Prospective business owners register their businesses in at least two, and possibly three ways. They
both a legal structure (business entity
form) and a name (DBA).
You may want to consult with an attorney before choosing a legal structure,
particularly if more than one person will own the business. (The
information on this site does not replace legal advice provided by an
entity form affects the taxes paid and when and how they are reported, so you may want to check with an accountant as well.
Business names are registered with the Idaho Secretary of State's
office before you begin conducting business activities. An
Assumed Business Name can be permanently registered for any business
entity type for $25. The form is found at http://www.sos.idaho.gov/corp/corindex.htm.
If the business will have employees or make
retail sales, you must also register with the State Tax
Commission, Idaho Industrial Commission, and Idaho Department of Labor by
filing Form IBR-1 found at
You must do this in addition to registering your business name and
following legal structures (business entity
are recognized in Idaho. For
information, click on the name.
Limited Liability Partnership (LLP)
Professional Service Corporation
Limited Liability Company (LLC)
Professional Limited Liability Company (PLLC)
Changing your registered information:
After a business is registered, the Secretary of
State's office must be informed whenever changes occur. If the name,
address, registered agent, or ownership of a business changes,
the entity type is changed, or the business is closed, you must notify the
Secretary of State in a timely manner. If you are a corporation or an
LLC you must file an annual report. For information on these topics,
click the following links:
Change of name, address, ownership, or registered agent
or changing a business name
Corporation/LLC annual reports
a Foreign Corporation or LLC in Idaho
Searching for a registered business name
Changing a registered business entity type
Administratively dissolved corporation or LLC
Business Entity Types
Sole Proprietorship is the simplest
business structure to
organize. All businesses are considered sole proprietorships
unless the owner specifically registers the business with the Secretary of State's
office as a corporation,
partnership, LLC, or non-profit entity. If you plan to operate your business as a sole proprietorship, you do not need to file any
additional paperwork other than your certificate of
A sole proprietorship is owned by one
individual, who has complete control of the
business and is responsible for all business decisions and financial
obligations. Business revenue (income) is considered the owner's personal income and is taxed at
the owner's personal tax rate. Liabilities (debts) created by the
business are considered the owner's personal liabilities.
A business formed as a sole proprietorship is NOT
a separate legal entity; rather, it is an extension of the business
owner. Therefore, if the business incurs debts or is sued, the owner's
personal assets may be used to satisfy the debt or a court judgment. A
sole proprietor pays taxes by filing Schedule C with her/his personal
income taxes. The owner pays quarterly estimated taxes on business
profits and pays self-employment taxes. See the
taxes section of this site for more information.
A sole proprietorship
automatically terminates upon the owner's death or bankruptcy. The property
used in the
business is disposed of according to the terms of the owner's will or a
To change the address, owner's name, or
close a sole proprietorship, file a "Cancellation or
Amendment of Certificate of Assumed Business Name" using the form found
Partnership involves two or more people
(including married couples) who operate a business together. An
attorney should create a partnership agreement to govern the business
operations in accordance with Idaho laws. A General Partnership form, found at http://www.sos.idaho.gov/corp/gn_partn.htm,
is filed with the Secretary of State's office. A general partnership
may be converted to a limited liability partnership.
Caution: Under Idaho law,
a legally binding partnership agreement may be created orally, in
writing, or by the actions of two or more parties. Individuals who engage in a common effort to make and share profits from
a business activity or businesses that represent
themselves to the public as partnerships have created a
legal partnership, even if they have
registered as a General Partnership with the Secretary of State. Creating an
unintentional partnership could have serious legal or financial implications.
In a partnership, all partners share unlimited personal liability
for the obligations of the business.
A written partnership agreement prepared by an attorney is
used to govern the business. The agreement establishes
the rules by which the partners will conduct business, the
responsibilities and authority of each partner and how business
decisions, including financial decisions, will be made. The agreement
should also contain an exit plan in the event one partner wishes to leave the
business, retire, becomes seriously ill or incapacitated or dies.
If a partner decides to exit the partnership, he/she
files a "Statement of Denial" or a "Statement of
Dissociation" form found at
and http://www.sos.idaho.gov/corp/acro4/pa_dissociate.pdf. Filing the
form gives public notice that the person is no longer a partner in the
business and is therefore no longer responsible for the actions
of the business, including financial obligations.
Partners share in the profits and losses of the
business according to the terms of the partnership agreement and profits
are taxed as personal income. While a partnership is recognized as a
separate legal entity from the individual partners, the partners’
personal assets may be used to satisfy creditors,
including debts incurred by only one partner.
