A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Annual Budget:  For an existing business, this is a realistic budget for the current fiscal year based on past income and expenditures. It includes anticipated changes in income and spending that may occur during the year. For a start-up business, this is a realistic projection of the income and costs of doing business for a year.

Bar Codes: See UPC Codes below.

Beer and Wine Taxes: Taxes on these products are remitted by wholesalers to the Idaho State Tax Commission. Wholesale permit numbers are required.

Bridge Loan: A short-term loan, usually associated with the purchase or remodel of real estate and usually for a term of less than one year, that allows a borrower to close quickly when on a tight time frame, or that allows time to work out permanent funding.

Business Plan:  A business plan contains all the information about your business: name, location, number of employees, how the business is organized, management team, the business’s purpose, products and/or services and how they will be rendered, target markets, equipment needs, financial projections, and any other pertinent information. Anything you can think of that pertains to your business should be included in your business plan. The marketing plan may be included in the business plan. You will need to have a detailed business plan that includes financial statements before approaching a lender. Every business should have a business plan even if you don't need financing. The business plan is a planning tool that will keep the business organized and focused.

Cash Flow Projections:  A month-by-month future projection of income and expenditures over a period of time, usually a year. The projections for an existing business are based on current cash flow patterns. A cash flow projection for an existing business can be created with more than one anticipated outcome. For instance, you might create a projection of income and expenditures if business increases by 5%, another for an increase of 7%, and another for an increase of 10%.  Cash flow projections enable business owners to anticipate future funding needs compared to anticipated income. Your accountant can assist in preparing this.

 A cash flow projection for a start-up anticipates monthly income and expenditures over a period of time, usually a year. The statement can be created with more than one outcome, based on anticipated sales and expenditures, but be conservative in estimating anticipated income.

Cigarette and Tobacco Taxes: Taxes on these products are remitted by wholesalers to the Idaho State Tax Commission. Wholesale permit numbers are required.

Coin Operated Amusement Device Annual Decals: Sales tax is prepaid on coin-operated amusement devices (such as pool tables or video games) by the owner, who purchases a yearly "amusement device decal" for each amusement device.

Completed Operations (Errors and Omissions) Insurance - CPAs and other licensed professionals may need this insurance to protect themselves against errors or omissions in the services they provide to their clients.

Cookie: A cookie is a small piece of information sent by a Web server (the site you are viewing) to store on a Web browser (your computer) so it can later be read back from that browser. This is useful for having the browser remember bits of specific information. This Web site uses cookies to remember your selections when you go through the Business Wizard or the Resource Wizard.

County Sales Tax: A sales tax collected by a county in addition to the state sales tax. Nez Perce County collects a .5% county sales tax in addition to the state sales tax.

Direct Payment: You can make electronic payments on your taxes through the Idaho State Tax Commission's State Tax Electronic Payment System (STEPS) Program for ACH Debit. Direct payments may also be made by Automated Clearing House (ACH) Credit.

Employee:  Same as "worker" and means a person who has entered into the employment of, or who provides a service for an employer. An employer usually has the right of control over how, when, and where an employee performs her/his duties.

Employer:  Someone who hires others to work for them in a business, trade, or occupation.

Employer Identification Number (EIN):  All businesses (except sole proprietorships that have no employees and do not make tax-exempt purchases) must obtain a Federal Employer Identification Number (EIN), also called a Tax Identification Number. This number should be used when your business files its tax returns. Your banker and/or corporations and businesses for whom you perform work may require that you have an EIN even if you are a sole proprietor. You must furnish them with your EIN number if they are required to include it on their tax returns.  For more information, see Internal Revenue Service form SS-4, Application for Employer Identification Number and Publication 1635, Understanding Your EIN.  Idaho does not issue a state EIN. Your federal number is sufficient for business purposes in Idaho.

Employment Practices Liability Insurance (EPLI) - Protects against wrongful termination and discrimination lawsuits.

Employment Taxes:  All employers are required to withhold certain taxes from employee wages, including: 

• Federal Income Tax
• Social Security and Medicare Taxes (FICA)
• Federal Unemployment (FUTA) Taxes

For information on your tax responsibilities as an employer, see IRS Publication 15, Circular E, Employer’s Tax Guide.  If you have agricultural employees, see IRS Publication 51, Circular A, Agricultural Employer’s Tax Guide. If you are not sure whether people working for you are independent contractors or employees, see IRS Publication 15-A, Employer’s Supplemental Tax Guide. 

Estate Tax: Idaho estate taxes are determined by federal requirements. For information, visit http://tax.idaho.gov/questions.htm#ESTATE%20TAX%20(ET). For dates of death on or after January 1, 2005, estate tax returns need to be filed only with the IRS.

