The beautiful state of Idaho is a wonderful place to start a new business.
According to the Tax Foundation’s annual rankings, Idaho scored number 3 for property taxes and number 9 for sale tax rates. High GDP and a growing workforce make Idaho an even more attractive option for new business incorporation.
A limited liability company (LLC) is a popular type of business entity among local entrepreneurs. Why? Because LLCs combine minimal admin overheads with wholesome personal assets and personal liability protection.
Probably these factors made you consider LLC formation in the first place. But now you’re wondering what does it take to form an LLC in Idaho. This guide provides a structured walkthrough of the company formation process.
Table of contents
- Step 1: Choose a business name for your Idaho LLC
- Step 2: Designate a registered agent
- Step 3: File the Idaho LLC Certificate of Organization
- Step 4: Obtain an EIN (Employer Identification Number) from the IRS
- Step 5: Complete the Idaho Business Registration (IBR-1) application
- Step 6: Prepare an LLC operating agreement
- Step 7: Open an Idaho business bank account
- Taxes, costs, and fees in Idaho for LLC
- Business permits and licenses in Idaho
- Pros and cons of forming an LLC in Idaho
- Key takeaways
- Formation FAQs for an LLC in Idaho
Step 1: Choose a business name for your Idaho LLC
Chances are you’ve already thought of the perfect name for your new business. That’s great, but you’ll need to do two things:
- Ensure your company name is available and not already registered in Idaho
- Confirm that it meets all Idaho’s naming requirements for LLCs
Idaho doesn’t allow two legal entities to operate under the same or even a similar-sounding name. So you must come up with an option that’s distinct and distinguishable from all other registered names.
Your name must also include the term “limited liability company” or “limited company” or any of their abbreviations (e.g., LLC, Ltd. Co., L.L.C.).
To check if a business name is available in Idaho, use the Idaho Secretary of State’s database (it’s free!). Type your name into the search bar and review the results. If there are no matches, your selected name is available for registration.
Pro tip: When doing a business name search, always add abbreviations like LLC, Ltd. Otherwise, you may not receive a complete list of results.
If your preferred LLC name is not registered, you can apply to reserve it for four months. Name reservations come in handy when you aren’t ready to file other company formation documents.
To reserve a name in Idaho, submit an application with the Secretary of State (SOS) and pay a processing fee of $20 if you file online. Paper applications are also accepted, but you’ll pay an additional $20 for the manual processing (or $40 total).
Assumed name (DBA)
If you want to operate under a business name different from your legally registered one, you can apply for an assumed name, also known as a “doing business as” (DBA) name.
Assumed names make sense in cases when:
- Your legal business name doesn’t well represent your brand.
- You’re operating as a sole proprietorship and don’t want to use your first and last name as your company name.
- You plan to offer multiple products or services and want to differentiate between them.
Similar to a registered company name, an assumed name must be unique and not already in use by another business. You can verify availability on the Secretary of State’s website.
An assumed name registration costs $25 in Idaho when filed electronically. Paper filings are $45.
Step 2: Designate a registered agent
The Idaho Secretary of State requires all LLCs to appoint a registered agent.
A registered agent is a person or professional service selected to receive government notices or legal documents (sometimes called service of process) on behalf of your company.
Generally, a registered agent in Idaho must:
- Be at least 18 years old
- Have a physical street address in Idaho (no P.O. boxes allowed)
- Be available during regular business hours at the physical address
Anyone who meets the above requirements can act as your registered agent. You can appoint yourself, a trusted employee, your accountant, or a corporate attorney. Although the last two may charge you a small fee.
Appoint a professional registered agent company
In Idaho, you can appoint a professional service to act as your registered agent. These companies usually charge between $100 and $300 per year, depending on the scope of provided services.
Professional registered agent service is a good option for:
- Single-member LLCs operating out of the owner’s home who want to keep their address off the public records.
- Foreign LLCs — LLCs headquartered in other states but want to do business in Idaho — without a local street address.
- Business owners that don’t want to be available during business hours year-round.
Step 3: File the Idaho LLC Certificate of Organization
When you’re ready to officially start your business, you’ll need to file your Idaho Certificate of Organization with the Secretary of State.
Preparing this filing is simple. You’ll need to add the following business information:
- Name of the LLC
- Street and mailing address for the company
- Contact information for the registered agent
- Name and contact information for at least one member of the LLC
Idaho offers two different filing options:
- Online registration for $100
- Paper applications by mail or drop-off are $120
In a rush?
No problem. Idaho offers expedited processing for an additional $40 and same-day processing for $100 more.
Without the expedited service, company document processing in Idaho takes 7-10 business days for online submission and around 2 weeks for mailed-in filings.
Step 4: Obtain an EIN (Employer Identification Number) from the IRS
Once the Secretary of State approves your LLC, you may want to apply for a federal employer identification number (EIN) from the Internal Revenue Service.
It’s a unique nine-digit identification number that acts like your company’s social security number. It helps authorities recognize your business for federal tax purposes.
