Ready to start your business in Idaho but not sure where to begin? Don’t worry; our guide to starting a business in Idaho is exactly what you need. It provides clear, step-by-step guidance for new entrepreneurs, covering the essentials like selecting the right type of business structure, registering with the state, and more, so you won’t miss out on any critical steps as you turn your dream into reality..
Steps To Start A Business In Idaho
Step 1: Choose a Business Idea
Having a great business idea is the start of your business journey. It’s easy to get excited and jump into forming your business and ordering the business cards, but before moving forward on your idea, I recommend that you take the time to consider a few things first:
- Think about the things that you enjoy or that come naturally to you. Consider your passions, hobbies, and talents, in addition to any professional experience you may have. If you are still looking for inspiration, check out our library of business ideas to get detailed industry information, trends, costs to start, tips, and lots more.
- Research the local market to determine if there is a need for the type of business you are considering starting. You can also look into existing businesses in the area that offer similar services or products to see how they are doing and make a judgment call on how successful their business is and if there is room for another competitor.
- If there is room for another, study the competitive landscape to help you identify unique selling points and create a business that differentiates itself from others in the market.
- Reach out to successful entrepreneurs, industry experts, or business coaches for advice and guidance. They can provide valuable insights, share their experiences, and help you avoid common business pitfalls.
Step 2: Write a Business Plan
After choosing your business idea, it’s time to write a business plan. While it’s often thought of as only something small business owners have to do if they are looking for funding, think of it as a recipe for your business, outlining what you need to do and when.
In the plan, you’ll outline your business concept, target market, competitive analysis, organizational structure, financial projections, and marketing strategy in a way where you can establish clear goals, identify potential challenges, and develop actionable steps for achieving your objectives.
A study by Palo Alto Software found that entrepreneurs who complete business plans are nearly twice as likely to successfully grow their businesses or obtain capital, emphasizing the importance of diligent planning in the early stages of a business.
Related: How to write a business plan
Step 3: Find the Money
In the previous step of creating a business, one of the sections was compiling a list of all the costs related to starting your business. If you skipped that step, either go back and get started on the plan or begin writing all of your costs down. This way, you will have a good idea of how much your startup will cost to launch. With this number in hand, you can look at whether your personal savings are enough or if you will need to find outside funding sources. If additional money is needed, here are some common ones:
- Bank loans: Many Idaho-based banks offer business loans to small businesses, and these funds can be used for various purposes, including working capital, equipment, and real estate. Banks typically require a strong credit score, a comprehensive business plan, collateral, and a personal investment of at least 15% of the total project to secure funding.
- SBA loan guarantees: The Small Business Administration (SBA) provides loan guarantees to small businesses that may not qualify for traditional bank loans. These guarantees reduce the risk for lenders, making them more willing to extend credit to small businesses. The SBA 7(a) Loan Program is a popular option for entrepreneurs in Idaho, offering flexible terms and competitive interest rates. To be eligible, businesses must meet SBA size standards and demonstrate a good credit history, among other requirements.
- Friends and family: This source of funding tends to be more flexible than a bank loan, but it should still be handled professionally. To keep your relationships intact, write down the terms and conditions since business can be unpredictable.
- Microloan programs: Microloans are smaller loans, usually up to $150,000, for small businesses that may not be eligible for traditional bank funding. A few active microloan programs in the state include the Regional Development Alliance, Janus, and Business Impact Northwest.
- Investors: Idaho entrepreneurs can also seek funding from angel investors, venture capitalists, or other private investors. These investors provide capital in exchange for equity or debt in the business. To attract investors, businesses need a compelling pitch, strong growth potential, and a clear exit strategy.
- State and local programs: The Idaho Department of Commerce offers various financial assistance programs that provide incentives, tax credits, and loan guarantees to support business growth and job creation.
Step 4: Select a Business Structure
A business structure (also called a business entity) is the way a business is legally structured to operate. This decision can impact the owner’s personal liability, taxation, and management. There are four primary types of business entities to consider: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).
A sole proprietorship is the easiest and lowest cost business structure to start and refers to a business owned by one person who has full control over all aspects of the business. The owner and the business are considered the same legally, which does not protect the owner’s assets should the business face legal or financial issues.
A general partnership is similar to the sole proprietorship, but instead of a single owner, the business is owned by two or more people who share responsibility for running the company and are jointly liable for its debts and obligations.
A corporation is a separate legal entity that is registered with the Idaho Secretary of State and can be held legally responsible for its actions. It provides limited liability protection to its owners but requires more paperwork than the other types of entities.
Related: How to form an Idaho Corporation
A Limited Liability Company (LLC) combines features of both sole proprietorships/partnerships and corporations in that it provides limited liability protection to its owners (called members) while allowing them to manage the business without all of the administrative burdens of the corporation.
Related: How to form an Idaho LLC
Forming a corporation or LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular formation services include:
IncFile - Great service and free registered agent the first year.
