Forming a corporation in the state of Idaho is simple. You’ll also enjoy low taxes, a common-sense regulatory environment as well as a balanced state budget.
This step-by-step guide is designed to show you how to start a corporation in Idaho.
1. Select a name for your corporation
The first step in creating your Idaho corporation is deciding on a business name. You’ll need to make sure that the business name is different from any other company name in the state of Idaho.
General corporate name guidelines
Also, bear in mind that there is state corporation naming requirements that you must adhere to when deciding on a name for your corporation. Your Idaho corporation name must comply with the following guidelines:
- Do not include restricted words such as “bank” unless prior approval has been obtained
- Do not use language falsely implied or stating that your business is associated with a government agency
- Ensure that your Idaho corporation name is significantly different from other existing businesses registered with the Secretary of State
- If the type of corporation is a professional entity or a professional corporation, then include words such as a chartered, professional corporation, professional association, or the abbreviations of these words
- Your Idaho corporation name must contain the following words or abbreviations: corporation, company, Inc., Corp., Limited, CO, Inc., limited, or abbreviations containing a similar meaning
The Idaho state statute contains corporation naming guidelines for your perusal.
Trademarking your corporation name is an ideal way to protect your business name from intellectual property theft. Your trademark must be unique from other businesses trademarked in the state. Go ahead and apply for a trademark for your Idaho corporation name with the US Patent and Trademark Office.
Your entity name is the legal name that your Idaho corporation is registered under. It’s also the name that the state uses to identify your business entity. Therefore, the entity name must be included in all formation documents.
DBA (Doing-business-as) name
If you intend on doing business under a different business name from your legal entity name, then the state of Idaho requires that you file a DBA or (doing business as) name.
The first step in registering your DBA in Idaho is conducting a name search on the state’s website or the Idaho Secretary of State website. Once you’ve decided on a DBA, you need to file the Certificate of Assumed Business Name Form and then file it with the Secretary of State.
2. Nominate a registered agent
To legally set up your corporation in the state of Idaho, a registered agent must be identified to act as a corporation’s point of contact with the state.
The agent is also referred to as a resident or service of process agent, and their primary role is to receive tax notices, legal documents, summons, subpoenas, etc., on your corporation’s behalf. The registered agent can be any individual who is a resident of the state of Idaho, including yourself.
- The requirements to be a resident agent include:
- Maintaining availability during normal business hours
- Having a physical street address in the state
- Consenting to the appointment
Resident agents are not allowed to submit P.O. Box addresses, and it has to be a physical street address in Idaho. The name and address of the agent must become a public record, and therefore with that comes the loss of privacy.
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3. Appoint initial directors at the organizational meeting
A part of the process of incorporating in the state of Idaho includes holding the initial Board of Directors meeting. During the first meeting, an initial director will be nominated and the board of directors will elect officers of the corporation. These officers will fulfill the roles of president, vice president, treasurer, and secretary.
Additionally, the Board of Directors will also review and approve corporate bylaws, issue shares of stock, choose a corporate bank account and decide whether the corporation will be structured as a C Corp or S Corp.
Additionally, recording meeting minutes at every single board meeting is necessary to protect the shareholders from court actions and lawsuits. This is because the minutes offer a record of all decisions and actions taken during the meetings held.
While minutes are not filed with the state, they still need to be stored in with company’s corporate records.
4. File Articles of Incorporation
Filing the Idaho Articles of Incorporation or Idaho’s Certificate of Incorporation is the next step in the process. This step legally forms your corporation and establishes it as a separate legal entity. The articles must be filed with the Secretary of State or the state’s office.
The information you need to provide in the articles includes:
- The incorporator’s name. This may be someone helping with the formation of the company or one of the owners of the corporation.
- The physical or mailing address of the company
- The resident agent’s name and resident agent’s physical address, which should be a street address and not a P.O. Box address
- The number of shares the company is authorized to issue
- The name of the corporation
Idaho Office of the Secretary of State
450 N 4th Street
P.O. Box 83720
Boise ID 83720-0080
5. Create and approve bylaws
Your Idaho corporation needs to create and approve corporate bylaws. Bylaws are the general guidelines, procedures, and principles of the operations of the business.
The bylaws may include:
- The responsibilities of the board members
- The names of the officers of the corporation
- Procedures for removing and adding new directors and shareholders
- Terms of service
- Policies for authorizing shares
- When director, shareholder meetings, and annual meetings are going to be held and more
6. Select a share structure
The corporation may exchange shares of stock or issue stock in exchange for money or services. The quantity of shares, also referred to as stock authorized, may not be more than the number of approved shares contained in the Articles of Incorporation.
