The idea of starting your own business can be both exciting and intimidating. You can enjoy an unlimited income potential and scheduling flexibility, but you’ll also have to jump through legal hoops to ensure your business is compliant, and face numerous challenges in the early days of your startup. Fortunately, structuring your business and getting your requisite tax ID numbers are relatively easy.
Idaho’s economy is based on a number of diverse industries. As you might suspect, thanks to ample rural farmland, agricultural businesses tend to do well. Manufacturing, healthcare, and food and beverage processing are also booming industries in the state. There are also thriving urban areas conducive to young businesses and fresh startups, including Boise, Twin Falls, and Nampa.
Steps to Forming a Business in Idaho and Getting a Tax ID (EIN) Number
- Form a Business in Idaho
- Federal Tax ID (EIN) Number Obtainment
- Idaho State Tax ID Number
- Localized Licenses and Permits in Idaho
To get started, it’s a good idea to decide whether to structure your business as a sole proprietorship, a partnership, a limited liability company (LLC), or a corporation. There are advantages and disadvantages to each type of business, and many different motivations that could influence your decision.
For example, you could choose a business based on simplicity. Corporations offer you the ability to issue public shares as a way to raise funds, but because of that perk, they tend to be more complex to start and manage. LLCs are slightly simpler, but because they exist as a separate legal entity, they do have a few hurdles to get through. Partnerships and sole proprietorships tend to be easier to manage, especially for new entrepreneurs.
That said, partnerships and sole proprietorships have a major weakness: liability exposure. In these companies, you’ll take on all debts personally, and can be held personally liable for anything that happens in the business. LLCs provide a bit of liability protection, since they’re technically separate entities and can hold debts or take on liabilities of their own. Corporations offer the highest degree of liability protection.
You’ll also need to think about how your business is taxed. In a partnership or sole proprietorship, you’ll pay taxes as an individual on any money you make in the business. LLCs are considered pass-through entities; you won’t pay taxes on revenue generated by the business itself, but instead will pay taxes as an individual on any funds you collect as salary or profits from the business. In Idaho, you will also need to file an annual report for your LLC. Corporations are unique. They’re required to pay federal and state taxes on any revenue they generate, in addition to owners and shareholders paying taxes on any money they make from the business. This results in a kind of double taxation. In Idaho, the corporate tax rate is a flat 7.4 percent.
Before you start your Idaho business, you’ll probably need to get a federal tax ID number. This 9-digit number serves as a unique identifier for your business, not unlike a social security number. It’s also known as an employer identification number (EIN) because you’ll need one if you’re going to hire employees. You’ll also need one if your business is going to have multiple partners (like in an LLC, partnership, or corporation), if you’re going to open a business bank account, or if you’re going to apply for a business license or permit.
To get a federal tax ID number, make use of our federal tax ID number obtainment services. It’s the easiest and fastest way to get your tax ID. Through us, you’ll fill out a simple application, answering questions about your business and your founding members. When you’re done, you’ll receive your tax ID via email in an hour or less.
Most Idaho businesses will also need an Idaho state tax ID number. This is a unique identifying number like your federal tax ID, but it functions at the state level, rather than the federal level. In many cases, both numbers will be required. You’ll need an Idaho state tax ID number if you’re going to hire Idaho state employees, if you’re selling taxable goods and services in Idaho, or if you’ll owe excise taxes in the state.
Before you can get an Idaho state tax ID number, you’ll need a federal tax ID number. When you have that, you can make use of our Idaho state tax ID number obtainment services. Apply online by answering a few questions, and you’ll receive your Idaho state tax ID number in just 4 to 6 weeks.
Many businesses in Idaho will need some kind of license or permit, depending on their industry and their city and county regulations. There’s no catch-all business license in Idaho, nor is there a single organization responsible for assigning licenses and permits. Instead, there are literally hundreds of potential forms of certification and/or documentation your business may need. Accordingly, the most efficient course of action is to speak with your local Chamber of Commerce to find out what forms of documentation you’ll need to operate legally in your chosen area. Make sure you have your federal tax ID number ready if you’re going to apply.
The economy in Idaho has been growing slightly slower than the rest of the United States economy, but unemployment is falling and new business creation is strong. More than 99 percent of all new businesses in the state are small businesses, which now number more than 158,000. Collectively, those businesses employ 304,700 Idaho residents, or 55.8 percent of the working population. Every year, small businesses create tens of thousands of net new jobs for the state, and are a driving economic force.
Starting a business in Idaho may seem intimidating, but once you have your federal tax ID number and Idaho state tax ID number in hand, you’ll feel much more confident about the process moving forward. Make use of our federal tax ID number and Idaho state tax ID number obtainment services today to make things easy on yourself.