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Running a business can be rewarding, but it’s not without risk or cost. Many people are unaware that a business dispute could affect their personal assets. One possible solution for this problem is to form an S Corporation, also known as an S Corp.

An Idaho S Corp is not a formal business structure, like an LLC or corporation. Instead, an S Corp is a tax election that can be made with the Internal Revenue Service. Unlike a regular corporation, an S Corp passes its taxes through to its owners, which could have certain advantages.

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What is an S Corporation?

You should understand that an S Corp is not a business structure. Rather, it’s a tax classification that either an LLC or a corporation can apply for with the IRS if it meets the criteria. We’ll outline those criteria and the steps you would need to take to file as an S Corp if you decide that it’s right for your business.

If you want to form an LLC with S Corp status, our S Corp service can help you do just that. Plus, we offer other services to help you run and grow your business and stay in compliance with state and federal laws.

How to Start an S Corporation in Idaho

You should understand that an S Corp is not a business structure. Rather, it’s a tax classification that either an LLC or a corporation can apply for with the IRS if it meets the criteria. We’ll outline those criteria and the steps you would need to take to file as an S Corp if you decide that it’s right for your business.

If you want to form an LLC with S Corp status, our S Corp service can help you do just that. Plus, we offer other services to help you run and grow your business and stay in compliance with state and federal laws.

1. Choose a Business Name

In Idaho, you can choose almost any name you want for your S Corp. If you try to use a name that’s the same or very similar to an existing Idaho LLC or Corporation, it might not get approved. Idaho corporations will need to have some sort of variation of “corporation,” “incorporated,” “company,” or “limited” in their name. Similarly, Idaho LLCs need to have a variation of “limited company,”  or “limited liability company” in their names.

2. Appoint a Registered Agent in Idaho

Idaho law requires all corporations and LLCs to have a registered agent. A registered agent is just a person or entity you designate to receive official notices and legal documents. A registered agent must have a physical address in the state.

You can be your own registered agent or let someone else, but it doesn’t give them any authority or control over your business. As an option you can use ZenBusiness’s registered agent service to comply with the state requirement.

3. Choose Directors or Managers/Members

Your S Corp will need to have a governing body. If your entity is a corporation, you’ll need directors. If you have an LLC, you’ll need members or managers. You can appoint the owners or members of the company to be directors or managers, or you can allow non-owners to fill those positions if you wish.

To set the rules for how your company will be run, you may need to create an operating agreement or corporate bylaws depending on the type of entity you choose.

4. File Articles of Incorporation/Certificate of Organization 

To form a corporation, you need to file Articles of Incorporation with the Idaho Secretary of State (SOS) and pay all state filing fees. For an LLC, you need to file a Certificate of Organization with the SOS. We can handle either process for you.

5. File Form 2553 to apply for S Corp status

You need to obtain an Employer Identification Number and file IRS Form 2553 to convert your entity into an S Corp. For an LLC, you may need to elect to be taxed as a corporation first by filing IRS Form 8832.

The conversion to an S Corp can only be made at certain times. You’ll need to file the conversion within the first two months of the tax year to convert it the same year. You can still file Form 2553 after the first two months, but the conversion won’t occur until the next tax year.

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What to know before creating an S Corporation in Idaho 

 To convert your LLC or corporation to an S Corp, it needs to meet certain requirements. Specifically, the entity:

You may be wondering what’s so special about an S Corp and why you’d want to convert an LLC or a regular corporation to an Idaho S Corp.

What is the difference between an Idaho S Corp and a C Corp?

The primary difference between an S Corporation in Idaho and a C corp is how the corporation is taxed. In a typical C Corp, the corporation itself pays corporate income taxes on income earned by the business. When dividends are issued to shareholders to distribute these profits, the shareholders themselves will pay taxes as well. This can create lead to double taxation. 

Can LLCs choose an S Corporation election?

Yes! An LLC can also elect S Corporation status. Many businesses do this for tax purposes. Usually, LLCs and sole proprietorships will pay self-employment taxes on net earnings.

However, with an S Corporation, you may be able to avoid self-employment taxes if you pay yourself a reasonable salary. You’ll most likely still need to withhold money for social security and medicare if you pay yourself as an employee. To learn more, feel free to read our information on LLC taxation issues.

Pros and cons of forming an Idaho S Corporation

Deciding whether an Idaho S Corp is right for you largely depends on your needs and your business. That said, there are some distinct benefits of an S Corp.

Idaho S Corp pros:

S Corps aren’t without their drawbacks. The main cons of an S Corp include:

How We Can Help 

All this may seem overwhelming, but we can help. We can work with you every step of the way as you form your entity and convert it to an Idaho S Corp. Then, once your S Corp is up and running, we can help keep it that way. Whether you need a Business Plan, an EIN, or want Worry-Free Compliance, we have the services you need to keep your business going. 

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.

Idaho S Corp FAQs

  • What are the benefits of creating an S Corporation in Idaho?

    An Idaho S Corp offers the liability protection of a corporation with the simplified tax treatment of an LLC.

  • How should I choose a name for my Idaho S Corp?

    You can pick any name that is not taken by another Idaho business and abides by the state’s business naming laws.

  • Should I identify my LLC as an S Corporation?

    If you plan on paying yourself a reasonable salary, it may be a good idea to convert to an S Corp. But that doesn’t necessarily mean that you must identify your LLC as an S Corp. You can still use the LLC designation in your business name if you wish. Consult an experienced professional if you have any questions.

  • How should I calculate taxes for my S Corporation? 

    As a pass-through entity, you’ll typically pay taxes like other income. However, you may want to talk to a tax professional for more information about S Corp taxes.

Idaho Business Resources

How to File an S Corp in Your State

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