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. A few business types, including banks and insurance companies, cannot be LLCs.
- Operates under a legal contract between the owners called an “Operating Agreement.” All LLCs, including single member ones, need a legal Operating Agreement created by an attorney that conforms with Idaho law. If an agreement is not created, the business is governed by the “Idaho Uniform Limited Liability Company Act,” which may not be in the business’s best interests.
- The individual owners, called governors, members or 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 governors/owners/managers engages in activities that “pierce the veil” of protection.
- The veil of protection from liability is “pierced” when an owner signs or co-signs a lease, loan application or another legal document, pledges personal property as collateral for a loan or fails to keep business and personal finances separate. The IRS can also hold the business owners/managers personally responsible for failure to remit taxes withheld from employee wages, including Social Security and Medicare payments.
- Taxed like a sole proprietorship (if one owner) or a partnership if multiple owners. Members of an LLC are considered self-employed and must make self-employment tax payments.
- A single member LLC terminates upon the death, retirement, incapacity or bankruptcy of the owner or by court order. A multi-member LLC terminates in accordance with the terms of the LLC’s Operating Agreement, a court order or state law. The Idaho Secretary of State’s office must be notified of termination by filing the appropriate form. Business assets are liquidated and distributed in accordance with the terms of the Operating Agreement or by court order.
- An LLC can 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.
- Some types of businesses, such as banks and insurance companies, cannot be formed as LLCs.
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 IRS website for details.
Registering a Foreign LLC – An LLC formed in another state can register to do business in Idaho by completing a Foreign Registration Statement.
Changing the Registered Address or Agent, Dissolving an LLC – Contact the Secretary of State’s office for information and access to the correct form. An LLC must have a current address and email address on file with the Secretary of State’s office or risk being administratively dissolved when its annual report form is not 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 for information. There is a cost to be reinstated.