Opening a new Idaho business starts by forming your Idaho business’s legal structure, finding a location, obtaining necessary permits, and operating licenses.
Are You Buying an Existing Idaho Business?
You may also be buying unpaid debts, unpaid taxes, worker’s compensation, and unemployment insurance experience ratings. You should require the owner to provide a Tax Status Letter. However, most people will purchase (assets only) using their new Idaho business entity instead of assuming that of the old owners.
What is Idaho Business Entity Right for You?
Before you can decide on what business structure is right for your new Idaho business, you must fully understand your liability, future goals, ownership, and personal needs.
Idaho Sole Proprietor
An Idaho sole proprietorship is allowed for individuals or married couples in community property like Idaho. Forming an Idaho sole proprietorship requires filing a certificate of Assumed Business Name. The Idaho business owner has full control of management and operations and is exposed to unlimited liability for business debts and taxes.
Idaho General Partnerships
An Idaho General Partnership is created by filing a Statement of Partnership Authority with the Secretary of State. Idaho general partners have similar exposure to personal and tax liability as sole proprietorships.
Idaho Limited Liability Partnership (LLP)
Usually formed by doctors, lawyers, accountants, and CPA firms. An LLP gives individual partners protection from personal liability for the actions of other partners that could negatively impact all partners.
Idaho Limited Partnership (LP)
An Idaho LP consists of two or more individuals who jointly own an Idaho business in an unequal capacity (general partners or limited partners). Limited partners are usually only financially liable for debts equal to their investment in the LP and have limited control over the partnership’s management.
This is the most complex entity type to establish but could be beneficial for the right Idaho business. Idaho corporations are a separate legal entity from its shareholders/owner and may be privately or publicly held. Corporate profits may be taxed twice if dividends are issued, once as corporate income and once as shareholder dividends.
Idaho S Corporation (S Corp)
Idaho S Corporations offers the protection of a corporation and the flexibility of a partnership. Profits and losses pass through to the owners. Idaho S Corps must file “Articles of Incorporation,” adopt bylaws and hold regular documented meetings. Idaho S Corps are prohibited from having more than 100 shareholders, being owned by another corporation, partnership, or a non-U.S. resident.
Idaho Non-Profit Corporation (Non-Profits)
Idaho non-profits are formed to provide a community service. Funding comes from donations or grants received from corporations, foundations, individuals, and government agencies. Idaho non-profits must first apply for and maintain tax-exempt status from the Internal Revenue Service before registering with the state. After obtaining IRS approval, the non-profit registers in Idaho. To reserve a name while awaiting IRS approval, “Application for Reservation of Legal Entity Name” can be filed. The “Articles of Incorporation” must contain a clause stating the specific purpose of the business and a provision for the disposal of assets should the non-profit cease to exist.
Idaho Professional Service Corporation
Registered by individuals engaged in a limited number of professions, such as medical, dental, or legal.
Idaho Unincorporated Non-Profit Association
Commonly used by homeowner’s associations, sports leagues, and other organizations that offer a benefit to a large group of individuals and whose officers or agents regularly change.
Idaho Limited Liability Company (LLC)
An LLC provides liability protection like a corporation with the federal tax benefits of a partnership or sole proprietorship. All LLCs must file a “Certificate of Organization” with the Secretary of State and operate under the provisions of its written “Operating Agreement.” Taxes are reported based on the way the LLC has chosen to be taxed. This choice may include a corporation, partnership, or sole proprietorship.
File Formation Documents