How to Start a Business in Idaho
With reasonable registration costs and no annual report fees, Idaho is one of the most affordable states when it comes to starting and running a business. In fact, if you’re selling something or getting paid to provide a service in Idaho, you’re already in business. But if you want your business to go beyond being small potatoes, you’ll need to register your business with the state, protect your assets, and follow Idaho’s regulations. We’ve written a detailed guide on how to start a business in Idaho and make it thrive.
Ready to Start a Business in Idaho?Let's Get You Started
Pick a Business Structure
Name Your Business
File Formation Paperwork
Draft Internal Records
Get Idaho Business Licenses
Organize Your Money
Get Business Insurance
Understand Your Tax Burden
Build Your Business Website
File Idaho Annual Report
Apply for Trademarks
1. Pick a Business Structure
The structure you choose will have a lasting impact on how you’ll do business, what taxes you’ll pay, and the legal protection you can expect. All it technically takes to start a business is for you to sell something or provide a service. Do that, and you’re in business as a sole proprietor. Sell something with a partner, you’re in a general partnership. Neither one needs to register with the state to do business, but neither structure gives you liability protection in the event that you get sued or go bankrupt. If you want liability protection, you’ll need to create a business entity that has separate assets, debts, and liability from its owners. The most common entity types with liability protection are LLCs and corporations.
Idaho Limited Liability Company (LLC)
LLCs are one of the most popular business structures because they offer excellent liability protection, flexible taxation, an unlimited number of owners (members), and are relatively easy to maintain. Starting an Idaho LLC requires you to file a Certificate of Organization with Idaho’s Secretary of State and pay a $100 fee.
Corporations are the older, fancier sibling of the LLC. Like LLCs, corporations offer liability protection to their owners, but unlike LLCs, they’re structured in a way that makes it easier for them to raise money and grow. Instead of members, corporations have shareholders, officers, and a board of directors. Because of their size and structure, corporations require more annual maintenance and paperwork. To start an Idaho corporation, you’ll need to file Idaho Articles of Incorporation with the Secretary of State and pay a $100 filing fee.
Can an LLC be just one person?
Yes! A one-person LLC is called a single-member LLC. Single-member LLCs are one of the most common kinds of businesses in the country. For the most part, single-member LLCs are just like multi-member LLCs, but there are some slight differences in how they file taxes and protect personal assets.
Read all about Single-Member LLCs.
What about Idaho nonprofits?
The purpose of a nonprofit is to benefit a community or champion a particular cause. Nonprofits use their income and assets to pursue charitable goals. You can start an Idaho nonprofit by completing the Idaho Nonprofit Articles of Incorporation. Online filings cost $30, or you can pay $50 and file by mail.
Want to learn more? Check out our Nonprofit Guide.
2. Name Your Business
Your business name is the first thing potential customers will see and hear, so you’ll want to make it a good one. But before you name your sewing supply business “Quilty as Charged,” you’ll need to make sure your name adheres to Idaho Statute § 30-21-301, which states that your business name must:
- Include an identifier, like “LLC” for a limited liability company or “Inc.” for a corporation.
- Be unique among registered business names in Idaho.
- Not use any words or abbreviations that suggest it’s a different entity type.
- Not use words that falsely suggest the business offers a professional service or is a government agency.
Search the Idaho Business Name Database to see if your preferred name is available.
Can I reserve a business name in Idaho?
Yes. By submitting an Application for Reservation of Legal Entity Name, you’ll be able to register a business name for 120 days. The reservation fee is $20 if you file on the Idaho Secretary of State website and $40 if you print it out and file by mail.
What is a DBA?
A DBA, short for “doing business as” name, is like a nickname for your business. The legal name of your business is the name you used on your formation documents. For sole proprietorships and partnerships, the legal name is the name of the owner or partners. Businesses use DBAs to change their image, expand into new markets, or simply use a name that makes more sense to the customer.
Idaho calls a DBA an Assumed Business Name. You can register for one by filing a Certificate of Assumed Business Name with the Idaho SOS. Paper filings cost $45 and can take a few weeks to be approved. Or you can pay $25 and file online with the Idaho Secretary of State and get your Assumed Business Name (DBA) immediately.
What about trademark names?
It’s a good idea to check with the US Patent and Trademark Office (USPTO) to make sure your business name hasn’t been trademarked by someone else. If it has, and you use it anyway, there’s a chance that the business could come after you for infringement.
3. File Formation Paperwork
LLCs and corporations are required to file formation paperwork with Idaho’s Secretary of State. Sole proprietors can skip this step, but in most cases they’ll still need to register for an Idaho business license.
