An Idaho professional corporation (PC) is a business structure owned and operated by licensed professional providers like physicians and lawyers. This article will show you how to form a professional corporation in Idaho.
Determine whether an Idaho professional corporation is right for you
All businesses should consider a formal entity structure, but there are some that would do better as a corporation than other types. See the ZenBusiness entity guide to see what’s right for you.
Idaho recognizes several professional business structures, including professional corporations (PC), professional limited liability companies (PLLC), and professional limited liability partnerships.
PCs are corporations created for professionals. There are several differences between PCs and PLLCs:
- A professional corporation provides the highest liability protection to its members. There may also be tax benefits. Profits are distributed among its shareholders, and its formation and management requirements are complex.
- A PLLC provides fewer personal asset protections for its members but is easier to set up and manage. Its owners are called members. Pass-through taxation is a key characteristic of a PLLC.
If you’re unsure, consult legal and tax professionals to help you make a decision.
Division of Ownership
Professional corporations are owned by shareholders and managed by directors, who act on their behalf. The division of ownership is determined through the distributions of shares. Shareholders can be directors if appointed. In Idaho, all owners must be active in the same profession, e.g., physicians, dentists, etc.
In addition to the board of directors, officers can be appointed to manage the PC. These officers may include the president, chief executive officer (CEO), secretary, and treasurer. Member committees may make recommendations to the board of directors and officers.
Choose a name for your professional corporation
According to the Idaho Uniform Business Organizations Code, professional corporations must follow specific name requirements. State law requires PCs to include the words “professional corporation,” “professional association,” or “chartered” in the company name. Acceptable abbreviations include “P.C.,” “P.A.,” or “Chtd.”
Once you have a suitable name that’s not registered by another entity, you have the option to reserve your business name for 120 days while you complete your paperwork. You’re responsible for determining that your chosen name isn’t already in use and doesn’t violate any state restrictions. You can do your own research through the Secretary of State or use our online service to complete your name reservation.
It’s a good idea to plan your web presence by choosing a domain name that’s identical or representative of your business name. You can do that easily through ZenBusiness’s domain name service.
Select an Idaho registered agent
Idaho requires professional corporations to appoint a registered agent who is available at a physical office address during normal business hours. This is needed to accept notices from the Secretary of State and service of process in case of a lawsuit. The agent’s name is filed with the Secretary of State (SOS), and it appears on the Articles of Incorporation and other documents. The SOS maintains a directory of registered agents on its website. If you need further assistance, you can use ZenBusiness’s registered agent services to stay in compliance.
Complete your Idaho Articles of Incorporation
Preparing Articles of Incorporation can be a complex and time-consuming process. To form an Idaho professional corporation, you must register with the state; part of that registration is the Articles of Incorporation.
The document must include:
- Name of the corporation
- The number of authorized shares
- Your registered agent’s name and address
- The names, titles, and addresses of your incorporators
- Signature of a person designated to file the corporation’s legal documents with the Secretary of State
- The name and capacity of each signatory
Filing the articles with the Secretary of State carries a $100 fee and may be completed online, by mail, or hand delivery. There’s a $20 surcharge for paper filings, and expedited service is available for an additional fee depending on the desired completion time. Documents should be sent to:
Office of the Secretary of State
450 N. 4th St.
P.O. Box 83720
Boise, ID 83720-0080
When the document has been processed and approved, the Secretary of State’s office will register the corporation. You will receive a copy.
Establish a corporate record in Idaho
Once your corporation is in business, you need to meet certain record-keeping requirements to stay in compliance. The Articles of Incorporation, meeting minutes, business contracts, and financial records should all be kept in the corporate record. For help keeping your business in good standing, sign up for our worry free compliance service.
Designate a board of directors
A professional corporation in Idaho consists of at least one individual, although most boards contain several directors. Directors must have an interest in seeing that the organization uses corporate best practices. Directors should be available for meetings and accessible at other times for consultation. The board may be composed of shareholders, officers, or other licensed professionals.
Create Idaho corporate bylaws
Bylaws form a road map for the management of a professional corporation. Initial bylaws are adopted by its incorporators and board of directors. Member shareholders may adopt, amend, or reject the bylaws. They’re important to prevent misunderstandings about the roles and responsibilities of owners, officers, and directors. They also provide guidance about operational and/or legal proceedings. The initial set of bylaws is at the first board meeting.
Hold your first board meeting
An initial board meeting is an opportunity to educate the directors on their roles and responsibilities. The agenda may also contain other vital information. While there isn’t a mandatory list of items on an initial agenda, it could include:
- Welcome and introductions
- Treasurers’ report
- Committee reports, if any
- Old business, if any
- New business
- Next meeting
- Approval of minutes or other activities
Another point of discussion at the initial meeting might be frequency, location, and notification of future meetings. The bylaws dictate how many directors must be present for a voting quorum.
Handle Idaho tax obligations
Corporations require an employer identification number (EIN) issued by the Internal Revenue Service to file returns. The IRS will provide it for free when you apply, or you can get yours through ZenBusiness.
Professional corporations have to pay federal income tax, but they may elect to be taxed as an S corporation if they meet certain requirements, such as having no more than 100 shareholders. This designation is requested on Form 2553, and tax returns are filed on Form 1120-S. If the organization qualifies as an S corporation, income isn’t taxed at the corporate level, but only at the individual shareholder level, and they report it on their individual tax returns.
State taxes are set by the Idaho State Tax Commission. Besides corporate income taxes, there are a number of other state taxes that your business may have to pay. The Idaho Tax Commission provides more information about state tax rules for corporations.
Idaho’s municipalities and counties may require corporations to collect or pay local taxes. It’s important to check in with the county as well as the town or city hall revenue office to determine your tax liability and how to meet it.
Obtain Idaho business licenses and permits
It’s your responsibility to obtain the licenses and permits required for your business. There isn’t a central place to check them all because they can be on the federal, state, or local level. Some licensing is specific to professional corporations and the professionals in them. ZenBusiness offers a simple business license report service to help you get started.
Acquire insurance for your Idaho professional corporation
There are three basic types of insurance that corporations may want to consider:
- Optional general business insurance covers liabilities associated with business activities. This can include personal injury lawsuits, property damage, and legal proceedings.
- Professional malpractice insurance can provide added protection in addition to any optional malpractice insurance held by individual shareholders.
- Workers’ compensation insurance is required to cover employees in case of a work-related injury or illness with few exceptions.
Open a business bank account
Business bank accounts are necessary to isolate the corporation’s income and expenses from its owners. The shareholders, along with the board of directors, designate who can sign checks and make deposits. At a minimum, you will need an EIN, Articles of Incorporation, and personal documentation to open an account.
Ready to start your business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain name, we want to help you succeed. Check out our services and contact us today to see how we can help you grow your company.
Idaho Professional Corporation FAQs
What are the filing fees for an Idaho professional corporation?
The cost to file Articles of Incorporation for your professional corporation with the Secretary of State is $100 when completed online. Paper filings will incur a $20 processing fee and must be paid for by check. Expedited processing is available for an additional $40 to $100.
Do I need a lawyer to form an Idaho professional corporation?
Legal representation isn’t required to form your Idaho professional corporation; however, it’s strongly recommended that you consult a lawyer throughout the process. This ensures that all requirements are met and there are no legal snags.
Does Idaho have other professional entity types?
Yes. Idaho allows professionals to form partnerships, professional limited liability partnerships, and professional limited liability companies. A solo professional may act as a sole proprietor, which doesn’t require a business registration.
Can professionals from different fields form an Idaho professional corporation together?
No. All members of a professional corporation must be within the same profession.