Estimated Income Tax (Federal):  Estimated tax payments must be made by individuals who expect to owe tax of $1,000 or more on their personal income tax return and who do not have at least 90% of the tax withheld by an employer. Sole proprietors, owners of limited liability companies, members of partnerships, and S corporation shareholders may need to pay estimated taxes. Individuals receiving income from interest, dividends, rental property, and other types of passive income may also need to pay estimated taxes. Payments are made four times a year using form 1040-ES, Estimated Tax for Individuals. For information, see IRS Publication 505, Tax Withholding and Estimated Tax. 

Estimated taxes are not required to be paid on the state level, though you may do so voluntarily.

Excise Taxes:  The Internal Revenue Service collects federal excise tax on the following:

• Telephone communications
• Air transportation
• Motor fuels
• Heavy truck sales
• Windfall profit tax on domestic crude oil production
• Environmental tax on the receipt of hazardous materials
• Environmental tax on manufacturing petroleum and chemicals
• Highway use tax by heavy trucks and buses
• Production, sale, or importing of alcohol, tobacco, or firearms
• Luxury tax on high-end passenger cars, yachts, and other consumer luxury goods

For more information on federal excise taxes, see http://www.irs.gov/businesses/small/article/0,,id=99517,00.html and IRS Publication 510. 

Factoring:  A method of raising working capital by selling your business's accounts receivables to a bank or another lender at a discounted rate. The bank then manages and collects the money due.

Federal Tax Deposit Coupon: Coupons are used for depositing employment taxes. Each coupon shows the deposit amount, the type of tax, the period for which the deposit is made and your phone number. A coupon book will automatically be sent by the IRS about six weeks after a business applies for an Employer Identification Number (EIN). If you have no employees, you can then cancel it.

Federal Unemployment Tax (FUTA): The federal unemployment tax is part of the federal and state program that pays unemployment compensation to workers who lose their jobs.  Only the employer pays FUTA tax; no funds are withheld from an employee’s pay. Payments are made using IRS Form 940 or 940-EZ, Employer’s Annual Federal Unemployment (FUTA) Tax Return.  These taxes are used to administer the Unemployment Insurance and Employment Services Programs in the state of Idaho.

FICA: The Federal Insurance Contributions Act (FICA) tax is a tax imposed by the federal government on both employees and employers to fund Social Security and Medicare. A portion of the tax is withheld from employee earnings and remitted to the IRS. Employers also contribute a portion of the tax.

Fidelity Bond - Protects employers against employee dishonesty and theft. This is a necessity if your employees go into the homes or workplaces of clients. Can be purchased from insurance companies.

Financial Statements:  Statements concerning the business’s financial status. These include an income statement, balance sheet, and cash flow statements, and may include other statements appropriate for your business, such as accounts receivable and accounts payable statements. Your accountant can prepare these, or, if you use accounting software such as QuickBooks, the software can be used to prepare the statements. 

First Degree of Consanguinity:  A near relative of an employer who is exempt from Worker's Compensation coverage. For more information, see Worker's Compensation exemptions.

Gambling, Wagering, and Betting Taxes: Businesses that accept bets or run a betting pool or lottery must register with the Internal Revenue Service and pay an occupational tax and an excise tax on wagering. To register and pay the occupational tax, use IRS Form 11-C, Occupational Tax and Registration Return for Wagering. To figure tax on bets received, use IRS Form 730, Monthly Tax Return for Wagers.

Gasoline and Fuels Taxes:
 Fuel tax rates are as follows:

Gasoline:	25 cents per gallon
Diesel:	25 cents per gallon
Propane:	18.1 cents per gallon
Natural gas:	19.7 cents per therm
Aviation Fuel:	5.5 cents per gallon
Jet Fuel:	4.5 cents per gallon

Idaho is a member of the International Fuels Tax Agreement (IFTA), which provides a cooperative and simplified reporting system for interstate motor carriers (truckers).  Motor carriers and motor fuels distributors should contact the Idaho State Tax Commission regarding licensing and reporting requirements.

Greater Boise Auditorium District Tax: In addition to the Idaho sales tax and the statewide travel and convention tax, a Greater Boise Auditorium District tax is imposed on the user or occupant of a hotel or motel room in the Boise metropolitan area. For information visit http://tax.idaho.gov/answers_sales_tax.htm#14. Pocatello also collects an auditorium district tax.

Heavy Vehicle Use Tax: Trucks, truck tractors, and buses having a gross weight of 55,000 pounds or more must pay a federal excise tax.  The tax is reported on IRS Form 2290, Heavy Vehicle Use Tax Return.   

