Before starting an Idaho limited liability company (LLC), make sure you do your research. You must take some time to fully understand the potential expenses.
This article details the costs of forming a limited liability company in Idaho.
Read on to learn all about:
- The mandatory costs when starting an LLC in Idaho
- Extra expenses that might help your business
- How to choose between LLC formation approaches
Our goal is to teach you the essential details of Idaho LLC formation.
Total Idaho LLC Cost – Starting at $100
According to the Idaho Secretary of State's business forms, the lowest possible cost to start an Idaho LLC is $100.
This only includes one item:
- Idaho Certificate of Organization filing fee: $100 (online only)
You may also need to apply for a sales tax permit from the Idaho State Tax Commission, but this is free of cost. Some LLCs will need to obtain professional and local business licenses, the costs of which vary.
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Idaho LLCs – the Basic Costs
The total cost of forming an Idaho LLC will vary. However, the bare minimum cost is $100. We’ve laid out the required LLC formation expenses in the sections below
Certificate of Organization Filing Fee — $100 to $120
Certificates of Organization are the legal documents that officially start LLCs. You must submit one to the Secretary of State to start an Idaho LLC. Luckily, it is not a complicated process. All you really need to do is list the basic details of your company.
State Tax Permit — Free
Idaho law requires LLCs that sell tangible personal property or provide taxable services to apply for a sales tax permit. This allows the business to collect sales tax from customers. There is no fee to obtain a sales tax permit.
You can learn more on the Idaho State Tax Commission’s Sales/Use Tax Hub.
Professional Licenses and Business Permits — Variable
You may also need to get a local permit or business license for your LLC. For instance, the city of Boise requires certain types of companies to get business licenses.
Idaho LLCs – Optional Costs to Consider
In addition to these required expenses, you should consider making some extra expenditures. While optional, these costs can help simplify the process of starting and running an Idaho limited liability company.
Expedited LLC Filing Fees — $40 to $100
Typical Idaho LLC processing times range from 7 to 10 business days. If you want your LLC paperwork to be processed faster, you can pay $40 for expedited service. Same-day processing is also available for a $100 fee.
Registered Agent Fee — about $100 per year
Under Idaho law, all LLCs must appoint registered agents to accept their legal documents. You must list information about your registered agent in your Idaho LLC Certificate of Organization. You can also change your Idaho registered agent later on; there is no fee if you file online.
Many new LLC owners think it makes sense to name themselves as the registered agents for their LLCs. But they often don’t fully understand what they are agreeing to do.
Registered agents are legally required to be available to receive papers during regular business hours, with no breaks or exceptions. Their addresses are also publicly available online. For this reason, many agents deal with tons of junk mail and other invasions of their privacy.
We suggest that every LLC hire a professional registered agent service instead. These businesses only charge you about $100 per year, and they will manage all of your LLC’s registered agent duties.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement — Variable
An Idaho LLC operating agreement is a type of contract that creates the rules for the business. They include essential information like the rights and duties of the members and how to join or leave the LLC.
Idaho law doesn’t require that LLCs make operating agreements. Still, we strongly suggest having one. And while you are allowed to write the operating agreement for your LLC yourself, we recommend that you hire an expert.
A local attorney or law firm can draft an operating agreement for your LLC. This option will give you a professional and customized contract. Just remember that lawyers are not cheap. To save a little cash, you can pay an LLC formation service as little as $39 to make your LLC operating agreement.
DBA Fee — $25 to $45
LLC owners often run their businesses using “doing business as” or “DBA” names. A DBA is a business name that a company “goes by” that is not its legal LLC name. For instance, it’s common to drop the “LLC” from the day-to-day name of a business.
In Idaho, DBAs are called “assumed business names.” If you want to use a DBA for your LLC, you must submit a Certificate of Assumed Business Name to the Secretary of State.
You can submit your DBA online with a $25 filing fee. You can also submit a paper form for a $45 fee.
Name Reservation Fee — $20 to $40
If you have chosen a name for your business but aren’t ready to file the registration documents, Idaho law allows you to reserve an LLC name for 120 days. By reserving a name, you can prevent others from claiming it during this period.
To reserve a name for your business entity, you must submit an Application for Reservation of Legal Entity Name to the Secretary of State. There is a $20 filing fee if you apply online and a $40 fee if you use a paper form.
Domain Name — about $20 per year
Most modern marketing plans include the use of a business website in one form or another. If you want to make a website for your LLC, you will need to buy a domain name. Luckily, domains are reasonably priced and easy to obtain.
Still, it’s crucial to get your domain immediately. If you wait, somebody else can buy it first. You also need to look out for “domain squatters” who buy and resell a new LLC’s potential domains.
You can get a domain name from GoDaddy.com or a comparable service for about $20 to $50 per year. These businesses also often run sales, so you can usually spend even less.