State formation documents like a certificate of organization or articles of incorporation are what officially register your business with the state. They also create the legal separation necessary to protect your personal assets.
- To form an Idaho LLC, file the Idaho Certificate of Organization.
- To start an Idaho corporation, file Idaho Articles of Incorporation.
Note: When you submit your business formation documents to the state, the information on them becomes part of Idaho’s public record. This means that that the names and addresses you include will be searchable in Idaho’s Business Database. Anyone with a working knowledge of the internet will be able to look your business up.
What is an Idaho registered agent?
Your Idaho registered agent is the person (or business) authorized to receive important legal mail and correspondence from the Idaho Secretary of State on behalf of your business. Your registered agent could be you, another individual, or a registered agent service (we know someone, wink wink!).
How can I keep my information off the public record?
A reputable registered agent service won’t list your personal information on public filings if they don’t have to. This means that if an identity thief looks your business up on Idaho’s SOS website, all they’ll get is the name of your registered agent.
4. Draft Internal Records
So far in this guide, we’ve dealt with public forms that you’ve had to file with the Idaho Secretary of State. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company.
Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS.
Here are the major internal documents you need to organize for LLCs and corporations:
Idaho LLC Operating Agreement
This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.
Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft an Idaho LLC Operating Agreement template that you can use as a solid foundation.
Idaho Corporate Bylaws
Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. Unlike operating agreements, corporate bylaws are required by Idaho law (ID Code § 30-29-206 (2019)).
As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted an Idaho Corporate Bylaws template you can use to get started.
Starting a nonprofit? Learn about Idaho nonprofit bylaws.
5. Get Idaho Business Licenses
Business licenses certify that your business is operating in a safe and legal manner. The type and number of licenses your business will need depends on what kind of business it engages in. While a florist may need just one license, a contractor will probably need multiple.
Idaho’s Business Wizard makes it easy for business owners to get an industry and occupation-specific list of state and local licensing requirements. Depending on what type of business you engage in, Idaho’s Business Wizard will provide a checklist of licenses or permits your business needs, and the state and city offices you’ll need to contact.
Idaho State Business License
The only state-wide business license you’ll need in Idaho is the Sales and Use Tax license, which allows you to collect the state sales tax of 6%. Registering your business for a Sales and Use Tax license also registers your business for unemployment insurance and tax withholding accounts.
Idaho Professional Business Licenses
Professional business licenses are issued to businesses that require special education and training. Lawyers, dentists, doctors, and hair stylists, among others, require a professional business license.
Local Business Licenses
Depending on where your business is located and what kind of business you engage in, you may need to obtain a license from the city or county. To find out if your specific business activities require a license, you’ll want to contact your local county or city clerk’s office. Some cities also have their own Sales and Use Tax license in addition to the state license.
Learn more about How to Get a Business License.
How do I get an Idaho Sales and Use Tax License?
All you need to do is register your business online with Idaho’s Department of Labor. You can also print out a Idaho Business Registration Form (Form IBR-1) and mail it in to the address on the application. Idaho’s Sales and Use Tax license is free.
How much does it cost to get an Idaho business license?
The cost of a business license in Idaho varies. Mobile food trucks will pay $35 for a temporary food vendor license. Barber shops pay $50 to license their establishment, and another $25 for the professional license. Fishing guides are on the hook for a minimum of $105 to guide trips. Restaurants, bars, and contractors are usually hit with the heftiest fees, because they have to clear so many licensing hurdles, from local permits to state registration fees. Long story short, if you do business in Idaho, there’s a license somewhere calling your name.
How do I get a professional license in Idaho?
Professional licenses must be obtained through the state licensing board that matches the profession. For example, if you’re a podiatrist, Idaho’s Board of Podiatry will need you to pony up an initial application fee of $200 and a yearly license fee of $500. Idaho’s Division of Occupational and Professional Licenses has a website that will help you find the appropriate professional licensing authority.
How do I get a local business license?
Local business licenses must be obtained from your local authority. For example, if you plan to open a bar in Riggins, Idaho, you’ll need to contact the city clerk for an application to sell liquor, wine, and beer. You’ll also be required to go before the city council to get approval. This step comes after you get a license from Idaho’s State Liquor Division. However, in most cases, unless you’re looking for approval to sell a regulated product (medicine, alcohol, food, etc.), you’ll just need a local license.
6. Organize Your Money
The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.
Open a Business Bank Account
To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.
Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.
How do you set up a business bank account?
