Many people find taxes to be one of the most intimidating aspects of owning a business. Nevertheless, knowing and understanding your tax obligations is crucial to the future success of your small or growing business. If you’re not sure where to begin, don’t worry — you’re not alone. Use our guide below to help you understand how to file small business taxes in Idaho so that you can keep your business legally compliant.
If you need more complete legal compliance help, check out our Worry-Free Compliance service, which keeps your business documents organized and can help keep you on track with required business filings.
If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses to learn more.
Step 1: Establish your Idaho business’s corporate income tax obligations
First, you’ll want to determine what corporate income tax obligations exist for your Idaho small business. The state of Idaho collects business income taxes from business entities for which any of the following statements are true:
- You’re transacting business in Idaho
- Your business is registered with the Idaho Secretary of State
- You have income attributable to Idaho
- You’re a fiduciary
Who pays taxes for your business, however, will depend on the type of entity you form. For example, in a pass-through entity, the business itself is generally not subject to a corporate income tax. Pass-through entities in Idaho include:
- Limited liability companies (LLCs) taxed as a partnership or S corporation
- S corporations
- Trusts and estates
In these types of entities, profits of the business flow through to the owners or members who will be taxed on their individual income taxes.
For purposes of business income tax obligations, Idaho deems your business to be “transacting business” in Idaho if:
- The business owns or leases property in Idaho
- The business solicits business in Idaho
- You are a member of a partnership or S corporation that does business in Idaho
- You have any Idaho activity from which you receive, realize, or derive income
- You have an agent acting on your behalf in Idaho
Currently, there is a 6.5% Idaho business tax rate on a business’s income.
Your Idaho business’s tax return is due on or before the 15th day of the fourth month following the close of your tax year. If your tax year matches the calendar year, that means taxes are due on or before April 15th.
Not sure how to stay compliant? Learn more about legal compliance for small business owners.
Step 2: Determine your Idaho business’s employment taxes
In addition to your business’s income tax obligations, you may also be subject to certain employment tax requirements. In Idaho, these employment taxes are referred to as withholding taxes.
Idaho businesses that have employees need to also have an Idaho withholding account. Once you’ve obtained a federal Employer Identification Number (EIN), you can then visit the Idaho Business Registration Information guide and follow the instructions on registering for a withholding account with the state.
Failure to properly withhold Idaho income tax and register your withholding account can result in civil penalties of $100 per day. So make sure you take these steps in a timely fashion to avoid penalties.
All wages, tips, and other compensation earned by your employees are subject to Idaho income tax withholding. Generally, if the compensation is subject to federal income tax, it’s also subject to state income tax. Additionally, benefits considered taxable under the Internal Revenue Code (IRC) are subject to the state income tax withholding if they’re earned for services provided in the state of Idaho.
Withholding taxes are to be withheld directly from an employee’s payment and subsequently delivered by the employer to the state. The precise amount of withholding varies depending on the payroll frequency, the employee’s withholding status, and the employee’s wages.
Due dates for filing withholding returns also depend on certain factors such as filing period and payroll frequency. However, if your requisite due date falls on a weekend or state holiday, the form is instead due on the next business day.
Step 3: Establish your Idaho business’s additional state tax obligations
Of course, it’s important to note that income and withholding taxes are certainly not the only tax obligations your business may be subject to.
For example, if your Idaho business sells goods or provides a taxable service, Idaho’s sales and use tax applies to you. You’ll need to apply for and maintain a seller’s permit, collect sales tax, and file a sales and use tax return with the state.
The state of Idaho also requires most businesses to pay a Permanent Building Fund tax. This includes corporations, partnerships, estates, and trusts. Importantly, C corporations pay $10 per year for the entire entity, while S corporations pay $10 per shareholder.
Additionally, if your business has employees, it’ll have to pay an Unemployment Insurance (IU) tax. This tax, paid by employers, helps to fund unemployment compensation programs for eligible employees in the state. Currently, the standard rate for new employers is 1%.
Additional taxes your business may have to pay will depend on the particular goods and services provided by your business entity. Below are some other examples of taxes in Idaho that could apply to your business:
- Beer and wine taxes
- Cigarette and tobacco taxes
- Controlled substance stamp tax
- Electricity tax
- Fuels tax
- Mine license tax
- Oil and gas production tax
- Travel and convention hotel/motel tax
- Vacation rentals, AirBnB, and short-term lodging taxes
There may be other types of taxes that could apply to your business, so be sure to double check with the state and speak with a tax professional to ensure that you’ve met all of your tax obligations.
Step 4: Prepare to file and pay your Idaho small business taxes
Finally, you’re ready to move forward with preparing to file and pay your business taxes in Idaho.
To help streamline the process, it’s recommended that you compile any relevant documents and information you may need well in advance. For example, records you may need to gather include:
- Your EIN
- Accounting records for the business
- Business-related receipts and invoices
- Any legal documents for the business
By organizing and compiling this information ahead of time, you can greatly reduce time and stress later on down the line. One way we can help make that happen is through our ZenBusiness Money App, which makes it easy for business owners to send professional invoices, get paid quickly, and keep all your financial information and documents in one place to make things easier at tax time.
Once you have everything you need, you’re ready to file. The State of Idaho uses a system called Taxpayer Access Point (TAP). This is an online database for business owners to e-file certain taxes returns.
Note, however, that you can’t e-file your business income taxes through TAP. Instead, Idaho provides a list of electronic filing databases where you can file your business income tax return on its website.
Do I need an accountant?
As you start your business, it may seem tempting to want to reduce costs by not hiring an accountant. And it’s technically true that having an accountant prepare your tax returns isn’t required by law.
However, most individuals, including business owners, find tax information incredibly confusing. Further, failure to properly and timely file your tax returns can result in negative consequences for both the business and its individual owners.
Hiring an accountant to walk you through what taxes you need to file and when can alleviate many of your concerns regarding the complexity of the process. This, in turn, can help ensure that your business files all of its necessary taxes correctly.
In short, while you may not need an accountant, most small businesses benefit greatly from professional accounting help.
How we can help
Running your own business is a lot of hard work. And while taxes are an essential part of any business, ensuring compliance with all of your tax obligations only adds to your already full plate. No matter what stage your business is in, our mission is to make things easier on you. With our ZenBusiness Money App, we can help you manage and grow your business today.
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.
- How much can an Idaho small business make before paying taxes?
Idaho imposes an income tax on all companies that transact business within the state. Thus, there is no minimum amount that you must make before having to pay taxes.
- What percentage does an Idaho small business pay in taxes?
Currently, the business income tax rate is 6.5%, no matter how much or little a business makes. However, depending on the goods and services your business provides, there may be additional taxes with varying rates that you’ll have to pay.
- How does an Idaho small business pay taxes?
You can pay taxes through Idaho’s online database or by mail.
- Do I have to file taxes for my small business in Idaho?
Yes, all businesses that conduct business in the state of Idaho must file taxes. This applies to all businesses, no matter their size.
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