Northwest - Privacy-Focused: Free registered agent and private business address for 1 year!
ZenBusiness - Easy to use and free registered agent for 1 year!
Step 5: Register the Business
After setting up the legal structure, the next step is to research and obtain all necessary licenses and permits so the business can legally operate. The specific licenses and permits required for your business will vary depending on what your business does and its location, but some of the common registrations for small businesses in Idaho include:
- Business licenses: There is no state business license; however, many cities require a business license to operate. Some cities or counties in Idaho may require businesses to obtain a local business license or permit. Check with your local city or county clerk’s office for information on any specific requirements.
- Federal Employer Identification Number (EIN): Most businesses are required to obtain an EIN from the Internal Revenue Service (IRS) for tax purposes.
- Seller’s permit: Businesses selling products and certain services will need to register for a seller’s permit with the Idaho State Tax Commission.
- Assumed business name: If you plan to operate your business under a name different from your personal name (sole proprietor and partnership) or the registered name of a corporation or LLC, you must register an assumed business name (commonly referred to as a “Doing Business As” or DBA), with the Idaho Secretary of State.
- Professional licensing: Some services, such as appraisers, collection agents, therapists, driving instructors, and outfitters, require licensing in Idaho.
- Industry specific licensing: Depending on your business’s nature and location, you may need additional licenses or permits from state or local agencies. Examples include professional or occupational licenses, health and safety permits, and environmental permits.
Step 6: Open a Business Bank Account
Once the business is registered, you will have the information to open a business bank account. Keeping your business and personal finances in separate bank and credit card accounts makes it easier to track the business’s income and expenses in order to maintain clear, accurate records for tax reporting, financial analysis, and budgeting purposes.
Opening a business bank account in Idaho is similar to opening a personal one. You will need to provide some basic information about yourself and your business, such as name, address, contact information, and tax ID number. You may also need to provide business documents such as assumed name registration, articles of incorporation, or a certificate of good standing from the Secretary of State. After submitting all the required documents, you will be able to open your account and start using it right away.
Step 7: Hire Employees
The next phase of starting a business may include hiring employees. There are a lot of responsibilities in this step, starting with registering as a new employer. This involves having an Employer Identification Number from the Internal Revenue Service (IRS), in addition to registering for a Withholding Tax Number from the Idaho Department of Revenue and Unemployment Insurance Tax Account Number from the Idaho Department of Labor.
To ensure a successful hiring process and maintain compliance with state and federal regulations, employers are responsible for reporting new hires, verifying employees are eligible to work in the U.S., income tax withholding, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.
Step 8: Obtain Business Insurance
Next, we want to look at whether business insurance is necessary and, if so, which policies are needed. Having the right insurance coverage can safeguard your company’s assets, ensure business continuity, and protect your personal finances.
A few of the most common types of insurance for small businesses include property insurance, general liability insurance, professional liability insurance, workers’ compensation insurance, and commercial auto insurance. It’s important to understand the different types of coverage available and determine which ones are best suited for your particular situation.
Step 9: Set Up a Bookkeeping System
Tracking your income and expenses is a big deal when you’re running a business. It doesn’t matter if you’re jotting things down by hand, using a simple spreadsheet, diving into accounting software, or bringing in a professional to keep the books. You’ve got to have a clear system for tracking what money comes in and what goes out.
Not keeping your financial records straight can lead to unnecessary headaches, including penalties or increased focus from tax agencies.
Related: Setting up accounting for a business
This material is property of StartingYourBusiness.com
Common questions when starting a business in Idaho
What are the steps to starting an LLC in Idaho?
How much does it cost to start an LLC in Idaho?
The cost to file the Certificate of Organization with the Idaho Secretary of State, which is the paperwork to start an LLC in Idaho, is $100.
Does a sole proprietor need a business license in Idaho?
In Idaho, whether a sole proprietor needs a business license depends on the type of business they are running and where it’s located, not the business structure.
The state of Idaho itself does not require a general business license. However, certain professions and types of businesses may need specific licenses or permits to operate legally. Additionally, local governments (cities and counties) may have their own licensing requirements.
Idaho Small Business Resources
There are 188,603 small businesses in Idaho, which is 99.2% of all businesses in the state,1 and there are almost 360,000 people employed by these small businesses.2 Because of the economic impact of small businesses, there are a number of small business resources to help Idaho businesses start and grow. Some of these include:
- Idaho Business Wizard: State portal with information about licenses and permits for businesses.
- Idaho Small Business Development Center: The Idaho SBDC supports the growth and success of small businesses within the state.
- SCORE Idaho: A nonprofit association of volunteers that lays the foundation for business success through comprehensive education and mentorship programs.
- Idaho Women in Business: This organization provides resources and guidance for female entrepreneurs in Idaho.
- Idaho Veteran’s Chamber of Commerce: Supporting Idaho-based veterans in their entrepreneurial endeavors.