7. Obtain an EIN
An EIN is an Employer Identification Number. It is also referred to as a tax number or Federal Employer Identification Number. The EIN is a custom nine-digit tax identification number that the Internal Revenue Service assigns to all business entities in the states. Think of the EIN as a social security number, but for your business.
It is especially useful in identifying corporations for tax purposes. The EIN is also useful if you plan on hiring staff, opening a corporate bank account, filing tax returns, registering for business licenses and permits, and more.
Applying for and obtaining an EIN is completely free of charge with the IRS. When applying online, through the IRS website, the number is made available immediately.
However, you can always choose to mail your EIN application by downloading the IRS Form SS-4 and mailing it to the following address:
Internal Revenue Service
Attention – EIN Operation
Cincinnati, OH 45999
8. File Idaho state taxes
Aside from federal tax and depending on your business structure or type of corporation, you may be required to register for one or more forms of Idaho state corporate taxes:
- Idaho sales tax: You need to register for sales tax or a seller’s permit if you plan on selling a physical product. In order to register for sales tax, you need to apply to the Idaho State Tax Commission website. The certificate ensures that your corporation can collect sales tax on taxable sales.
- Idaho employer tax: If your corporation will be hiring employees, then an Idaho employer tax is also necessary. Apply for Idaho employer tax through the Idaho Sales Tax Commission website.
9. Idaho business licenses and permits
Business owners in Idaho need to apply for specific licenses and permits depending on the nature of their new business and its location:
- Business licenses: Idaho does not impose a state business license. However, certain cities may require a business license to allow you to legally operate in the state
- Seller’s permit: Corporations who are selling products and specific services must register for a seller’s permit with the Idaho State Tax Commission
- Professional license: Depending on the type of business your corporation is involved in, you may require a professional license to operate in Idaho. Some of the services requiring a professional license include collection agents, driving instructors, outfitters, and therapists.
10. Annual report requirements in Idaho
All Idaho corporations must submit an annual report to the Idaho Secretary of State. The annual report needs to be submitted every year by the end of the month in which the corporation was created. For example, if your corporation was created on December 1st, 2021, then the next annual report is due on December 30th, 2022. There’s no filing fee for the annual report in Idaho.
11. Costs of starting a corporation in Idaho
The filing fees below apply to all Idaho corporations:
- Name reservation: $40
- DBA name: $25
- Articles of Incorporation: $100
- Annual report: FREE
- Idaho Certificate of Good Standing: $10
Next steps after forming a corporation
After legally forming your Idaho corporation, there are a few steps that you should take in order to keep your business in good standing and ensure long-running success.
Open a business credit card
Much like opening up a corporate bank account for your Idaho corporation, a business credit card will assist your Idaho corporation in separating professional and personal assets and expenses.
Additionally, it will also help to build your C corporation’s credit history allowing you to qualify for capital for your business. The higher your score, the more financial assistance your business will be able to obtain.
Get business insurance
In order to manage risks and help you focus on growing your Idaho corporation, you need to have business insurance. The most common types of business insurance include workers’ compensation, professional liability insurance, and general liability insurance.
- Worker’s Compensation insurance: This type of insurance provides coverage for employees’ job-related injuries, illnesses, or deaths.
- Professional liability insurance: This type of insurance covers claims of malpractice as well as other business errors for professional service providers such as accountants, consultants, etc.
- General liability insurance: This type of insurance protects your business from lawsuits. Most small businesses opt for general liability cover.
A C Corporation is known as the default or standard corporation structure under the Internal Revenue Service rules. C corporations are also liable for double taxation. S corporations, on the other hand, have elected special tax status with the IRS and therefore enjoy more tax advantages than C corps.
A C corporation refers to any type of corporation that is taxed separately from its owners. An LLC or limited liability company is a type of business that is legally separate from its owners, who are referred to as members. LLCs may have one or more members.
Starting a sole proprietorship has various advantages over other types of business structures. Not only are the processes fewer and easier, but so are the requirements for business taxes. Sole proprietorships also pay fewer registration fees and enjoy straightforward banking and simplified business ownership.
The corporation’s officers are responsible for overseeing the company’s daily business operations. Corporate officers are also granted legal authority to act on the company’s behalf in almost all lawful business-related activities.
C corporations are liable for corporate income tax. Shareholders, on the other hand, are subject to personal taxation. Essentially, C corporations pay tax on their income in the same way an individual would pay tax on their yearly salary.