Benefits of a Corporation
A corporation is a limited liability entity, which means that the corporation’s owners—the shareholders—are protected from personal liability for the corporation’s debts and obligations. A corporation’s limited liability may also help protect shareholders’ personal assets if an employee is sued. There are other benefits to incorporating your business, such as possible tax benefits.
Requirements for Incorporating in Idaho
Preparing Your Articles of Incorporation
Your corporation’s existence begins when you file its articles of incorporation with the Idaho Secretary of State. To incorporate, you also need to pay a filing fee. The articles of incorporation may contain many provisions, but they must contain the following:
- Name of the corporation
- Stock structure
- Registered agent
- Names and addresses of incorporators
A corporation can have different types of stock, called classes or series. These types of stocks can have different advantages, for example one can offer voting rights while another may not. In regards to stock structure, the articles of incorporation must state the following:
- If there is only one class of shares, the articles of incorporation must state the total number of shares the corporation is authorized to issue. There must be at least one share authorized.
- If there is more than one class or series of shares, the articles must list each class or series, state how many shares are authorized in that class or series and provide a designation for each class or series. Before any shares of a class or series are issued, the articles must state the rights, preferences and limitations applicable to that class or series.
Naming Your Corporation
You should check the availability of your proposed corporate name before filing articles of incorporation. You can do this through the Secretary of State’s website.
You can reserve a corporate name for four months by filing an application with the Secretary of State.
Your corporation’s name must meet the following requirements:
- Your corporation’s name must contain the words “corporation,” “incorporated,” “company” or “limited,” or the abbreviations “corp.,” “inc.,” “co.” or “ltd.” If you use the word “company,” it cannot be immediately preceded by the word “and,” e.g., Jones and Company.
- Your corporation’s name must be distinguishable from the name of any other formally organized entity in the records of the Secretary of State.
An incorporator’s primary responsibility is to deliver the articles of incorporation to the Secretary of State for filing. Incorporators’ names and addresses must be listed in the articles of incorporation. When specifying incorporators, you must adhere to the following requirements:
- Your corporation must have at least one incorporator.
- An incorporator must be a person.
- If the articles of incorporation do not name the initial directors, the incorporators must hold an organizational meeting to elect directors. Incorporators may also approve bylaws and elect officers at that meeting. The incorporators’ responsibilities end when the directors are chosen.
Corporate directors oversee the management of the corporation and establish corporate policies. Directors are fiduciaries, which means they must always act in good faith and put the interests of the corporation ahead of their personal interests. Idaho law does not require any qualifications for directors, but the bylaws or articles of incorporation may establish eligibility requirements for directors.
When specifying directors in your articles of incorporation, the following requirements must be met:
- There may be one or more directors.
- The articles of incorporation or bylaws should state the number of directors allowed.
Specifying a Registered Agent
Every Idaho corporation must designate a registered agent, who receives legal documents on the corporation’s behalf and forwards them to the corporation. The following are the requirements for specifying a registered agent:
- You must list the name of a commercial registered agent or, if you do not have a commercial registered agent, the name and street address in Idaho of your noncommercial registered agent. If the noncommercial agent is an entity, you can list the job title of the person who will serve as agent instead of listing the person’s name.
- The registered agent must be located at a street address in Idaho.
Stating a Corporate Purpose
Some states require you to state a corporate purpose in your articles of incorporation, but Idaho does not. Every business incorporated in Idaho has a purpose of engaging in any lawful business.
Determining Incorporation Bylaws
Bylaws provide rules and guidelines for the way a corporation will operate and can contain provisions for managing the business and regulating the affairs of the corporation. Usually, they include such details as the number of directors and officers and the manner in which shareholders’ meetings are conducted.
Although bylaws are not filed with the Secretary of State, they must meet the following requirements:
- The directors or incorporators must adopt bylaws.
- Bylaws cannot include anything that is inconsistent with the law or the articles of incorporation.
Costs of Incorporating in Idaho
The Idaho Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.
LegalZoom can help you start a corporation in Idaho in three easy steps. LegalZoom provides corporate formation and filing services, including providing a registered agent, in Idaho.