If you want to start and run an Idaho limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Idaho LLCs.
The State of Idaho requires you to file an annual report for your LLC. The Secretary of State will send your LLC a reminder notice before the report is due. You can file the annual report online at the SOS website. There is no fee to file the annual report.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay federal income taxes, only their members do.
Idaho, however, imposes a separate state tax directly on LLCs. The rules for the tax are complicated. Special rules apply if—among other things—one or more members of your LLC are not Idaho residents or some LLC income is not distributed to members. At a minimum, all multi-member LLCs with the default tax classification (partnership), and whose members are at least part-year Idaho residents, must file Form PTE-12, Form 65, and Form ID-K1. Generally there is at least a $10 minimum tax on the LLC. Any LLC income not distributed to members is taxed at the corporation tax rate. For additional tax guidance, check with the Idaho State Tax Commission (STC).
In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Idaho, like almost every other state, taxes corporation income. In Idaho, corporation income generally is taxed at a flat 7.4% rate plus an additional $10. However, there are alternative methods for computing the corporation income tax. There is also a minimum tax. The corporation income tax is payable to the STC. Use the state's corporation income tax return (Form 41). For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the STC website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Idaho employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the State Tax Commission. Begin by registering your business with the STC either online or on paper (Form IBR-1). Once you've registered, you'll need to file withholding taxes on a periodic basis (for example quarterly) using Form 910. You'll also need to use some version of Form 967 each year to reconcile your LLC's tax withholding. For more information, including regarding online filings, check the STC website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through the Idaho Department of Labor (DOL). You can register for these taxes online or by using Form IBR-1. Then, each quarter, use Forms TAX020 and TAX026 to report on wages and pay the UI taxes. For more information, including regarding online filings, check the DOL website.
If your LLC will sell goods to customers in Idaho, you will need to collect and pay sales tax. This means you'll have to register for this purpose with STC and then make periodic sales tax payments for goods sold. You can register online or mail in Form IBR-1. After you've registered, you'll be sent a seller's permit. Then, on a periodic basis (for example monthly or quarterly), you must submit sales tax returns to the STC. You can do this on paper (Form 850) or online through Idaho's Taxpayer Access Point (TAP). For more information, check the STC website.
If you will be doing business in states other than Idaho, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Idaho, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.