Starting a Business in Idaho: Choosing a Business Entity

by Norris Law Group on September 3, 2014

Starting a Business in Idaho: Choosing a Business EntityA primary consideration for any business owner is protection from liability. For example, many owners run their businesses as sole proprietorships. It is easy to start a sole proprietorship, and it does offer some advantages. But sole proprietorships are the same as the owner in the eyes of the law. If the sole proprietorship were ever to be sued for any reason, the plaintiff is actually suing the business owner—and all the owner’s assets are at risk.

If you are considering starting a business in Idaho, one of your first considerations is the type of business entity you’d like to operate. The Office of the Idaho Secretary of State offers entrepreneurs and business owners several types of business entities from which to choose, including:

  • General Partnerships. According to the Idaho Secretary of State, a general partnership is one of “the oldest and simplest form[s] of business organization.” If two or more people engage in business together, they are considered partners by the state. In a general partnership, each partner assumes “unlimited liability” in the business.
  • Limited Partnerships. An Idaho limited partnership must have at least one general partner and at least one limited partner. Limited partners aren’t held personally liable for any debts that the partnership may incur unless they are actively involved in managing the partnership. They are only responsible for their own investment in the partnership. Managing partners may be held liable for their own actions, but not for the actions of the partnership as a whole for of other partners.
  • Limited Liability Partnerships or Companies. An Idaho LLC, or limited liability company, is a bit of a “hybrid.” Its structure may include some aspects of sole proprietorships, corporations, and partnerships. An LLC has “members” instead of shareholders, and does business under a contract known as an operating agreement between the owners. In Idaho, LLC’s are required to file a Certificate of Organization with the Secretary of State. LLC members do not assume personal risk for the actions of the company as a whole, much like corporate shareholders. LLC’s also do not require members working as managers to take on any personal risk.
  • Corporations. A corporation offers business owners personal protection from liability, and must have a board of directors. A corporate board may actually be comprised of just one person, and must maintain accurate records of all business transacted. These records must be made available to shareholders at least once a year. While a corporation protects its owners, this type of entity is “is subject to double taxation, [meaning that] income is taxed once at the corporate level and then taxed once more when income it is distributed to shareholders as a dividend.”

A skilled Idaho business law attorney can help you navigate through the paperwork and filings necessary for establishing a business in Idaho.

Attorney Graham Norris and his associates at the Norris Law Group serve the residents of Utah County, UT and throughout Utah, Wyoming and Idaho. Contact them today at 801-932-1238 or online for a free consultation.

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