LLCs and corporations will need to provide the bank with their formation documents, operating agreement or corporate bylaws, EIN, and in some cases, a Corporate Resolution to Open a Bank Account or LLC Resolution to Open a Bank Account.
Do I need a business bank account to accept credit card payments?
Probably. Payment processors require you to provide them with a bank account. This is where they’ll deposit funds from transactions. Most of the time, this needs to be a business bank account.
Some payment processors may let you get away with listing a personal bank account, but it’s not a great idea. Mixing your business finances with your personal finances erodes the separation between you and your business, weakening your liability protection. It also turns tax season into a nightmare.
Learn more about Payment Processing.
Set up Payroll
If you’re going to hire employees, you’ll need to pay them. This means you’ll need to set up a payroll system. Here’s how you do it:
- Get an EIN for your business.
- Get your tax withholding account number by registering with the Idaho Department of Labor.
- Use the Employer Portal to manage your unemployment insurance account.
- Prepare, collect, and file the necessary forms that your employees will need to fill out.
- Crunch the numbers and do your own payroll, buy payroll software, or hire a professional.
- Schedule payroll, and let employees know when they can expect to be paid.
Handling payroll for your business is a lot of work. There’s no shame in using payroll software, or hiring a professional payroll processing service to do the heavy lifting.
What forms do my employees need to fill out?
Your new employees will need to fill out a W-4 to determine how much you’ll withhold and an I-9 to verify that the employee is eligible to work in the US.
What’s the difference between an independent contractor and an employee?
It’s important to understand the difference between an independent contractor and an employee. That’s because for employees, you’ll need to withhold and pay income, social security, and Medicare taxes. Independent contractors pay these taxes on their own.
An independent contractor is self-employed—how they complete their work is not directly controlled by an employer. An independent contractor may perform the same kind of work for other businesses, and can do the work when and how they choose.
An employee, on the other hand, performs their work how and when their employer chooses.
If you’re unsure, you can file Form SS-8 with the IRS and let them decide.
Learn everything you need to know about hiring independent contractors.
How do I get an Idaho Tax Withholding Account?
Your business will get a tax withholding account number when you register it business online with Idaho’s Department of Labor.
Note: You’ll need an EIN before you apply for an Idaho withholding account.
7. Get Business Insurance
Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is going to have to pony up some cold hard cash. Business insurance can help cover the costs.
If you have a low-risk business—for example, selling homemade soap online—you might be asking, “Why would I need business insurance?” Problem is, people are people, which means that anytime you sell a product or perform a service for a customer, you’re at risk. If your soap gives someone a rash and they sue you, you’ll wish you had insurance.
Workers’ Compensation Insurance
Workers’ comp insurance covers medical expenses and replaces income for employees who are injured on the job. It can also be used towards rehabilitation services. In accordance with Idaho law, workers’ comp insurance is required to be in place before the first employee is hired. Idaho employers who operate without workers’ compensation insurance may be liable for financial penalties.
Idaho does allow for a few exemptions, including:
- Employment covered under Federal Workers’ Compensation Laws.
- Pilots of agricultural spraying or dusting planes (under certain conditions).
- Associate real estate brokers and real estate salespersons when paid solely by commission.
- Ski patrol volunteers.
- Officials of athletic contests in secondary schools only (grades 7-12 inclusive or any combination thereof).
- Household domestic service.
- Employment of family members living in the employer’s household (applies only to sole proprietorships).
There are four options for workers’ compensation insurance in Idaho:
- You can purchase it through Idaho’s Workers’ Compensation Fund.
- Shop around for private insurance.
- If your business meets certain payroll requirements, you can choose to self-insure.
- Employers who don’t meet the requirements for self-insurance, or are unable to obtain coverage from a private company or the State Insurance Fund can apply for coverage with The National Council on Compensation Insurance (NCCI).
Check out our article on How to Minimize Risk When Starting a Business to learn more!
This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.
Do business owners need workers' compensation insurance in Idaho?
Individual business owners are not required to have workers’ compensation coverage for themselves. However, since personal insurance plans won’t always cover business-related injuries, it might be a good idea to get workers’ compensation insurance for yourself anyway.
Do I need business insurance for my home-based business?
Probably. That’s because you can’t count on your homeowners’ or renters’ insurance policy to cover damages related to your business. Most insurance companies offer a home-based business insurance plan.
8. Understand Your Tax Burden
Paying taxes may not be your idea of fun, but it’s an important aspect to running a business. Here’s a quick walk-through of the taxes you can expect to pay as a business owner in Idaho.
- LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. LLC members are responsible for their own federal self-employment taxes (15.3%). LLCs can elect to be taxed as an S-Corp or C-corp by filing the appropriate paperwork with the IRS.
- Corporations. Corporations are taxed as C-Corps by default. This means that corporations pay the 21% federal corporate tax rate and the 6% Idaho corporate tax.
To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.
Do I need an EIN if I’m self-employed?
If you’re operating a sole proprietorship or single-member LLC that doesn’t employ anyone else and you don’t need to file excise or pension plan returns, you don’t legally need an EIN.
However, you can still get one—and you probably should. Otherwise, you’ll have to use your own social security number to do business. Plus, you’ll likely need an EIN to open a business bank account.
How do I get an EIN?
To get an EIN, you can either apply online or file form SS-4 by mail with the IRS. Getting an EIN is free.
Check out our guide to applying for an EIN.
What is an S-Corp?
An S-Corporation is a federal tax election. Registered business entities like LLCs and corporations start out with a default tax status, but can file paperwork with the IRS to be taxed as an S-Corp. Like LLCs, S-Corps are taxed as pass-through entities. Like corporations, S-Corps can make distributions that aren’t subject to the 15.3% self-employment tax.
Learn more about the S-Corp tax election.
What is a C-Corp?
A C-corporation is the default federal tax election assigned to corporations. Most corporations are taxed as C-corps, but LLCs can also apply for C-corp tax designation by filing paperwork with the IRS. C-corps file federal corporate income taxes and state corporate income taxes (in Idaho, the corporate income tax rate is a flat 6%). C-corps can pay their shareholders in distributions, and the shareholders report those profits on their personal tax returns.
Learn more about the C-corp tax election.
Idaho State Business Taxes
Idaho’s personal income tax ranges from 1% to 6%. Corporations pay a flat 6% corporate tax. There is also a state-wide sales tax of 6%, with some municipalities levying added local taxes of up to 3%. As an Idaho business owner, you’ll be expected to collect both state and local sales taxes, and then remit them to the appropriate authority. Idaho also levies a flat $10 Permanent Building Fund (PBF) tax on most businesses.
Idaho has a handy online tax system called TAP (Taxpayer Access Point) that allows business owners to pay taxes and receive refunds with just a few clicks. Registering with TAP is easy, and will allow your business to pay sales tax without dealing with postage delays or lost mail.
Local Idaho Business Taxes
Some cities in Idaho levy a Local Option Tax (LOT). The LOT is in addition to the state sales tax of 6%. Each municipality can levy its own LOT. For example, Ketchum, Idaho adds an additional 3% tax to alcohol and short term lodging properties, and 2% to all other retail purchases.
There are also three auditorium districts (Boise, Idaho Falls, and Pocatello/Chubbuck) that only add a localized sales tax on lodging. All other purchases are subject to the regular state sales tax.
9. Build Your Business Website
If you want actual Idaho customers to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or an annoying influencer to establish a robust online presence. You’ll just need the following:
- Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
- Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“email@example.com”).
- SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
- Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.
10. File the Idaho Annual Report
LLCs and corporations in Idaho need to file an annual report with Secretary of State each year. Annual reports ensure that the state has up-to-date information for your business. Most states use the annual report to make some money, but not Idaho. Idaho’s annual report is free. It is due at the end of your business’s anniversary month. This means if you formed your Idaho business on July 23, 2022, July will be your anniversary month and all future reports will be due July 31st each year.
Read up on How to File an Idaho Annual Report.
What if I don’t file an annual report in Idaho?
There are no late fees for annual reports in Idaho. However, if no report is submitted within 60 days following your due date, your business may be administratively dissolved.
11. Apply for Trademarks
A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.
You can apply to register your trademark with the Idaho a or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in Idaho is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in Idaho.
You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.
Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.
How do I register for a trademark in Idaho?
You have two options. File on the Idaho Secretary of State website and pay the $30 filing fee, or print out and mail an Application for Registration of Trade Mark/Service Mark and pay $50. (Idaho adds a $20 processing fee.) No matter how you file, Idaho requires you to include one sample (logo, business card, letterhead, label, etc…) of your business using the mark you wish to register.
Can I register a trademark before I use it?
No. But you can file an application with the USPTO under Intent-to-Use status. This gets your application in line before you’ve actually used the mark, which could be helpful if you’re worried someone else might register your mark before you’ve had a chance to use it.
For your trademark to become official, you’ll eventually need to show proof that you’re using it. An Intent-to-Use application buys you some time to do that.
Learn more about filing an Intent-to-Use Trademark.