Getting an Employer Identification Number (“EIN”) — Free
An EIN is a 9-digit identification number that the Internal Revenue Service gives to a company. It’s kind of like a social security number for a business. Some LLCs are legally obligated to get EINs. Others aren’t required to, but they still can.
Either way, we suggest that you get an EIN for your LLC. Most banks require that you provide an EIN for a business bank account. An EIN will also help you avoid identity theft because you won’t have to give out your SSN.
Foreign LLC Qualification Fees — about $100 per extra state
You'll need to spend more when expanding your LLC into other states. Although you don’t have to form more than one LLC, you will need to register as a foreign limited liability company in each state where you operate.
Foreign LLC filing fees vary between states. Most are around $100.
Writing Formation Costs Off
You can usually deduct your LLC formation costs as business startup expenses on your federal income taxes. The IRS offers substantial advice on the issue, so check the IRS website for more information.
By default, LLCs are classified as “pass-through” tax entities. This lets an LLC owner deduct up to $5,000 in startup expenses from their federal income taxes in the year they start their business.
Victoria decides to start a single-member LLC and open a daycare in Boise, Idaho. Her formation expenses are as follows:
- Idaho LLC Certificate of Organization (online filing): $100
- Expedited (same-day) LLC Filing Fee: $100
- Boise Child Care Center License: $135
- Operating Agreement: $50
- Idaho Registered Agent Service Fees: $105
- DBA (assumed business name) Fee (online filing): $25
- Name Reservation Fee (online filing): $20
- Web Domain Costs: $25
As a pass-through entity, the LLC won’t pay any income taxes. Instead, Victoria will include her earnings from the LLC and any deductions on her personal state and federal income taxes.
Victoria's total formation costs were $560. Before deductions, her total taxable income was $36,000. But after Victoria deducts her expenses, she lowers her taxable income to $35,440. This reduces her 2022 federal income taxes from $4,121 to $4,054.
While this is not a huge drop, LLC owners who deduct expenses regularly will realize significant tax savings as time goes on.
Cheapest Way to Start an LLC in Idaho
Choosing the right formation method for your LLC can be challenging. In the sections below, we’ve laid out some of your options. As you make your decision, be sure to remember your LLC’s unique needs.
Formation Service – $39 + state fees
Many business owners prefer to use LLC formation services. While these services don’t have the legal expertise of a lawyer, they do specialize in creating business entities.
Business formation services are often a sensible option. The benefits of this method include:
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
Still, formation services aren’t suitable for everyone. The flaws of this approach include:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products or business services you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
Another option is to hire a local business attorney. If you do so, your LLC will be formed by a legal expert. But lawyers can be expensive. Many charge an hourly fee for their services, often several hundred dollars per hour.
Despite the expense, using an attorney comes with meaningful benefits:
- Lawyers help you manage risk. If you are starting a business with complicated legal issues, hiring a lawyer would be the best choice.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
However, the disadvantages of this option often outweigh the advantages:
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very careful people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Finally, you can choose to roll up your sleeves and complete your own LLC documents. While this option may seem like the most cost-effective approach, don’t forget to account for your time. Your time is valuable, and you may be better served to let someone else handle the LLC formation tasks.
The benefits of a DIY formation approach include:
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t account for the value of your time, a DIY solution is the cheapest option.
But remember, there are also drawbacks:
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that can cost them even more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual Idaho LLC Fees: How Much Will it Cost to Maintain your LLC?
Idaho law says that every LLC must file an annual report with the Secretary of State. There is no filing fee. You can file your annual report online or submit an in-office paper form.
You may also need to periodically renew your LLC's business licenses or permits.
Additionally, some optional expenses are ongoing. For instance, you might need to pay the following annual costs:
- Registered agent service fee: approximately $100
- Domain name registration: $20 to $60
How Much are LLC Taxes in Idaho
LLCs in Idaho aren't subject to income taxes, as they are “pass-through” tax entities. This means you must report your LLC’s earnings on your personal income taxes.
But if you elect to have your LLC taxed as a corporation, it will likely need to pay Idaho’s Business Income Tax.
Idaho LLC Formation Costs Quick Links
- Idaho Online Filing
- Iowa Forms
- Idaho Secretary of State
- Idaho State Tax Commission
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
Idaho LLC Formation Costs FAQs
How much does it cost to start an LLC in Idaho?
The bare minimum cost is $100. But, you may need to spend more due to your industry or location.
What is the cheapest way to start an LLC in Idaho?
A do-it-yourself formation technique is the cheapest in terms of cash spending. But when you account for the value of your time, a reasonable LLC formation service is often the most cost-effective method.
Do I need to hire an attorney to form an LLC in Idaho?
No. A standard LLC can be formed without a lawyer. A DIY method or a business formation service will suffice for most LLCs.
Can I pay to form an LLC more quickly in Idaho?
Yes. Idaho offers expedited filing for a $50 fee or same-day processing for a $100 fee.