Starting your very own Limited Liability Company in Idaho is an exciting venture. But how do you do it? In this article, you will discover everything you need to do before you set up your LLC and how much it will cost.
You will also learn all the steps you need to take to found your own LLC, which forms you need to fill out to register it, how LLC taxes work in Idaho, and more.
|LLC Filing Fee||$100||$200||$100||$425||$130.38|
|LLC Annual/Biennial Fee||$0 (however, an information report must be filed every year)||$60 (every year)||$100 (every year)||$350 (every year)||$89.34 (every year)|
|Corporate Tax Rate||6.50%||0%*||6.6-7.6%||0%*||5.60%|
|Nominal GDP per capita||$49,616||$86,265||$62,867||$61,375||$64, 773.08|
Before You Set Up An LLC In Idaho
Before you go about creating an LLC in Idaho, you need to make sure you have a couple of things:
- First, you need to have chosen a name for your LLC. The name you choose must be visibly different from businesses already registered with the Secretary of State Business Name Database. That way, your business won’t be confused with any other once you register it.
- You need to choose a registered agent. This agent will agree to accept any legal papers on your future LLC’s behalf.
- You will need to file a Certificate of Organization of Limited Liability Company with the Idaho Secretary of State. This certificate must include your LLC’s name, the address, and street for its primary office, the name and mailing address of your chosen agent, and the signature of your LLC’s organizer.
Now that you know what you need to start an LLC in Idaho, we will go over all the necessary steps in greater detail. Before that, though, let’s go over how much starting an LLC will cost in Idaho.
|ZenBusiness – $49 + state fees to register your LLC (read review)|
|Incfile – $0 + $50 state fees to register your LLC (read review)|
How Much To Start An LLC In Idaho?
If you’re looking into how to start an LLC in Idaho for free, we have to disappoint you. When you’re filing your Certificate of Organization, you will have to pay a certain sum.
If you’re filing the certificate online, Idaho State will charge you $100 for the service. If you’re filing the certificate by mail, this figure will rise to $120.
Steps To Forming An LLC Idaho
- The first thing you’ll need to do is choose a name for your LLC. The name you choose must be unique. You can check the Secretary of State Business Name Database to ensure that it is. If you’re worried about someone else adopting the same or a similar name but won’t be starting your LLC quite yet, you can reserve the name you want up to 4-months in advance by filing a Reservation of Legal Entity Form. Doing so, however, will cost you an additional $20 if you reserve online or $40 if you file through the mail.
- Your next step will be to find a registered agent in Idaho. You can find a list of registered agents online and make your choice from there. A registered agent can be either an individual residing in Idaho or a business entity — domestic or foreign — that is registered with the Idaho Secretary of State.
- Next, you must file your Certificate of Organization. This certificate must bear your LLC’s name, its principal office’s street, and address, its registered agent’s name and address, an address for future correspondence, and the signature of your LLC’s organizer. Additionally, the certificate must have the name and address of at least one “governor”. The “governor” will be a manager if your LLC is managed by a manager or a member in an LLC managed by a manager.
- Once you’ve filed your Certificate of Organization, you can move on to preparing an Operating Agreement. While you don’t have to prepare an Operating Agreement to start an LLC in Idaho, it’s advisable that you do so. An Operating Agreement is an internal document that establishes how you’ll be operating your LLC. It details what each of its managers and members will be responsible for and what their rights will be. In the event that you don’t want to prepare an Operating Agreement, Idaho State LLC Law will govern how your LLC is run.
- After you’re done with the Operating Agreement, you can move on to obtaining your LLC’s very own IRS Employer Identification Number (EIN). You have to get an EIN, even if your LLC has more than one member. If you’ve founded a one-person LLC but intend to hire employees in the future, you have to get an EIN. If, however, your LLC will only have the one-member, you can choose to have it taxed as a corporation instead of a “sole proprietorship”.
The Forms You Need To Register An LLC In Idaho
Now that we’ve discussed how to start an LLC in Idaho, let’s quickly go over all the forms you’ll need:
- A Certificate of Organization Limited Liability Company.
- Name Reservation Application if you intend to reserve your name months before starting your LLC.
- The Idaho LLC Operating Agreement.
