A limited liability company ("LLC") is described as a business organization that shares the limited liability benefits of a corporation but the management and tax freedom of a partnership. LLCs are legal entities created only under state law. "Limited liability" simply means that everybody associated with the company is not liable for damages beyond their initial investment and cannot be held vicariously liable.
An LLC in Idaho is a legal entity in the state of Idaho that has the same similarities to both corporations and partnerships. An Idaho LLC is formed under specific state laws and regulations that many businesses use. When you form an LLC in Idaho, it can be used to combine the limited liability benefits of a corporation with the flexibility and tax benefits of a partnership in the state of Idaho.
To form an LLC in Idaho, you must complete the following requirements:
- Choose a name for your LLC: Under Idaho law, an LLC name must have one of the following: "Limited Liability Company," "LLC," "L.L.C.," "Limited Company," "LC," or "L.C." The term "Limited" can be short like "Ltd." and "Company" or "Co." You also have to do a name check to see if the name is available in the state. You may reserve a name for up to 4 months by filing a Reservation of legal Entity Name with the Idaho Secretary of State.
- File Articles of Organization and Transmittal form: In Idaho, to register your LLC, you will need to file the Articles of Organization with the state of Idaho. The filing fee is $100.
- Appoint a Registered Agent: Every Idaho LLC is required to have an appointed agent for service of process. The agent is an individual or business entity that agrees to accept legal documents on behalf of the LLC’s if it is sued or any legal documents that need to be handed over to the LLC. A registered agent can be an individual or business that is authorized to do business in Idaho. The registered agent must have an Idaho physical address.
- Obtain an EIN: If the Idaho LLC has more than one individual, they must obtain its own IRS Employer Identification Number (EIN). An EIN is required for Idahoan LLCs that will have employees. Also, most banks require an EIN if you want to open a business bank account. Also, if you are selling goods within the state of Idaho, you will need to register with the Idaho Tax Commission.
- Pay annual report registration fee. All LLCs formed and doing business in Idaho must file an annual report with the Business Registration Division and pay a filing fee. This has to be filed every year on the same time the previous one was filed.
- Obtain all Business Permits and Insurance: In Idaho, business permits and licenses are required for most business. It is important to apply and obtain one before doing any business.
The documents that are required to form a LLC in Idaho are the Articles of Organization for limited liability company. These documents would need to be filed with the Secretary of State in the State of Idaho before the formation of the LLC. All documents that are going to be submitted need to have duplicate copies. If your LLC is going to be treated as a limited liability partnership, these LLCs are required to file Form 1065, U.S. Return of Partnership Income, and have to prove that there is equal distribution of profits, losses and credit on a Schedule K-1 with the IRS.
There are several advantages of having a Idaho LLC such as having a LLC gives your business protection of law in terms of separating out you personal assets from the future debts and obligations from your business investments if your Idaho LLC as it conducts business. Creditors can only come after you for your LLC financial obligations and cannot come after your for your personal assets to collect a debt. There are also many tax benefits of having a LLC in Idaho. With an LLC, your Idaho LLC qualifies as a pass through vehicle meaning that you would not be taxed either at the state or federal level as long as the LLC remains in good corporate standing.
There are disadvantages to LLC’s in Idaho. LLCs can be dissolved easily when a member of the LLC dies or goes bankrupt. In addition, having a sole-proprietorship or partnership will have less paperwork and complexity while LLCs have a bit more paperwork to deal with.
Choosing an entity for your business can be a challenging task given the various options. If you are looking to form a LLC or change the form of your business entity, consider consulting an attorney. A corporate lawyer can help you evaluate your options, it is a good idea to discuss your ideas with an experience local Idaho business lawyer. A lawyer experienced with limited liability companies can help you incorporate your LLC and explain the tax and organizational benefits of the limited liability structure.