You need to register an EIN when:
- Your LLC files taxes as a partnership or S-corporation
- You plan to have employees on payroll
- Your company is subject to federal regulations
How to apply for an EIN?
Getting your tax ID number is easy and takes less than 15 minutes.
Go to the online application form on the IRS website. Fill in a short form, and get your number issued within several minutes. This service costs nothing.
You can also apply using the paper Form SS-4, Application for Employer Identification Number, but it can take up to eight weeks for the IRS to process it.
Step 5: Complete the Idaho Business Registration (IBR-1) application
Some companies will need to file an Idaho Business Registration.
It isn’t a general business license application but a filling required to obtain a state tax ID.
Your LLC needs to register with the state authorities if you’ll need to collect sales tax from customers or have employees and pay state employment taxes.
Registration is free and quick when you apply using the Idaho State Tax Commission TAP portal.
Step 6: Prepare an LLC operating agreement
Multi-member LLCs need an operating agreement. While the state laws don’t require you to have this document, you should still draft one.
The operating agreement outlines how your business will be managed and operated.
Without one, your business structure will be subject to the local statutory and corporate laws in cases of legal disputes between LLC members or between your LLC and another business. That could lead to undesirable outcomes.
You can find operating agreement templates online. Or you can have an attorney write one for you.
In both cases, be sure to include the following information:
- Legal name of the company
- Purpose of the company
- Names and addresses of all members
- Ownership percentages and how much capital each person contributed
- Method for distribution of profits and losses
- Procedures for how new members can be admitted or members can leave
- Steps on how the company can be dissolved
Step 7: Open an Idaho business bank account
Once your company documents are approved, you’d be ready to open a business bank account.
Having a business bank account provides several benefits:
- Prevents commingling of personal and company funds
- Provides an image of legitimacy for your business
- Simplifies tax planning
In general, it’s easiest to open a business bank account with the same institution where you have a personal account. But they may not have the best terms, so be sure to shop around too!
Banks like WaFD, Chase, and U.S. Bank have a large footprint across Idaho, so you’ll be able to find a branch near you.
National banks tend to offer various convenient services — from low-cost credit card payment processing to batch transfer scheduling for salary payments.
Fees: Monthly service fees can be up to $20 per account, and look out for additional fees for optional services like wire transfers or cash depositing.
Local banks or credit unions
Credit unions and local banks like Idaho Central Credit Union and Bank of Idaho are solid contenders for small business owners since they focus on strengthening the local economy. And they may have more lenient lending requirements than the larger banks.
Fees: Some community banks offer free accounts. Also, monthly service fees will likely be smaller than the national banks.
Idaho LLC taxes, costs, and fees
Idaho charges minimal fees to maintain your LLC in good standing. To stay compliant, you’ll have to submit an annual company report and pay applicable state taxes.
All LLCs need to file an annual report with the Secretary of State.
It’s a state form where you update any company information that may have changed during the year. You’ll have to file a report even if nothing has changed.
But thankfully, Idaho doesn’t charge a fee to file your annual report.
Most LLCs won’t pay corporate income tax in Idaho. Under the default LLC tax classification, the company’s profits pass through to the owners, who then report income on their personal income tax returns.
If you sell taxable goods or services in Idaho, you’ll need to collect 6% sales tax from your customers. Then remit it to the local government.
Note, local governments (on city/county level) often levy an extra sales tax. For example, Ketchum has a 2% or 3% sales tax that you’ll collect, in addition to the state 6%, depending on what you sell.
Other local taxes
- Beer tax
- E911 prepaid wireless fee
- Oil and gas production tax
- Wine tax
- Employment taxes, including withholding and state unemployment
Idaho business permits and licenses
Like many states, Idaho doesn’t have a general business license. Instead, specialized occupational licenses are needed for some regulated professions such as:
- Massage therapists
- Barbers and cosmetologists
Fees for specialty licenses vary. For example, a barber pays $25 to apply for a permit, while a veterinarian will spend over $300.
You can get up-to-date information on all licensing costs and requirements from the Idaho Division of Occupational and Professional Licenses.
Although the state doesn’t require a business license, your city or county may. For example, Boise requires licenses for restaurants, child care centers, and a few other industries. So be sure to verify additional local requirements too!
Pros and cons of forming an LLC in Idaho
Idaho is well-known as an outdoor lover’s paradise. But it’s also an excellent place to get serious about starting a business — the costs and regulations are very attractive!
However, there are a few drawbacks too.
Idaho LLC pros
- No annual report costs
- Low state fees for company formation
- No state general business license required
- No minimal annual franchise tax for LLCs
Idaho LLC cons
- High sales tax rate in some municipalities
- Specialty licenses and permits can be pricey
- Starting an LLC in Idaho costs as little as $100.
- Recurring costs for maintaining an Idaho LLC are minimal.
- LLCs generally pay no corporate income tax in Idaho.
- Annual reports are required, but the state charges no filing fee.
- No general state business license is required, but local permits may be needed.
Commonly asked questions (FAQ)
Here are the most frequently asked questions regarding LLC formation in Idaho.