Start Your Own Business in Idaho: Seven Steps You Need to Take

From licenses and permits to taxes and insurance, learn what you need to do to start a business in Idaho.



Here’s an overview of the key steps you’ll need to take to start your own business in Idaho.

Step 1. Decide on a Legal Structure

The most common legal structures for a small business are:

  • sole proprietorship
  • partnership
  • limited liability company (LLC), and
  • corporation.

There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check  Choose Your Business Structure  on Nolo’s website for more information on how to choose the best ownership structure for your business.

Step 2. Choose a Name

For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Idaho Secretary of State (SOS). You can check for available names by doing a  business entity search  on the SOS website. You can reserve an available name for 120 days by filing anApplication for Reservation of Legal Entity Name. There are certain name requirements for LLCs and corporations (like including a word such as “L.L.C.” for LLCs or “Company” for corporations). See  How to Form an LLC in Idahoand  How to Form a Corporation in Idaho  for more information.

Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must file a  Certificate of Assumed Business Name  with the SOS.

If you plan on doing business online, you may want to register your business name as a domain name. See  Choose and Register a Domain Name  for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See  How to Do a Trademark Search  for more information.

Step 3. Create Your Business Entity

  • Sole proprietorship:  To establish a sole proprietorship in Idaho, you don’t need to file any organizational documents with the state. For more information, see  How to Establish a Sole Proprietorship in Idaho.
  • Partnership:  To create a general partnership in Idaho, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see  How to Form a Partnership in Idaho.  To form a  limited liability partnership  (often used by professionals), you must file a Statement of Qualification with the Idaho SOS. For more information, seeHow to Form a Limited Liability Partnership in Idaho.
  • LLCs:  To create an LLC in Idaho, you must file a  Certificate of Organization  with the Idaho SOS. You will also need to appoint a  registered agent  in Idaho for service of process. In addition, while not required by law, you also should prepare an  operating agreement  to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see  How to Form an LLC in Idaho  and  How to Form a Professional LLC in Idaho  (for professionals).
  • Corporations:  To create a corporation in Idaho, you must file  Articles of Incorporation  with the Idaho SOS. You will also need to appoint a  registered agent  in Idaho for service of process. Although not legally required, you also should prepare  bylaws  to establish your corporation’s internal operating rules. Bylaws are not filed with the state.  S Corporations  must also file IRS Form 2553,  Election by a Small Business Corporation,  with the IRS. For more information, see  How to Form a Corporation in Idaho.

Step 4. Licenses and Permits

Tax Registration.  If you will be selling goods in Idaho, you must register with the State Tax Commission (STC) to collect sales tax. If your business will have employees, you must register with the STC for employer withholding taxes. You can register for both types of tax, as well as other business taxes, either online via the  Idaho Business Registration System  (IBRS) or on paper using  Form IBR-1,  Idaho Business Registration Form.

EIN.  If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.

Regulatory licenses and permits.  These cover areas such as:

  • health and safety
  • the environment
  • building and construction; and
  • specific industries or services.

Different regulatory licenses and permits are issued by different state agencies. For example, permits relating to agriculture are issued by the Department of Agriculture and permits relating to the environment are issued by the Department of Environmental Quality. The state government website has a  Regulatory Requirements Wizard  that you can use to help figure out what licenses and permits your particular business may need. For information about local licenses and permits, check the websites for any cities or counties where you will do business.

Professional and occupational licenses.  These cover people who work in various fields. The  Professional Licenses  section of Idaho.gov, the state government’s primary website, lists many of the professions and occupations requiring a state license.

Step 5. Business Location and Zoning

You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking  municode.com.

Step 6. Taxes and Reporting

Idaho taxes every kind of business. See  Idaho State Business Income Tax  for more information on state business taxes in Idaho.

Sole proprietorships.  Pay state taxes on business income as part of their personal state income tax returns (Form 40).

Partnerships.  Partners pay state taxes on partnership income on personal tax returns. In addition, Idaho partnerships also must file  Form 65,  Idaho Partnership Return of Income.

LLCs.  Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Idaho LLCs also are required to file anannual report  with the Idaho SOS. See  Idaho LLC Annual Filing Requirements  for more information.

Corporations.  Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Idaho  corporation taxes. And, finally, corporations must file an  annual report  with the Idaho SOS.

If you have employees, you must also deal with state  employer taxes.

And, apart from Idaho taxes, there are always federal income and employer taxes. Check IRS Publications 334,Tax Guide for Small Business, and 583,  Taxpayers Starting a Business, available at irs.gov.

Step 7. Insurance

Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check  Obtaining Business Insurance  for more information.

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