Federal Tax ID, the EIN is a nine-digit numerical identification given to your business by the IRS. This series of numbers is to your LLC what a personal Social Security number is to a person.

What business entities need an EIN?
The types of business entities that need an EIN include:

  • An LLC with employees (even if owned by one person)
  • An LLC with more than one member
  • A partnership (LLC or C-corp)

Please Note: A sole proprietorship is not required to have an EIN.

Why is an EIN necessary?
The more common reasons you would need an EIN are:

  • To hire employees
  • To open a bank account in the U.S.
  • To file your company’s taxes
  • To pay independent contractors

Important: Any business that earns revenue must have an EIN.

Swyft Filings offers EIN services for small businesses in Idaho. Find more information here.

Maintaining Your Idaho LLC

Beyond the steps of forming an LLC in Idaho, you still have more to do to make your business compliant and ready to officially operate.

The Next Phase:

Step 1: Register for Idaho State Taxes

In the state of Idaho, all businesses are required to pay a corporate tax of 6.925%, with a minimum of at least $20 due. In addition to the corporate tax, LLC members will also be responsible for paying state income taxes — the rate dropped to 6.925% in 2018 for all income over $11,280.

Other taxes your LLC may need to pay include:

  • Sales and Use Tax at 6%
  • Employee Withholding Tax
  • Unemployment Tax

Step 2: Obtain Business Licenses and Permits

The licenses and permits required for an LLC in Idaho can vary, depending on a number of variables:

  • Location (city and county)
  • Type of Business
  • Industry

Tip: If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.

Step 3: File an Annual Report

Most states expect businesses to file an annual report. Any Idaho LLC must file this report with the Secretary of State to ensure that the business’s information and good status remain current.

Fee: $0
Due Date: The anniversary month of the LLC’s formation
Implications of Late Filings: The Eventual dissolution of the business by the state

Swyft Filings provides stress-free solutions to keep your LLC compliant. Let us file your annual report today.

Step 4: Obtain a Certificate of Good Standing

Your LLC is almost completely ready to go — all you need is a Certificate of Good Standing.

What is a Certificate of Good Standing?
The Certificate of Good Standing is a “stamp of approval” from the state government to show that your business has met all the necessary requirements as an official LLC.

Why do I need a Certificate of Good Standing?
Many banks, financial institutions, and other businesses may demand assurance that your LLC is completely legal and compliant with the Secretary of State. This document proves that your business is in good standing with the state government.

Swyft Filings can create a Certificate of Good Standing for your Idaho LLC. Click here for more information.


Additional Idaho Resources