How to start a business in Idaho in 8 easy steps

Not only are we home to potatoes and the Sawtooth Mountains, but we also have one of the highest rates of new business per capita of any state. In fact, AdvisorSmith ranked Idaho the top state for entrepreneurs in the U.S. in 2021. With relatively few regulations and taxes (corporate tax rates have consistently declined in recent years), the Gem State may be a good place to start a new business. This step-by-step guide will help you start a business in Idaho.

1. Choose a business idea

If you're reading this, you may already have a business idea in mind. But before you quit your day job and embark on a life of entrepreneurship (or before you invest a lot of time and money into a side hustle), you need to be convinced that your idea is worth taking the leap. So what makes a good business idea? As a starting point, you should be able to answer the following questions:

• Who do you sell to?
• What is the potential profitability of your business idea?
• What repeatable methods do you need to reach your customers?
• What kind of leader and founder are you?

2. Name your business

When a potential customer first learns about your business, your name is a big part of their first impression. It is important to choose a business name that is memorable and appropriate. Once you have your name, follow these steps to protect it.

• Search the database for the state of Idaho. To ensure your business name is approved, it must be distinguishable from other business names in the state. You can check against the database of the Idaho Secretary of State's Office.
• Check for federal trademarks. Search the U.S. Patent and Trademark Office site to make sure your name is not federally trademarked.
• Include the appropriate business identifier. LLC and legal entity names must include appropriate identifiers. The LLC name must include one of the following: Limited Liability Company, Limited Company, LLC, LLC, or LC. Additionally, the legal entity name must include Corporation, Incorporated, Company, or Limited, or an abbreviation of one of those words.
• Select your domain name. Don't forget about your business website. Once you find a domain name that matches your business name, grab it before someone else does. However, if the exact name is already taken, consider a variation that reasonably represents your business name.

Using a DBA in Idaho

In Idaho, if you choose a limited liability company (LLC) or corporation as your business structure, your business name will be registered as part of the business entity registration process. Sole proprietors and partnerships must apply for a DBA (doing business as), also known as an ABN (assumed business name) in Idaho. Owners of LLCs and corporations may choose to use a DBA if they wish to operate their business under a different name than the name listed on their company's certificate of organization or incorporation. This is useful if your business name is a common name and you later decide to use a name that is more appealing to your customers. Certificates of assumed business names can be found on her website at the Idaho Secretary of State's Office. The application fee is $25.

3. Create a business plan

A comprehensive business plan helps small business owners define goals, clarify strategy, and attract investment. But you don't have to start from scratch. Check out some examples and consider using the template as a starting point. Here are some elements you may need to include.

• executive summary
• Company Profile
• market analysis
• Products and services
• marketing plan
• Logistics and operational planning
• financial planning

4. Choosing a business structure

To form a corporation, Idaho business owners must choose a formal business structure. The legal structure of your business determines how your taxes are levied and whether you are personally liable for your business's debts and lawsuits. Common business structures include sole proprietorships, C corporations, and limited liability companies (LLCs).

Sole proprietorship

Although sole traders are relatively easy to register and manage, business owners are exposed to the most personal risks. There is no legal distinction between a sole proprietorship and its owner, so personal and business expenses and income are the same. This will make tax time easier. Simply report your business income on your personal tax return. However, the downside is that you are responsible for any debts or obligations that your business incurs. A sole proprietorship cannot secure investors.

Company C

Although C corporations require far more paperwork and formalities than sole proprietorships, they offer owners personal liability protection and the opportunity to raise investments. Because a C corporation is a separate legal entity, its income is taxed like an individual. Idaho's corporate tax rate is 6% (this number has been steadily declining over the past few years). In addition to this, shareholder dividends are also taxed, resulting in double taxation. A big advantage of this business structure is that C corporations can sell and transfer stock freely.

Limited liability company (LLC)

Limited liability companies (LLCs) are somewhere in the middle. Its legal structure combines the simple taxation methods of a sole proprietorship with the personal liability protection of a C corporation. When it comes to taxes, LLCs are pass-through entities. This means that a business's income passes through the LLC to its governors (also known as members or owners). This allows business owners to avoid double taxation and include business income on their personal tax returns. As long as business expenses and personal finances are kept separate, LLC governors benefit from personal asset protection.

