How to Start an Idaho S Corp

Naming your business

Determining a good name for your S corp is the first step in the business incorporation process. A good name should be unique and describe the purpose of your business. This naming convention will make the name more memorable for the general public and ensure you don’t face legal problems in the future. Idaho also requires businesses to include an identifier like “company” or “corporation” in their name.

You can reserve your business’s name for a small fee of $20. This reservation is valid for up to four months and will keep the name safe during incorporation.

Designate a registered agent

All S corps in Idaho need a registered agent to receive legal documents for the business. Registered agents can be anyone with a physical residence in Idaho and is available during standard business hours. Many companies choose to hire a professional or company to act as their agent for legal safety reasons.

Submit Articles of Incorporation

The next step in creating your S corp is filing the Articles of Incorporation with the Idaho Secretary of State. These documents should contain data like your business’s name, address, and registered agent information. As of 2024, the filing fee for the Articles of Incorporation is $100.

Create corporate bylaws

You must create corporate bylaws to establish your S corporation’s rules and governing body. These bylaws determine how your company will operate and make decisions. Creating these bylaws helps your company operate more efficiently and removes any confusion associated with individual roles.

Hold first organizational meeting

Once you draft your bylaws, the board of directors must approve them at the first organizational meeting. During this meeting, the board should also discuss appointing officers and other critical operational activities.

Obtain your Employer Identification Number (EIN)

All small business owners should obtain their Employer Identification Number through the IRS. Businesses require EINs for many basic business actions, including opening a business bank account and paying employee payroll.

Apply for S corporation status with Form 2553

Unlike many business entities, S corporations are not automatically given their tax status upon creation. Business owners must file Form 2553 for their companies to become S corporations. Be sure to file this form within 2 months and 15 days of forming your corporation or by March 15th.

Obtain business licenses and permits

S corps in Idaho do not need to apply for a state business license; however, they must register their business with the Secretary of State before operating. More professional or specialized companies may need to apply for additional licensing or permits. For example, a veterinary company in Idaho must complete its Controlled Substances Registration with the Idaho State Board of Pharmacy before administering controlled substances.

For more information on licensing requirements, visit Idaho’s Business Wizard website.

Submit your annual reports

S corporations in Idaho must file an annual report at no cost. This report will update the government on your business’s information or changes.

S corporation limitations and eligibility

While S corporations offer several advantages, the IRS has specific requirements and limitations for adopting this status.

• Domestic establishment: The entity must be a domestic corporation or another eligible entity.
• Shareholder limitations: S corporations are limited to a maximum of 100 shareholders. To be valid, these shareholders must be U.S. citizens or resident aliens. 
• Business limitations: Some businesses, like insurance companies or banks, cannot be S corps.
• Ineligible entities: Certain corporations, such as certain financial institutions and insurance companies, are ineligible for the S corp status.
• Stock classes: The business can only possess one class of stock.

• Professionalism: Many investors and customers consider incorporated businesses more trustworthy than sole proprietorships and partnerships. A more professional appearance can make it easier for S corps to access funding and make sales.
• Ability to transfer stock: Idaho S corporations have more access to capital by issuing and selling stock. Being able to transfer stock also makes transferring ownership in the company easier.

• Limited liability protection: S corporations give their owners limited liability protection. These protections shield the owners from being personally liable for the corporation’s debts or potential legal trouble.
• Tax benefits: S corporations are subject to pass-through taxation, allowing them to avoid double taxation by passing profits to shareholders. The shareholders are then responsible for reporting all gains and losses on their tax returns.