Hotel/Motel Tax: See Travel and Convention Hotel/Motel Taxes below

Idaho Income Taxes: Individuals and businesses, with few exceptions, must pay Idaho income taxes. The individual income tax rates range from 1.6% to 7.8%. Individual income tax is graduated so higher earnings are taxed at a higher rate. The corporate income tax rate is 7.6% of Idaho taxable income.

Identification Number for Tax Reporting: All business owners must have a taxpayer identification number for the proper processing of tax returns. Sole proprietors and limited liability companies owned by one individual may use their Social Security number if they have no employees and do not make tax-exempt purchases. Other companies must use their Employer Identification Number (EIN). You must include your identification number on all tax returns and other documents you send to the IRS. You must also furnish your number to other persons or businesses who are required to include your ID number on their returns.  These may include:

• Companies that pay interest, dividends, or royalties to you
• Individuals and companies for whom you provide dependent care services (such as day care or elder care)
• Certain other amounts paid to you that total $600 or more per year, including independent contractor payments
• Banks

You may not be able to use your Social Security number as your tax ID number in all situations even if you are a sole proprietor and for your safety, it is often better not to use it. See Employer Identification Number (EIN) above for more information. 

Illegal Drug Stamp Tax: Idaho imposes an illegal drug stamp tax, taxing marijuana and other controlled substances according to Idaho Code 63, chapter 42.  Contact the Idaho State Tax Commission for information.

Independent Contractor:  A person who provides a service for a specified amount of money for a specified result.  An independent contractor is not subject to control by the person for whom services are being provided except for the end result. See Independent Contractor vs. Employee for the differences between an employee and an independent contractor.

I-9, Employment Eligibility Verification:  Employers are required to have all employees and owners of a sole proprietorship or partnership complete a Form I-9 as proof of eligibility to work in the U.S.  See Employer Issues Legal Right to Work in the U.S. for more information.

Key Person Insurance: Protects against financial loss caused by the death or disability of a key person in the business, including the owner. Also used to fund buy/sell agreements when a business has more than one owner. Lenders and/or investors may require this insurance to protect their financial interests in a business. The business, not an individual, typically owns the policy, pays the premiums, and is the beneficiary.

License Tax On Electricity (Kilowatt Hour Tax): A one-half mill (.0005) tax is charged per kilowatt of electricity generated by means of water power. There are exemptions for power used in the generation process, power lost in transmission, and for power sold for use in pumping irrigation water as well as manufacturing, mining, milling, smelting, refining and processing.

Local Option Sales Taxes
Some small resort cities, auditorium districts, and counties collect their own sales tax in addition to state sales tax. To find a list of such entities visit http://tax.idaho.gov/answers_sales_tax.htm#14.

Luxury Tax: Luxury tax is a form of excise tax collected on the sale of certain high-priced consumer goods such as luxury automobiles, yachts, and other items. See IRS Publication 510 for reporting instructions and information on taxable items.

Marketing Plan:  A plan for how a business’s products and/or services will be marketed. This includes information on target markets and how to reach them, competitor analysis, marketing and advertising methods, anticipated marketing costs, and possible future marketing opportunities. The marketing plan may be included in the business plan.

Mezzanine Financing: A loan for the purchase or renovation of real estate that is less expensive than an equity loan and similar to a second mortgage, a subordinated interest in a first mortgage, or a preferred equity interest in the property. Mezzanine loans are typically written for up to three years, but may be extended. 

Mine License Tax: Idaho law imposes a 1% tax on the value of ores mined or extracted. The tax is paid to the Idaho State Tax Commission using Form 47.

National Standard Employer Identification Number: A number used to electronically transmit health insurance claims. The U.S. Department of Health and Human Services recommends that businesses use their Federal Employer Identification Number as their health insurance identification number. For information, visit http://www.hhs.gov/news/press/2002pres/hipaa.html.

Officer & Director Insurance - Officers and directors of a corporation may be held personally liable for their actions on behalf of the company. This insurance protects them in the event of a lawsuit. Some people may not be willing to serve on a board of directors without this coverage.

Operating Property: The State Tax Commission is responsible for valuing public utilities and railroads, which collectively are called "operating property."

Perfection of Security Interest:  Creditors may use a debtor's personal property as collateral for a loan by taking (or perfecting) a security interest in that collateral. To create a security interest, both parties (creditor and debtor) must make a written security agreement that specifically grants a security interest to the creditor. The agreement should describe the collateral being used to secure the debt and must be signed by the debtor. Once the agreement is made, the security interest "attaches," which means that if the debtor defaults on the loan, the creditor may repossess the collateral or foreclose on real property to pay off the debt. 

The creditor who holds a security interest in the real or personal assets of a business should file a State of Idaho Financing Statement, Form UCC-1,  with the Idaho Secretary of State's office. This places a lien on the assets and protects them against other creditors and transfers by the original debtor to another party. Only banks, dealers, or individuals who regularly grant loans should file with the Secretary of State. More information is available on the Secretary of State's Web site.  

