LLCs in Idaho are affordable and easy to form. As with other states, the State of Idaho has some unique LLC requirements.
Interested parties must register with the Secretary of State by filing the necessary forms, paying the necessary fees and meeting all naming and formation requirements.
The specifications required of an Idaho LLC are:
Registration. File a Certificate of Organization with the Secretary of State. The form may be filed online or by mail and should be accompanied with the filing fee.
Forms and fees. LLC registrants are required to file a Certificate of Organization, accompanied by the necessary filing fee of about $100. All submissions are required to have duplicate copies.
Timeline. The usual processing time for business forms and documents is between three to five business days. There are expedited processing services available, which move processing time up to eight working hours. Expedited processing fees apply, check with the Secretary of State for the most current fees.
Naming requirements. LLC naming requirements can be confusing. However, the easiest way to make sure that your LLC name will be approved is to make sure that it is distinguishable from other LLCs and includes specific words required of LLCs. You may opt to have a preferred name checked for availability before filing your LLC formation documents with the Secretary of State.
Formation requirements. To form an LLC, a registrant must first file a Certificate of Organization with the Secretary of State.
Next, an LLC with more than one member is also strongly advised to have a limited liability operating agreement among its members. This operating agreement contains the terms entered into by the members of the LLC and governs such critical items as the roles of each member, voting rights, who manages the LLC, how members are admitted or removed, dissolution of the LLC and procedures for amending the LLC operating agreement itself.
Starting an LLC in Idaho
Before deciding to form an LLC in Idaho, you must understand what an LLC is and if it is a viable business structure for your company. To begin, an LLC is a business structure that has flexible organization, is privy to tax efficiencies and provides limited liability for its members. Members may include individuals, corporations, other LLCs and foreign entities. One benefit of an LLC is that there is no maximum number of members. An LLC is also known as a ”hybrid” business structure in the sense that it brings together elements of a corporation and limited liability partnerships.
Here are some tips to help you put together what you need to begin the registration process with the Idaho Secretary of State:
1. Decide on a name for your business. You can choose any name as long as it ends with “Limited Liability Company,” “Limited Company” or any variation of its abbreviation—e.g., LLC, L.L.C., L.C. or LC.
A name may be reserved for up to four months with the Secretary of State by filing a name reservation request online or by mail. All requests must be accompanied by the non-refundable filing fee of about $20. A preferred name may be checked for availability by accessing the Secretary of State’s website.
2. Assign an agent for service of process (also referred to as the resident agent). Registered agents are individuals or corporations authorized to do business in the state and that have permanent addresses in Idaho. Registered agents accept legal documents on behalf of the LLC and make sure its members are notified.
3. Get an Employer Identification Number (EIN) from the IRS. If there are two or more members in your LLC, your company will need to obtain an EIN from the IRS, for tax purposes.
4. Create an operating agreement. Although LLCs in Idaho are not required to have a limited liability company operating agreement, it is wise to have one in place with other members should your LLC have more than one member. The State of Idaho recognizes limited liability company operating agreements as governing documents.
5. Familiarize yourself with the LLC’s continuing legal obligations, specifically annual reports. Annual reports are required to be filed every year with the Secretary of State. These reports are filed online and require the entity type, entity number and PIN. Notification postcards are sent via mail by the Secretary of State informing when your annual report is due and includes the PIN you need to file online. There are no filing fees for annual reports.
Other continuing legal obligations may include, but are not limited to, state taxes, annual reports and so on.
6. Make sure that your LLC, should it offer professional services, meets Idaho state legal requirements. Idaho regulates various professional services with separate requirements. Check with the Secretary of State to get information specific for your LLC.
Filing an LLC and Fees
Following are the forms and fees that are required when starting an LLC in Idaho:
1. Forms. First, you need to complete and submit a Certificate of Organization to the Idaho Secretary of State. This can only be done online or by mail and must be accompanied by the filing fee. All submissions are required to have duplicate copies.
2. Fees. The processing fee for a Certificate of Organization is about $100. Fees can change, so check with the Secretary of State for the most recent fees.
3. Limited liability company operating agreement. Although the LLC operating agreement will not be submitted to the Secretary of State, it is a good idea to have one in place for LLCs with more than one member. This should be kept on file by the registered agent.
4. Taxes. LLCs in Idaho are treated as corporations, limited liability partnerships or single-member LLCs and are subject to federal income tax classifications. Depending on the type of taxation you opt to have for your LLC, the tax responsibilities are as follows:
a) An LLC treated as a limited liability partnership. These LLCs are required to file Form 1065, U.S. Return of Partnership Income, and to show equal distribution of profits, losses and credit on a Schedule K-1 with the IRS.
b) An LLC treated as a C corporation for federal tax purposes. These LLCs are required to file Form 8832, Entity Classification Election, and must opt to be taxed as a corporation. Next, they must file Form 1120, U.S. Corporation Income Tax Return, with the IRS.
c) An LLC treated as an S corporation. These LLCs are required to file Form 1120S, U.S. Corporation Income Tax Return, accompanied by a report from each owner expressing the equal distribution of profits, losses and credit with the IRS.
d) An LLC treated as a sole proprietorship. These LLCs must report all business income and expenses via the sole proprietor’s personal income tax returns, Schedule C (Form 1040), Profit or Loss from Business, with the IRS.
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