Some Basics About an Idaho LLC (Limited Liability Company)
By Lane V. Erickson, Idaho Business Attorney
Using an LLC as the structure for your small business in Idaho is usually a smart idea. The term LLC is an abbreviation for the name limited liability company which is a business structure often used by small business owners. The reason that small business owners use an LLC is because it provides protection for the owners individually from any liabilities that could arise within the structure or operation of the business. An LLC also offers many tax options which could be advantageous to a small business owner. Additionally, using an LLC allows an owner to separate out a business from any other businesses or interests that the owner may have in other areas.
For more than 70 years the premier Idaho business attorneys at the Racine law office have assisted business clients in the creation and operation of LLCs as part of their business structure. We take the time to meet with each client individually, to learn what their business needs are, and then help them customized structuring their LLC to meet their needs. The attorneys on our premier Idaho business team include partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley. Each of the attorneys on our team is skilled, knowledgeable, and experience in assisting clients with their business needs including organizing, creating, and helping in the operation of an LLC.
The purpose of this article is not to provide an exhaustive study of what an LLC is or how an LLC can assist you in operating your small business. Rather, the purpose of this article is just to provide some basic information about what an Idaho LLC is and the information you need in order to create one. Below is a list of four basic things that you should know about LLC’s in Idaho if you are thinking of creating one for yourself and for your small business operation.Choosing a Name for Your LLC
The first thing you need to know about LLCs is that you have to choose a name for your LLC. Without getting too technical, the name of your LLC must be unique, and must not be the name of a business that is already in operation in the state of Idaho. However, if you do find someone is using the name you wanted to use, you can create a derivative by adding or subtracting words from the name until you have something that is unique.
As an example, suppose you were a mechanic and you wanted to open your own mechanic shop. You decided that you wanted to use the name Larry’s Garage, LLC. However, upon searching you realize that someone else is already using that name. You can still use your name if you add some additional word or derivative to it such as Larry’s Premier Mechanics LLC, Larry’s Premier Garage LLC, Larry’s Garage and Mechanics LLC, and so forth. So long as your name is unique enough that it is not mistaken for another existing business, you can choose whatever name you would like to be associated with your LLC.
Once your name is chosen, a certificate of organization is filed with the Idaho Secretary of State’s office registering the business name. By doing this, you are assured that no one else will come in after you and try to use the same business name that you have chosen. In other words, you have the same protections for the business name you have chosen as those who have chosen names before you have.Choosing a Registered Agent
The next thing you need to know is that you are required to choose a registered agent for your small business. A registered agent has to be an actual real person who has a physical address within the state of Idaho. The reason for this is so that this person can receive any formal legal notifications that are served on your business.
For example, if for some reason your business would be involved in a lawsuit, the registered agent would receive the service of the complaint and summons. The registered agent would then be able to provide this information to the owners of the LLC. Every year, your business will be required to confirm who the registered agent is and what their address is. If the registered agent changes throughout the year, you are required to provide this updated information to the Idaho Secretary of State’s office so that the registered agent’s name and address is formally listed and can be found and viewed by any third party.
Often our clients, who are the owners of the business, will list themselves individually as the registered agent. Additionally, some clients will list the attorneys in our office as the registered agent rather than listing themselves. Additionally, some of our clients will name a third person who has no tie to the business in anyway as the registered agent. It really doesn’t matter who this person is, so long as they are a real life human being and have a physical address where legal notices can be served.Obtaining a Tax ID Number or EIN
After determining the name of your business and identifying who your registered agent is, and after having your business registered by the state of Idaho, the next thing you need to know is that your small business should obtain a tax ID number or EIN from the IRS. Think of this number as the social security number for your LLC business entity.
With this number, you are able to open a separate bank account for your small business LLC. This allows you to separate and keep all financial information for your LLC small business separated from yourself individually and from any of the other owners individually. This is important because in order to maintain the status of an LLC, you have to follow all corporate formalities. The most important corporate formality is simply separating out finances between the owners and the small business LLC.Creating an Operating Agreement
Finally, after your LLC is created you will want a qualified Idaho business attorney to help you prepare and create an Operating Agreement for your small business. An Operating Agreement is a contract between the owners of the LLC that provides information about who the owner are; how the LLC will be operated; what happens to an owner’s interest in the business in the event of a divorce, death, or disability of the owner; what happens to an ownership interest if an owner decides they want to sell their part of the business to a third party; and how the business will be managed.
The Operating Agreement also spells out specifically who the owners of the business are and what percentage of ownership each of them have. Additionally, an Operating Agreement can provide specific details and instructions about the capital accounts of the owners. Finally, an Operating Agreement can be specific in describing what voting rights each owner has and how voting within the organization occurs.
Again, the purpose of this article is not to provide all the details about how an LLC can assist you with your small business. Rather, if you have questions or concerns about using an LLC as part of your business, we are confident that we can help you.Enlist an Idaho Business Attorney to Help You
Our team of Idaho lawyers can help you with any of your business structure or operation needs. Whether you are seeking to create a new business or review a current business, we are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation. You can also email us directly at firstname.lastname@example.org or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.