A corporation is treated as a separate entity with its own rights, privileges, and liabilities. Generally speaking, a corporation provides the most protection to the owners of the corporation, who are called shareholders.
There are many steps to forming your corporation in Idaho. Learn how to get started by following our comprehensive step-by-step guide below.
To start a corporation in Idaho, you must file the Articles of Incorporation with the Idaho Secretary of State office. You can file forms on paper, but Idaho makes it more cost-efficient to file online through a business services portal known as SOSbiz.
There are many tasks to do and decisions to make before and after filing your Articles of Incorporation. To simplify the process of forming a corporation in the state of Idaho, we’ve put together 10 easy steps for you to follow:
Once you’ve decided to form a corporation, it’s time to name your new business. Be sure to follow Idaho naming laws when brainstorming. For example, a corporation name must contain one of the following words:
Your corporation’s name must be distinguishable from any other name already reserved, registered, or in use by a business in Idaho. To find out if you can use the name you want, do a name availability search through Idaho’s business database.
It’s important to think about how your corporation’s name can be used online, as well. A domain name is an address that consumers use to find your business online. You can also use it as your business email address. You want to choose a domain name that is close to your company’s name and easy to use. Do an easy domain name search to see if the name or a variation of it is available to use online.
Once you’ve decided on an available name, you may want to reserve it by filing an Application for Reservation of Legal Entity Name with the Idaho Secretary of State. It is $20 to file online or $40 to file manually. If you choose to mail your application, send it to:
Office of the Secretary of State
450 N 4th Street
P.O. Box 83720
Boise, ID 83720-0080
You’ll officially register your corporation’s name once you file the Articles of Incorporation with the state. If you plan to do business under any name that’s different from your company’s legal name, you’ll have to file a Certificate of Assumed Business Name (ABN) for $25 online or $45 on paper. An ABN is also known as a “doing business as” or DBA name.
Note that you’ll also want to check as to whether or not your name is trademarked. You can check to see if there are any federal trademarks by visiting the United States Patent and Trademark Office website. To see if your desired name has any state trademarks on it, use Idaho’s trademark search engine.
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According to Idaho law, a corporation must have a board of directors. You must appoint one or more directors who are at least 18 years old. The directors will manage your company’s business and affairs. Directors also represent the interests of the company’s shareholders and seek to make the corporation a well-run and profitable organization.
As an incorporator/shareholder, you don’t have to be on the board of directors, but you can be appointed. Incorporators and/or shareholders usually hold a company meeting before filing the Idaho Articles of Incorporation to take care of business, such as:
Changes to your board of directors can be made as decided upon at your first annual meeting. Details about how to appoint or replace directors should be included in your corporate bylaws.
Idaho corporations are required to designate and retain a registered agent. An individual or entity can serve as your registered agent, but they must have a physical address in Idaho. Their job is to receive service of process and other legal notices as well as official state correspondence for your business and to maintain a permanent physical address for your business.
To officially form your Idaho corporation, file the Articles of Incorporation with the Secretary of State. The articles can be known as a Certificate of Incorporation or a Corporate Charter in other states. Choose to file your articles in Idaho if you plan for it to be your primary place of business.
To file your Idaho articles for a general business corporation, you’ll need the following:
The fee for filing the articles is $100 online and $120 on paper. Expedited paper filing is available and costs an extra $40; same-day service is an additional $100. You can mail or deliver your completed Articles of Incorporation to:
Office of the Secretary of State
450 N 4th Street
P.O. Box 83720
Boise, ID 83720-0080
The Secretary of State’s office provides separate forms for domestic nonprofit corporations and domestic professional service corporations.
A note about authorized shares: Units of ownership interest in a company are known as shares or shares of stock. A corporation authorizes shares to be issued publicly or privately. Those who are given or purchase shares are known as shareholders. Issuing shares is a way for companies to raise funds to run their business and reward initial investors.
Each Idaho corporation is legally required to create and adopt corporate bylaws, or a code of rules, to regulate their business and manage their affairs. These binding legal rules can be created by a company’s incorporators or board of directors. Bylaws aren’t filed with any public office in Idaho; instead, they should be kept with the corporation’s private records.
The rights and responsibilities of all shareholders can be written in a shareholder agreement. Though not required by law, it is legally binding once adopted.
A shareholder agreement can include things like:
Look for an online template or other professional legal services to confidently draft a shareholder agreement.
Remember in the Articles of Incorporation how you gave the number of shares your corporation was authorized to issue? It’s required that you issue some of these shares before doing business. You must also keep company records of who owns the shares and how many shares have been publicly or privately issued.
Shares of stock can be sold or traded after being issued but can only be issued once. Two types of stock to consider issuing are:
You can also decide whether to issue shares publicly or privately. Private shares of stock are typically issued to managers, employees, founders, or a private investor group.