If the partnership agreement does not contain
an exit plan,
partnerships end with the death, retirement, expulsion, incapacity, or
personal bankruptcy of one of the partners. Partnerships are governed by the
Idaho Uniform Partnership Act.
Limited Liability Partnership
(LLP) is similar to a general partnership but provides individual
partners protection from personal liability for the acts of the
partnership and/or the acts of other partners that might negatively
affect all partners (misconduct, negligence, etc.). However, the
partners continue to share liabilities resulting from general activities
of the partnership. An attorney must create a written partnership
agreement to govern the general affairs of the business. LLPs are taxed
like partnerships. LLPs are most often formed by
professional businesses, such as doctors, lawyers, and CPA firms.
Individuals or an existing partnership
may elect to become an LLP by filing the "Statement of Qualification" found at http://www.sos.idaho.gov/corp/llpform.htm.
consists of two or more individuals who jointly own a business in an
are generally financially liable for debts only to the extent of their
investment in the business. They have
limited or no control over management of the company. The general partner/partners manage the company and face the greatest
potential risk and reward from the business operations.
Limited partnerships are formed by filing a
Limited Partnership" with the Secretary of State's office; see
http://www.sos.idaho.gov/corp/lpform.htm. The limited partners do
not need to be identified. An attorney must create a partnership
agreement to protect both the limited and the general partners.
is the most complex entity type to establish. Legal assistance is
generally required to create "Articles of Incorporation,"
which are filed with
the Idaho Secretary of State's office. The corporation must also create and
adopt "Bylaws" to manage and regulate corporate
affairs. Forms to establish a corporation are found at http://www.sos.idaho.gov/corp/corpform.htm.
A corporation is a separate legal
entity from its owners and may be privately or publicly held. (Publicly
held corporations issue stock to the general public.) The corporation is
controlled by a Board of Directors, which is in turn controlled by the
corporation owners (shareholders). Corporate profits are taxed twice
if the corporation issues dividends – once as
income to the corporation and once as a dividend to the
Note: Though a corporation is a separate legal
entity from the owners, it is possible to "pierce the corporate veil of
protection" if a business owner (incorporator) personally co-signs a lease or loan
agreement, pledges personal assets as collateral for a loan, or fails to
business and personal finances separate. The owners can also be held personally
liable if the corporation fails to pay employment taxes to the IRS that were
withheld from employees' earnings, including Social Security
Corporations must hold annual meetings,
keep minutes of
meetings, and file reports of their activities. Corporations are dissolved by a vote
of the shareholders, by court order, or administratively dissolved for
failure to return their annual report to the Secretary of State. (Being
administratively dissolved means the corporation involuntarily
gave up its right to do business in Idaho because it
failed to file the required annual report form by the due date.) Corporations must keep their address current with
the Secretary of State's office or risk being administratively dissolved
when their annual report form is returned by the Post Office. The Post Office cannot
forward annual report forms. (See
Changing the Name, Address, Ownership, or Registered Agent
below.) If a corporation is administratively dissolved, the process to
become reinstated can be time-consuming and may be expensive and the
business may be prevented from legally conducting business in Idaho until the situation is
Several types of corporations are
recognized in Idaho including C, S, Non-profit, and Professional Service
A C Corporation
(C-corp) files its own income tax returns and owners
(shareholders) are taxed only if dividends are paid to them. A C
Corp can be either privately or publicly held. If stock is issued to the
public, the Idaho Department of Finance must be notified using the forms found at http://finance.idaho.gov/Securities/SecuritiesForms.aspx.
The U.S. Securities and
Exchange Commission, http://www.sec.gov/,
must approve the stock issue.
An S Corporation
offers the protection of a corporation with the
flexibility of a partnership. Profits and losses pass through to the
owners as if the
business were a partnership. The corporation must file "Articles
of Incorporation," adopt Bylaws, and hold regular meetings. An S Corp
cannot be owned by more than 100 individuals (shareholders) and cannot be owned by
another corporation, partnership, or a non-U.S. resident.
To qualify as an S Corporation, in addition to
registering with the Idaho Secretary of State, the owners
file Form 2553
with the Internal Revenue Service
indicating their tax reporting status. See http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/S-Corporations
In Idaho, the same forms are used to establish an S
corporation and a C corporation. If the S Corp ceases to exist, both the IRS and the
Idaho Secretary of State's office must
Some business types, including financial
institutions and insurance companies, cannot be organized as S
Corporation exists to provide a community service.
comes from donations and from grants given by corporations, foundations, and government
corporations must first apply for and seek to
maintain tax-exempt status from
the Internal Revenue Service before registering as a non-profit
corporation with the state. Forms and information can
be found on the
Internal Revenue Service's
website. The "Articles of Incorporation" must contain a clause stating the specific
purpose of the business and a provision for the disposal of assets
should the non-profit cease to exist. Information on tax reporting
requirements for non-profits is found at
The IRS approval process is time-consuming and expensive, so be certain your
business qualifies for non-profit status before applying. Your attorney
can assist with preparing and filing the application.