Pollution Prevention (P2) - Pollution Prevention is any activity, including the use of materials, processes, or practices, which reduces or eliminates the creation of pollutants or waste at the source. It includes protection of natural resources by conservation and increased efficiency in the use of raw materials, energy, water, or other resources. For more information, visit the Pacific Northwest Pollution Prevention Resource Center's Web site at http://www.pprc.org.

Professional Liability Insurance - Protects professionals (doctors, lawyers, dentists, etc.) against malpractice suits.

Pro-forma Financial Statements: Financial statements created to project the anticipated financial future of the business. The statements are created using current data and include anticipated changes in sales and revenues and their effect on future net earnings.

Property Taxes: Property taxes are paid on both real estate and personal property owned by a business, such as equipment or machinery, including office equipment. The tax is collected by your local county assessor. For information, see http://tax.idaho.gov/propertytax/propertytax.htm

Sales and Use Taxes: Idaho sales and use tax is imposed on retail sales and rentals of tangible personal property. Sales tax is also collected on admission fees, fees for recreation, hotel/motel/campground accommodations, subscriptions, and fabricating and printing labor. Sales tax is prepaid on coin-operated amusement devices (such as pool tables) by the owner who buys a yearly "amusement device decal" for each device.

Use tax is paid on goods that are put to use, consumed, or stored in Idaho, if sales tax was not paid on the goods at the time of purchase. The person who uses, consumes, or stores the goods in Idaho owes a use tax unless a sales tax exemption applies. For example, if a retailer buys food for resale (tax exempt), but consumes some of it during a promotional demonstration, she/he owes use tax to the Idaho State Tax Commission on the cost of the food used.

Self-employment Tax: Self-employment Tax is the Social Security and Medicare tax collected from individuals who are self-employed. You must pay this tax if you earn any income from self-employment activities, including part-time activities, even if you pay Social Security taxes through another employer or are currently drawing Social Security. Self-employment tax is reported annually at the time you file your personal income taxes (usually April 15) by using IRS Form 1040-SE. For information, see http://www.irs.gov/businesses/small/article/0,,id=98846,00.html.  

Severance Tax: A 2% tax that is imposed on the market value of oil or gas produced in Idaho. The tax is paid to the Idaho State Tax Commission.

State Unemployment (SUTA) Taxes: Unemployment Insurance is paid by employers. It provides payments to workers who are unemployed through no fault of their own and who are able to work, available for work, and who are actively seeking work. Eligibility to receive these benefits is set by law.  

Unemployment Insurance benefits are funded through an employer tax, which is collected by the Idaho Department of Labor and placed in a trust fund. Unemployed workers, or workers whose hours have been reduced to less than full-time, can apply for unemployment insurance benefits.

To obtain more information, or to apply for unemployment insurance benefits, contact your local Job Service office. To find the Job Service office nearest you, please consult the Idaho Department of Labor directory.

Surety Bond - Guarantees that you have the financial capacity to perform the work you have been hired to do. Very common in the construction industry. 

Tax Payer Identification Number:  See Employer Identification Number above

Trade Mark: Also called a service mark; a logo, symbol, or name that is used to uniquely identify a product or business. Trade marks can be registered at the state level with the Secretary of State's office or at the national level with the U.S. Patent and Trade Mark Office. Registering a trade mark prevents other businesses from using it. For more information visit the Hot Topics section of this Web site.

Travel and Convention Hotel/Motel Taxes: In addition to the state sales tax, a statewide 2% travel and convention tax is imposed on the user or occupant of a hotel/motel room or campground.

Uniform Commercial Code (UCC):  See Perfection of Security Interest above.

UPC Codes/Bar Codes: Companies that package products for commercial sale, including magazines and books, must obtain a UPC code number from GS1 US BarCodes and eCom^TM, http://barcodes.gs1us.org/dnn_bcec/Home/tabid/36/Default.aspx. Membership in GS1 US Partner Connections is required to obtain a bar code.

Use Tax: See Sales and Use Taxes above

Withholding of Idaho Income Tax: Withholding Idaho income tax is required when payments are made to an employee for work done in Idaho, with some exceptions. The withholding tables and formulas provided to employers by the Idaho State Tax Commission reflect the approximate tax liability of each employee.

Worker:  A person who has entered into the employment of, or who provides a service for an employer; also called an employee.

Workers' Compensation Insurance:  A no-fault insurance policy that must be obtained by an employer to cover his/her employees in case of a job-related injury/illness/occupational disease.  This is an employer cost and cannot be charged to the employee. For information, visit the Insurance section of this Web site.