Publicly issued shares mean you own a public corporation, and anyone has access to purchasing shares. Public companies have to file quarterly statements with the federal U.S. Securities and Exchange Commission (SEC). To learn more about state securities regulations, contact the Idaho Department of Finance.
There is no statewide business license in Idaho, but some cities and counties may require a general business license. Additionally, certain occupations and businesses need specific permits or licenses to operate legally.
For example, Idaho requires retailers to register for a seller’s permit to sell goods, collect sales tax, and file taxes. You’ll need to research local, state, and federal requirements for all necessary permits and licenses before going into business. The Idaho Business Wizard is a great place to start.
The Internal Revenue Service (IRS) issues an Employer Identification Number (EIN) to companies that need to pay federal taxes. An EIN is a unique ID number used to hire employees and open business bank accounts. You can file for an EIN online for free or let ZenBusiness secure an EIN for you as part of our business startup services.
The state can also levy taxes against your corporation, such as business income tax. If you have employees, you’ll need to register for employer taxes with the state government. Contact the Idaho State Tax Commission for more information about your tax requirements.
Idaho requires each corporation to file an annual report with the Secretary of State. This report can only be filed online through the SOSbiz dashboard, and there is no fee. You’ll need to create an account if you don’t have one. An annual report usually includes details about your business, the registered agent, the board of directors, and officers. It may even provide information about shares that have been issued.
Your corporation’s annual report will be due within one year of incorporation, by the end of the month in which you registered your Articles of Incorporation. For example, if you first filed your articles in June, your report must be filed online by June 30 of the following year.
It costs at least $100 to start a corporation in Idaho, and that’s just to file your Articles of Incorporation online. The total amount needed varies, depending on the type of corporation you’re forming and which permits and licenses are needed. Here are some additional possible startup costs:
Forming a corporation in Idaho comes with many benefits. For example, a corporation is treated as a separate entity and offers protection of your personal assets in the event of a lawsuit. Corporations can be recognized as businesses throughout the U.S. and abroad. This business structure also allows you to more easily gain investors and much-needed capital by issuing stock.
Idaho encourages new business ventures and economic growth by offering various business incentives, such as finance and grant programs. The state also has a tax reimbursement incentive program through which you may be able to receive a tax credit. Your corporation could qualify for savings up to 30% on income, payroll, and sales taxes for up to 15 years.
Unfortunately, a few disadvantages come along with the many advantages of doing business in Idaho. Corporations are a complex business structure. They require more meetings, oversight, and record-keeping than a simpler business model, such as a limited liability company (LLC).
It can be time-consuming and expensive to start and run a corporation. They can also be subject to double taxation. First, a corporation pays taxes on its income, and then those dividends are taxed again when they’re distributed to shareholders.
A corporation must pay a variety of local, state, and federal taxes. How a corporation is taxed in Idaho depends on its type and how the IRS taxes it. The Idaho State Tax Commission is responsible for levying state taxes against a corporation.
If you have a C corporation (the default form of corporation), your company must file a business income tax return, Form 41, for state taxes each year. After your first year in business, you’ll begin to make estimated tax payments to the state if your corporation must make estimated federal payments and its estimated Idaho tax liability is $500 or more. For federal taxes, a C corporation pays taxes on profits to the IRS. Then, when those profits are doled out to shareholders, those shareholders pay state and federal income tax on those dividends on their personal tax returns.
With an S corporation, company profits avoid this double taxation because profits aren’t federally taxed at the corporate level, only when they’re distributed to shareholders. If you own an S corporation and wish to avoid having your company pay state income tax, you’ll need to file Form 41S with the state. The first year that you file this return, you’ll need to include federal Form 2553 and a copy of the federal notice approving the election that designates your entity as an S corporation. Your shareholders will then pay state income tax only on their individual tax returns, just as they do with the federal income tax.
The minimum income tax that a C corporation or an S corporation must pay to the state is $20. The only exemption from this law is applied to nonproductive mining companies. Most businesses are also required to pay a Permanent Building Fund (PBF) tax. C corporations pay $10, while S corporations pay $10 for each shareholder.
Idaho’s sales and use tax applies to your corporation if you sell goods or provide a taxable service in Idaho. You’ll need to apply and maintain a seller’s permit, collect sales tax, and file a sales and use tax return with the state. You’ll also need to forward the tax to the Idaho State Tax Commission. Be mindful that some cities tack on additional sales tax to the state sales tax.
A use tax is levied on goods you use or store in Idaho that didn’t require an Idaho sales tax payment when purchased. For example, goods purchased from a retailer on the internet, over the phone, or from a mail-order catalog may be subject to use tax.
It’s important to keep copies of your tax returns and all supporting documentation. The state recommends doing so for a minimum of seven years.
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Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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