After obtaining IRS approval, the
non-profit uses the form found at
www.sos.idaho.gov/corp/acro4/arts_inc_np.pdf to register in Idaho. To reserve a name while awaiting approval from the IRS,
"Application for Reservation of Legal
Entity Name" can be filed using the form found at
Non-profits that solicit donations from the public
must comply with the terms of the "Idaho Charitable Solicitations Act,"
Additional information is available on the Idaho Attorney General's website
Individuals serving on the board of a charitable
organization have specific obligations under Idaho law. See the Idaho Attorney General's booklet, "Service on an Idaho Non-profit Board of Directors," found at
Professional Service Corporation
can be registered by individuals engaged in a limited number of
professions, such as medical, dental or legal. A list of qualifying
business types is available from the Secretary of State's office. The
form to file is found at http://www.sos.idaho.gov/corp/corpform.htm.
A Foreign Corporation
is a corporation registered
in another state that desires to regularly conduct business
in Idaho. For information, see "Registering a Foreign Corporation in
Limited Liability Company
(LLC) provides the liability
protection of a corporation and the federal tax benefits of a
partnership or sole proprietorship. An LLC is formed by filing a
"Certificate of Organization" with the Secretary of State’s
office using the form found at
The individual members of an LLC, also
called managers, are protected from personal liability for the acts of
the company. They are not personally liable for debts, obligations, or
liabilities created by the company unless one of the business owners/managers engages
in activities that "pierce the veil" of protection.
It is possible to "pierce the veil" by
co-signing a lease or loan application or failing to keep business and
personal finances separate. The IRS can also hold the business owner/managers
personally responsible for failure to remit taxes withheld from employee
wages, including Social Security and Medicare payments.
An LLC can also
lose its status if the annual report is not returned to the Idaho
Secretary of State's office in a timely manner. See
Administratively Dissolved Corporations and LLCs below.
Service does not recognize LLCs as a unique tax reporting entity.
(LLCs are created by state, not federal, law.) Therefore, taxes are reported in the same manner as a corporation,
partnership or sole proprietorship (called a disregarded entity), depending on the size and complexity
of the LLC. See the following article for
A few business types, such
as banks, insurance companies, and non-profit organizations, cannot usually be
organized as LLCs, so check
with your attorney or the Secretary of State's office to be sure your business qualifies.
An LLC operates under a legal contract
between the owners called an "Operating Agreement."
All LLCs, including a single owner LLC, need a legal
Agreement" prepared by an attorney. If the
LLC fails to create a legal "Operating Agreement," the business will be governed
Uniform Limited Liability Company Act and that may not be in the
business's best interests.
Registering a Foreign LLC
- An LLC formed in
another state can register to do business in Idaho by completing "Application
for Certificate of Authority for Foreign Limited Liability Company" found at http://www.sos.idaho.gov/corp/llcform.htm.
Changing the Registered Address or Agent,
Dissolving an LLC -
use the forms
found at http://www.sos.idaho.gov/corp/llcform.htm.
An LLC must have a current address on file with the Secretary of State's
office or risk being administratively dissolved when its annual report
form is returned. The Post Office cannot forward annual report forms. If
your LLC is administratively dissolved and you want to reinstate it,
contact the Secretary of State's office to determine how to proceed.
There is a cost.
Limited Liability Company (PLLC) is an LLC whose members
offer a professional service. Eighteen professions can register as PLLCs. Contact the Idaho Secretary of State's office for
information. The form to
establish a PLLC is found at
Name, Address, Ownership, or Registered Agent: Businesses are
required to notify the
Secretary of State's Office when any of the following changes occur:
- Corporations, partnerships and LLCs change their
mailing address by completing the form found at http://www.sos.idaho.gov/CORP/chg_addr.htm.
proprietorships file an Amendment of Certificate of Assumed Business Name using the form found at http://www.sos.idaho.gov/corp/ABNform.htm.
The form can be used to change the name of the business, the
owner, and/or the address.
