Are you looking to form a professional limited liability company (PLLC) in Idaho, but you’re not sure how the formation process works? There are several important steps when it comes to creating an Idaho PLLC that is compliant and able to do business in the state.
What is an Idaho Professional LLC?
The professional limited liability company (PLLC) is a specialized type of LLC that is intended for licensed professionals to offer their unique services. Under Idaho law, a PLLC is an LLC organized solely to render professional services, allied professional services, and services ancillary to the professional services. Examples of professional services in Idaho include medical, dental, or legal services. An Idaho PLLC can only have as its shareholders (i) individuals who are duly licensed or legally authorized to render one or more the same professional services as the PLLC and (ii) other professional entities.
The Idaho PLLC is typically more popular than a professional corporation (PC) because it’s a more flexible business type, but it still includes the personal asset protection and professional qualifications that make the PSC valuable.
PLLCs in Idaho have relatively simple formation and maintenance requirements, several options for how they want to be taxed, and flexible management. From one-person businesses to multi-member PLLCs with several owners, the PLLC is a popular choice for a reason.
An important detail of the PLLC that differs from a traditional LLC is that liability protection is not shared across all members of the company. For example, if you operate a PLLC for physicians, your business structure does not shield each individual member from malpractice suits. Instead, each member is liable for their own malpractice insurance, and no member is liable for another member’s malpractice.
Forming a PLLC in Idaho (in 6 Steps)
Step One) Choose a PLLC Name
Your PLLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
Legalities
Generally, the name of an Idaho limited liability company is required to contain the words "limited liability company" or "limited company" or the abbreviation "L.L.C.," "LLC," "L.C.," or "LC." "Limited" can be abbreviated as "Ltd.," and "company" can be abbreviated as "Co." The name of an Idaho PLLC can also include the word "professional" before the word "limited" or the letter "P" at the beginning of any of the permitted abbreviations.
Explanatory Naming
Another aspect to consider is including language that explains what your business does. For example, if you’re a doctor, put the word “physician” or the initials “MD” in your PLLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
Do You Like It?
At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your PLLC name both sounds good when spoken out loud, and looks good when written down.
Name Availability
The most important consideration for naming a PLLC is to not get too attached to any one business name until you know that it is available for use. To confirm whether a name is available, you should conduct a search using the Idaho Secretary of State’s Business Search tool. You can reserve your chosen name for 120 days for a $20 fee by filing an Application for Reservation of Legal Entity Name. This application can be accessed through the SOSBiz website and can either be filed online or printed and mailed to the Idaho Secretary of State.
Get Your Business Domain
To fully embrace the business name, register your URL. With GoDaddy you’ll be able to quickly build a company website so that nobody else can use or take it.
Step Two) Designate a Registered Agent
Every PLLC in Idaho is required to designate a registered agent, which is the individual or business entity that receives government correspondence on behalf of your business, then forwards those documents to you.
Your Idaho registered agent can either be a person or another corporation located at a physical street address in Idaho. Businesses are not permitted to use a post office box as an address for a registered office.
Without a registered agent, you could lose your good standing with the state of Idaho, and the state also has the right to dissolve your PLLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
Our Recommendation
At the end of the day, we recommend hiring a dedicated registered agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record.
Step Three) File Formation Documents with the State
Once you are ready to form your Idaho professional limited liability company, you will fill out the Certificate of Organization of Professional Limited Liability Company, which can be accessed through the SOSBiz website.
This is THE document that will register your PLLC with the state. You’ll want to ensure all of the following information is correct on the form:
- Name of your PLLC
- Street address and mailing address of your PLLC’s principal office
- Name and address of your PLLC’s registered agent in Idaho
- Name and address of at least one governor of your PLLC
- Statement that your company is a professional limited liability company
- Principal profession or professions for which your PLLC’s members are duly licensed or otherwise legally authorized to render professional services
Once you’ve completed your Articles of Organization through the SOSBiz website, you can either file online or print and mail the document to the Idaho Secretary of State.
Cost to Form a PLLC
The filing fee for the Articles of Organization is $100. The fee for expedited service is an additional $20. A small processing fee, which goes to the payment processor, also applies to online filings.
Processing Time
The Idaho Secretary of State usually has a turnaround time of 7-10 days for business filings. Expedited processing can be completed within 8 working hours. Note that the Secretary of State may take longer to process your filing if it contains errors or other deficiencies.
Step Four) Create an Operating Agreement
After you register a PLLC in Idaho, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for a copy of this document. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your operating agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your operating agreement, or you can create one from a free template online. You can read more about operating agreements here, but some of the basic information you’ll want to have includes:
- Individual members' ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the PLLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Step Five) Handle Taxation Requirements
Federal Requirements
The vast majority of PLLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important PLLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
State Requirements
Depending on how you elect to treat your PLLC for tax purposes, your PLLC may need to pay corporate income tax. Other state-level taxes, such as sales and use taxes, may also apply to your PLLC. For more information on common taxes that apply to business owners in Idaho, you can visit the State of Idaho’s Business Portal.
Local Requirements
Depending on where in Idaho your business is located, you may also need to pay some local taxes. You should contact your city and county to determine local taxation requirements. The four largest cities in Idaho include business resources on their websites: Boise, Meriden, Nampa, and Idaho Falls.
Step Six) Obtain Business Licenses and Permits
Idaho does not require a general business license, but you may need to obtain one or more industry- or occupation-specific licenses or permits for your PLLC. The State of Idaho’s Business Wizard can generate a customized checklist of agencies you should contact to confirm the requirements for your business.
Would You Prefer a Professional Form Your PLLC?
If you would prefer to have a professional handle the paperwork for you, consider hiring an online business formation service.
Because of the often-complex nature of professional limited liability companies, some of our favorite service providers don’t offer PLLC formations, but there are still plenty of quality companies that do provide this service. A couple of our favorites for PLLC formation are LegalZoom and MyCorporation.
Another option would be to hire a business attorney to handle your PLLC formation. While this is certainly a more expensive route than using an online formation service, a lawyer’s expertise could come in handy when you’re forming a specialized business structure like this.
Next Steps: What to Do After Creating a PLLC in Idaho
Open a business bank account
We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
Business insurance
In Idaho, workers’ compensation insurance is required for businesses with one or more full-time, part-time, seasonal, or occasional employees. You should obtain this insurance prior to hiring your first employee. If you need further information about this requirement, you can visit the Idaho Industrial Commission’s website. Though not required, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies pertaining to the profession practiced by your PLLC.
Understand income reporting
Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year.
According to the Idaho State Tax Commission, an entity is required to file an income tax return with the state of Idaho if such entity (i) transacts business in Idaho, (ii) is registered with the Idaho Secretary of State to do business in Idaho, or (iii) has income attributable to Idaho.
Understand annual reporting
All business entities in Idaho are required to file an annual report with the Secretary of State. The annual report helps ensure your PLLC’s information on file with the Secretary of State is current. You can file your annual report through the SOSBiz website.
Find an accountant
We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how to best manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.