Obtaining an EIN

LLCs and corporations need a federal Employer Identification Number (EIN) to file federal tax returns, open a business bank account, and obtain a business credit card. This federal tax ID functions similarly to a personal Social Security number (sole proprietors can use the owner's personal Social Security number in place of an EIN). Obtaining an EIN is free and easy. Just fill out the form on his website for the Internal Revenue Service..

Incorporate in Idaho

If you choose an LLC or corporation as your business structure, you will need to incorporate with the Idaho Secretary of State's Office. To do this, follow these steps:

• Select a registered agent. Idaho requires LLCs and corporations to appoint a registered agent. This is an individual (18 years of age or older), company, or agency with an address in Idaho who can receive legal documents on behalf of your business. Designate a registered agent when you file your certificate of incorporation or organization.
• Submit your certificate of incorporation or organization. When you file a certificate of organization (for LLCs) or a certificate of incorporation (for corporations), your business is legally established in Idaho. Forms for both documents can be found on the Idaho Secretary of State's Office's website, and there is a $100 filing fee for each.
• Adopt bylaws and operating agreements. Idaho requires businesses to develop bylaws that outline the rules for operating their businesses. LLCs must also create a similar operating agreement. If an operating agreement is not created, the LLC will be governed by the Idaho Uniform Limited Liability Company Act. The Idaho Secretary of State's Office recommends that you seek legal and business advice from a business attorney when drafting these documents.

5. Obtain business licenses and permits

Although there are no state business licenses in Idaho, you may be required to obtain certain state and local licenses and permits. This depends on the type of business and location.

To find out what your business needs, visit the Idaho Secretary of State's Office Business Wizard, answer a few questions, and receive a checklist. To review local licensing requirements, visit her website for City and County Clerks.

6. Consider your insurance options in Idaho

Business insurance helps protect you and your business from financial risks. There are several types of business insurance, so why not consider them? Here are some of the most common ones:

• Workers' compensation insurance. Businesses in Idaho with one or more employees (even part-time or seasonal) must carry workers' compensation insurance administered by the Idaho Industrial Commission. If you are injured at work, this insurance will cover your employee's compensation.
• Unemployment insurance tax. In Idaho, temporary income for laid-off employees is technically provided by unemployment insurance taxes, not insurance. Businesses that employ workers in Idaho are required to make contributions.
• General liability insurance. General liability insurance protects your business from the legal consequences of bodily harm or property damage.
• Professional liability insurance. If you sell your expertise (as a lawyer, doctor, counselor, etc.), professional liability insurance covers you for errors and omissions in the conduct of your work.
• Commercial real estate insurance. If you have a physical space (office, retail, or otherwise), commercial property insurance can help cover property damage for both renters and owners.

7. Understand financial considerations

You'll likely need to tap into a variety of resources to help pay for the start-up costs of your new business, including small business loans, personal savings (or those of friends and family), crowdfunding, and angel investors. You may also consider non-traditional programs that provide payroll, inventory management, and marketing funding. These are all viable options that minimize paperwork and offer payment flexibility.

Business taxes are another financial issue to consider. If your business plans to employ employees, conduct retail sales, or provide lodging, you must register with the Idaho Tax Commission. This allows you to pay sales tax, unemployment insurance tax, and apply for or file workers' compensation insurance. For more information about the state's tax resources, visit the Idaho State and Federal Business website. This website lists common business taxes and the agencies that assess them.

8. Marketing your business

Once your new business is legally and financially ready, you can plan your marketing. Here are some important steps to create a marketing strategy for your small business.

• Conduct market research. Learn about your audience and competitors using tools like data analytics and customer research. You need to understand the key demographics of your target audience, what their needs are, what motivates them to buy, and how your business compares to others in your field.
• Create a marketing plan. Once you've done your background research, it's time to create a marketing plan and outline your strategy. Start with a mission or purpose statement that defines your brand's promise to your customers. It can also include your content strategy, sales and marketing goals, budget, and key performance indicators.
• Execute your plan with great content. Based on your market research and marketing plan, we develop content that helps you achieve your goals. You probably want to reach potential customers across platforms like email, social media, and blogs.

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