Name Change - Corporations wanting to
change their name need to submit the form
"Articles of Amendment" found at
http://www.sos.idaho.gov/corp/corpform.htm. Before submitting the
form, a formal corporate meeting must be held for shareholders to vote on the
name change. See "Canceling or Changing a Business Name," below, for
- When the registered agent (the primary in-state
person representing a foreign corporation or LLC) or the registered
agent's address changes, the Secretary of State's
Office is notified using the form found at
http://www.sos.idaho.gov/CORP/chgregagent.htm. Failure to notify
the Secretary of State will result in the business being
Selling a Business
- When a business is sold, both the current owner and the new owner
need to notify
the Internal Revenue Service (IRS), State Tax Commission and the Secretary of
State's office. For
If the business has employees, the Idaho
Department of Labor may need to be contacted to be certain withholdings are reported
Canceling or Changing a Business Name:
To cancel or change (amend) a business name, either
because the business is closing or changing its name, the Secretary of State's Office
must be notified using the form found at
Corporations, partnerships and LLCs
desiring to change their
business name may need to have an attorney create a new operating
agreement reflecting the new name. See the information above,
"Changing the Name, Address,
Ownership, or Registered Agent " for more information about changing the name of a corporation.
The Internal Revenue
Service (IRS) also needs to be notified to be certain tax payments are correctly attributed to
the business. For information, see
The Idaho State Tax Commission and the Idaho
Department of Labor should also be contacted to be certain state taxes and withholdings are reported correctly.
Changing a Registered
Business Entity Type: When a
business changes from one entity type to another
(such as from a sole proprietorship to an S Corp), the Secretary of State's Office
should be contacted for information. You may need the assistance of an attorney to
be certain documents are completed
The Idaho State Tax
Commission and the Internal Revenue
Service (IRS) should be contacted because your tax reporting method may change.
a Foreign Corporation or LLC in Idaho: Foreign corporations
desiring to apply for a "Certificate of Authority" to do business in Idaho
must submit an application and a "Certificate of Existence"
from their home state indicating that the business is currently in good standing in that state. The "Certificate of Existence"
can be obtained from the office or agency in the state where the "Articles of
Incorporation" were originally filed. It must be obtained within
90 days prior to the date on which you file in Idaho.
The application for a foreign corporate
Authority" to do business in Idaho is found at http://www.sos.idaho.gov/corp/corpform.htm.
The application to register a foreign LLC is found at
If a registered foreign corporation or LLC decides to
stop doing business in Idaho, an "Application for Certificate of
Withdrawal" should be filed. Links to the required forms can be found
on the above websites.
Reports and Administratively
Dissolved Corporations and LLCs:
Corporations and Limited Liability Companies
must file an annual report form with the Secretary of State's office.
Failure to complete the form within the allotted time can result in the
business being administratively dissolved (your authority to do business
in Idaho is revoked). When the report is due, the Secretary
of State's office mails a notice to the company's address of record. The report
can then be returned by mail or completed on-line at http://www.sos.idaho.gov/online/corpar/login.jsp.
Important: Annual report forms cannot be forwarded by
the Post Office. It is the business owner's responsibility to keep
information up to date with the Secretary of State's office or risk having the business administratively
dissolved. If your business is administratively dissolved, contact the
Secretary of State's office to find out what to do to reinstate
the business. It will take
time and money to be reinstated and your ability to conduct business
during the suspension may be affected.
Filing a DBA or
Once you have decided on a legal
entity form and a name for your business, they must be registered with the
Idaho Secretary of State's office. By filling out and returning
entity form (articles of incorporation, limited liability company, etc.) with a name on it,
both the business
name AND the legal status of the business are registered. If
the business will be a sole
proprietorship, only the business name is registered; no
additional forms are needed. The name
and entity type should be registered before you begin conducting business.
Before 1998, business names were registered with county recorder's
offices. If you own a business that was originally registered with your
county, be certain the name and entity type have been re-registered with the
Idaho Secretary of State's office.
If you change the name of your business, the entity
type, or sell or close the
business, you need to contact the Secretary of State's office and possibly
other agencies as well. See the
or Changing a Business Entity Filing
a Registered Business Entity Type.
Note: Registering a business
name does NOT create a legal business entity form (a sole
proprietorship is not a legal entity) and it is NOT a business
license. Business licenses are issued by local city or county clerk's offices,
not by the state.
Before registering a business
name, a search can be completed at
http://www.accessidaho.org/public/sos/corp/search.html?SearchFormstep=crit to determine whether another business operating in Idaho is
currently using the same name or a similar one. Only sole
proprietorships can register a name currently being used by
another business. Corporations and LLCs must choose a
unique business name.
find businesses in other states using your desired name or a
similar one, do an internet search. Though you can register the same name as an existing
business in another state, your business may
with theirs, particularly if they are regionally or nationally known. This
can be a problem if the other business falls behind in their
financial obligations, encounters legal problems, or has a questionable
reputation. In addition to
checking for your proposed business name, look also for similar names
spelled differently, such as "Shoppe" or "Centre."