- An Employer Identification Number (EIN).
|Did you know? |
While you’re filing your forms, you might find yourself wondering how exactly LLCs came to be. The first ever LLC was created in 1977, in Wyoming, but this LLC was quite slow in taking off. As a result, the State of Delaware got the credit for starting the first LLC in 1991. Nearly thirty years later and there are three or four times as many LLCs as corporations being formed.
LLC Taxes In Idaho
In general, LLCs in Idaho hasn’t been taxed the same way that businesses like corporations would be. When you start an LLC in Idaho the owner of the LLC pays a self-employment tax on business profits. Owners also pay a state income tax on profits, minus, of course, deductions or state allowances.
Owners further pay federal income tax on profits, minus deductions and allowances. In addition to this, employers pay payroll tax for wages paid to employees.
Idaho State Income Tax
An LLC might have to pay two types of state tax: Idaho income state tax and Idaho state sales tax. The Idaho income state tax is the tax that the owner of an LLC will have to pay on any money they pay themselves. For this, they will be taxed at the state’s standard rates.
An employee at an LLC will also need to pay state income tax. The rates for this tax can range between 1.125% to 6.925% of income, depending on how much is earned.
Idaho State Sales Tax
If your LLC sells products or services, you might need to collect sales tax and then pay it to the Idaho State Tax Commission. This tax is generally collected at the point of purchase. The statewide, static tax rate of Idaho is 6%.
For reference, the state with the lowest taxes in Alaska, as it does not have an income tax, and its sales tax is 1.42%. On the opposite end of the spectrum, is the State with the highest taxes California.
California’s current state income tax is a whopping 13.30%, whereas its sales tax is 7.25%. However, California also has a local sales tax of 1.31%. Combined with this, California’s state tax is 8.56% in total.
All members and managers that make a profit from an LLC must pay a self-employment tax and federal income tax. The Federal Insurance Contributions Act administers this tax.
As such, it covers social security, Medicare, and similar benefits. The current state self-employment tax is 15.3%.
Here’s a general model you can use to gauge how much your federal tax will amount to:
- For-profits of $32,000, your self-employment tax would be $4,896.
- For-profits of $52,000, your self-employment tax would be $7,956.
- For-profits of $72,000, your self-employment tax would be $11,016.
- For-profits of $92,000, your self-employment tax would be $14,076.
What Do You Do Once You’ve Formed Your LLC?
You’ve formed your LLC. Now what? What are the first steps you should take after formation?
- Create your logo. As a newly formed LLC, you need a calling card, something that declares who you are to the world at first glance. This is why you need to create a logo. Your logo will introduce you to the world and your client base.
- Build your website or e-commerce store. In the age of the internet, no business can remain standing for long without a website or e-commerce store. Building a site is your way of reaching the most people you possibly can, explaining who you are and what you aim to do in the clearest, broadest way possible. Take your time setting up your website to make it as professional and clean as possible.
- Set up your bank account. Now that you have EIN, you need to open your business bank account. This will help you keep your personal finances and business finances separate. It will also make recording keeping and tax prep easy when tax season rolls around.
- Get your business insurance. It’s surprisingly easy for a new business to commit costly legislative mistakes. To avoid this, contact an insurance agent and get the appropriate insurance for your business.
- Prepare your annual report. You will have to prepare and submit annual reports on the anniversary month of your LLC’s founding. The Secretary of State will send you reminders that your report is due two months before the deadline. So, make sure everything is ready before then and submit your reports on time.
- Have a marketing plan in place. Develop a marketing plan for when you launch. To that end, research the market you’re going into in Idaho before launching. Include information on trends, problems, and opportunities. List the resources and sources of information you can turn to. Identify state regulations, zoning, and licensing issues. Be sure to include information on your competitors in your marketing plan. Next, outline your services and products. What needs do these solve, or what problems do they fix? Adjust your marketing plan accordingly. As you develop your marketing plan, don’t forget to create a sensible marketing budget!
How To Dissolve An LLC In Idaho?
Now that you know how to start your own LLC in Idaho, there is one final thing you should know: How to dissolve one. To dissolve your LLC, you’ll need to fill out an LLC Statement of Dissolution and file it with the Secretary of State.
As you’re filing, make sure you include the necessary service fee, which is $20 for regular service, $40 for expedited service, and $100 for same-day filing.
Starting an LLC in Idaho is relatively easy and straightforward. We shared everything you need to form your LLC. All you have to do is fill out the required forms and wait to get started.