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
the assistance of an accountant may be needed as well.
Business names are registered with the Idaho Secretary of State's
office before engaging in business activities. The name can be permanently registered
using the form found at http://www.sos.idaho.gov/corp/corindex.htm.
If the business will have employees or make
retail sales, it must also register with the State Tax
Commission, Idaho Industrial Commission, and Idaho Department of Labor by
filing Form IBR-1.
You must do this in addition to registering the business name and
following legal structures (business entity
are recognized in Idaho. For
information, click on the name. To find a comparison chart of the
attributes of each business type, click here:
Business Entities comparison.
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. Corporations and
LLCs must file annual reports. 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
business structure to
organize. All businesses are considered sole proprietorships
unless specifically registered with the Secretary of State's
office as a corporation,
partnership, LLC, or non-profit entity. If the business will operate as a sole proprietorship,
no additional paperwork is required; the certificate of
Name is sufficient.
- Owned by one
individual, who has responsibility 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 the owner's personal liabilities.
- Is NOT a separate legal
entity but an extension of the business owner. If the
business incurs debts or is sued, the owner's personal
assets can be used to satisfy the debt or a court judgment.
- Pays taxes by filing Schedule
C with the owner's 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.
- Terminates upon the owner's death or bankruptcy. The
business' assets are 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."
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.
- Partners share unlimited
for the obligations of the business.
- A written partnership agreement prepared by an attorney
in accordance with Idaho law governs business
- If a partner decides to exit the partnership, he/she
files a "Statement of Denial" or a "Statement of
Dissociation" form with the Secretary of State's office.
- 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.
- Partnerships end with the death, retirement, expulsion, incapacity, or
personal bankruptcy of one of the partners unless the
partnership agreement states otherwise. Partnerships are governed by the
Idaho Uniform Partnership Act.
Limited Liability Partnership
often formed by professional businesses, such as
doctors, lawyers, and CPA firms. 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.). 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.
like a partnership.
- Individuals or an
existing general partnership may elect to become an LLP
by filing a
"Statement of Qualification."
- Consists of two or more individuals who jointly own a business in an
unequal capacity. Limited partners
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.
Formed by filing a
Limited Partnership" with the Secretary of State's office. 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.
- The most complex entity type to establish. Legal assistance is
generally required to create Articles of Incorporation and Bylaws to manage and regulate corporate
affairs. Forms to establish a corporation are found at
- Is a separate legal entity from
its owners (shareholders) and may be privately or publicly held. (Publicly held
corporations issue stock to the general public.)
- Controlled by a Board of Directors, which is in turn controlled by the
corporation owners (shareholders). Corporate profits may be 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, including Social Security
Several types of corporations are
recognized in Idaho including C, S, Non-profit, and Professional Service
- Must hold annual meetings,
keep minutes of
meetings, and file reports of their activities.
- Is 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, which
cannot forward 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
Exists to provide a community service.
Funding comes from donations and grants given by corporations, foundations, and government
Non-profits must first apply for and seek to
maintain tax-exempt status from
the Internal Revenue Service before registering with the state as a non-profit
corporation. 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. For information on tax reporting
requirements for non-profits, see
The IRS approval process is time-consuming and
expensive, so be certain your business qualifies for non-profit status
before applying. An attorney
can prepare and file the application.
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.
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.
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."
Professional Service Corporation
- 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
Limited Liability Company
- Provides the liability
protection of a corporation and the federal tax benefits of a
partnership or sole proprietorship. Formed by filing a
"Certificate of Organization"
with the Secretary of State’s office.
- Operates under a legal contract between the owners
called an "Operating Agreement." All
LLCs, including single member ones, need a legal
operating agreement. If one is not created, the business
is governed by the
Uniform Limited Liability Company Act, which may not be in
the business's best interests.
- The individual members, 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.
The Internal Revenue
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
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.
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."
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)
- 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:
proprietorships file an Amendment of Certificate of Assumed Business Name using the form found at
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
- Registered Agent
- 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
information see http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Sale-of-a-Business.
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 amend their operating
agreement, partnership agreement or Articles of Incorporation. 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
reported correctly. 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:
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:
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 of the date of registration in Idaho.
Authority" to do business in Idaho.
Foreign LLCs file the form 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.
Important: Annual report forms cannot be forwarded by the Post
Office. It is the business owner's responsibility to keep all contact
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 how 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.
Assumed Business Name
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
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
(assuming the name is available for registration in Idaho). 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.
Note: 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, the Secretary of State's office needs to be contacted and possibly
other agencies as well. For information, see
or Changing a Business Entity Filing
a Registered Business Entity Type.
Note: Registering a business
name does NOT create a legal business entity (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
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.
To 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 be confused with theirs, particularly if they are
regionally or nationally known. This can be a problem if the other
business falls behind in
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."