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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Starting an LLC in Idaho is a fairly straightforward process, the only break from the norm is that an LLC’s formational document is referred to as a “Certificate of Organization” in the state rather than the more commonplace term, “Articles of Organization”. Entrepreneurs forming an LLC in the state shouldn’t run into any major issues.
To avoid a misstep in the filing process, follow these steps to start an LLC in Idaho, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Idaho step-by-step
1. Select a name for your Idaho LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the state of Idaho:
- Your LLC’s name must be distinguishable from the names of existing business entities on file with the Idaho Secretary of State.
- Your LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “L.L.C.”, “LLC”, or “L.C.”
Reserve your LLC name with the Secretary of State
After selecting a name for your LLC, you may reserve it with the Idaho Secretary of State for up to four months in order to make sure that another business entity doesn’t use it before you are ready to legally form your company.
First, search the Idaho Secretary of State Business Search to ensure that your chosen name is available for use in the Gem State. If the name is free to use, go ahead and file a Reservation of Legal Entity Name with the Idaho Secretary of State. You have the option of filing online or filing by mail, however, the online filing fee of $20 is is considerably less than the $40 mail filing fee, so filing online is more cost-effective.
2. Designate a registered agent
As in every U.S. state, forming an LLC in Idaho requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in Idaho OR if the individual or business is based out-of-state, they must have a business office in Idaho.
3. File a Certificate of Organization
An LLC is organized in Idaho through the filing of a Certificate of Organization of a Limited Liability Company with the Idaho Secretary of State. You can file the Certificate online or through the mail. The filing fee is $100 (or $120 for mail filings) and payment can be made by credit card.
Your Certificate of Organization must provide the following details:
- LLC name
- LLC principal address
- Registered agent’s name, address, and signature
- The name and address of a “governor”, which can be a manager or member depending on whether the LLC is manager-managed or member-managed
- The date the LLC was formed
- Organizers’ signatures
LLCs formed outside of Idaho that intend to do business in the state are required to register with the Idaho Secretary of State.
Follow these steps to register your foreign LLC to be eligible to do business in the state of Idaho:
- Comply with Idaho’s LLC naming guidelines and make sure that your name is available for use in the state by searching the Idaho Secretary of State Business Search.
- Appoint a registered agent with a physical street address in Idaho
- File a Foreign Registration Statement (Limited Liability Company) with the Idaho Secretary of State online or by mail. There is a $100 filing fee (or $120 for mail filings).
- Along with the Statement, an LLC must also submit either a Certificate of Existence or Certificate of Good Standing from the state where the LLC was formed. The certificate must be dated from no longer than 90 days from the date that it is turned into the Idaho Secretary of State.
4. Draft an Operating Agreement
Although not a legally mandated step for forming an LLC in Idaho, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Idaho LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
Idaho LLCs and foreign LLCs doing business in the state must file an Annual Report with the Secretary of State every year. The report is due each year at the end of the LLC’s anniversary month (the month in which the LLC was officially formed). Filing the annual report online is the sole option, and there is no filing fee.
LLCs will receive email reminders from the Idaho Secretary of State 4-8 weeks before the report’s due date.
Register with the Idaho State Tax Commission
Some Idaho-based LLCs–such as retail businesses that collect sales tax and those with employees–must register with the Idaho State Tax Commission to file and pay certain state taxes and/or fees. Registration can be done online or by submitting a completed paper form in person or through the mail.
Obtain state and local business licenses
Certain LLCs may be obligated to acquire one or more state or local business licenses, permits, or certifications depending on the nature of their business and the area in which they are located.
- Visit the State of Idaho Business Wizard for information on state-issued business licenses, permits, and certifications.
- To learn about local licensing regulations, contact the city clerk’s office of the municipality where your LLC is located and ask if your LLC will need to apply for any licenses to operate legally in the area.
Idaho LLC checklist
An Idaho LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing business entities already on file with the Idaho Secretary of State.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “L.L.C.”, “LLC”, or “L.C.”
Formational documents and filing fees:
- Reservation of Legal Entity Name – $20 online filing fee, $40 mail filing fee
- Certificate of Organization of a Limited Liability Company – $100 online filing fee, $120 mail filing fee
- An LLC is created in Idaho by filing a Certificate of Organization of a Limited Liability Company with the Idaho Secretary of State.
Additional legal obligations:
- Filing Annual Reports – Required of all LLCs that do business in Idaho
- Obtain state and local business licenses – Required for certain types of businesses
- Register with the Idaho State Tax Commission – Required for certain types of businesses