Incorporating your Idaho small business should be on top of your to-do list before officially launching your startup. It will help you protect your Idaho startup, shield yourself from liabilities and safeguard your consumers’ rights. To start the process, you need to choose a legal entity which best fits your business.
A number of legal structures are available for you to choose from; they include forming an LLC, sole proprietorship, general partnership and more.
However, one that can give you major advantages is starting a Corporation in Idaho. Some of the world’s most successful businesses are formed as corporations and you can be one of them too.
However, before you learn how to start a Corporation in Idaho, you need to understand that the business structure is not meant for all types of businesses. In this article, we’re going to talk about the pros and cons of starting an Idaho Corporation. At the end, we hope that you’ll be able to decide better if you want to incorporate under corporation or nor.
This is one of the best advantages of starting an Idaho Corporation. When you form your small business as a corporation, you distinguish your business as a separate entity.
The state of Idaho will then recognize your Idaho small business as an independent structure, having its own rights and is allowed to initiate its own transactions. Whatever your business does is not your responsibility since both of you are now considered different entities.
If your business encounters problems in the future, may they be financial or legal, you will not be accountable for the mistakes or issues faced by your business. Of course, you can defend your business and assist it as it hurdles its problems, however, you will not be liable for anything. Your personal assets will be safe and you’ll be saved from lawsuits and credit investigations.
For the majority of entrepreneurs, their business is the result of their blood, sweat and tears. It is their legacy, something that they want to continue on even when they’re no longer there to see it. In the natural flow of things, there’s a 100% chance that your Idaho small business will outlive you and your co-owners.
However, if you form your business as a corporation, you’ll be able to ensure its lifelong existence because in the state of Idaho, even when changes in ownership or management structure occur, state law will still allow your corporation to continue its operations.
As a separate entity, your Idaho Corporation is in charge of paying its own state taxes. Compared to other forms of entities, a corporation is subject to lenient tax laws.
As long as your business qualifies under the small business category and has active income throughout the year, it will be able to benefit from numerous deductions and reduced income taxes. When it comes to capital losses reports, corporations also have fewer restrictions. Business transparency is better, thus, corporations are spared from strict audits.
Building your business credibility can take years, however, it’s still important to register your small business legally to gain the trust of customers. Having the abbreviation “Co.” after your business name will definitely give you a boost of credibility.
A corporation’s management structure, although described as stiff and unbendable by most entrepreneurs is actually a key advantage that will allow you to manage your business smoothly.
The state requires all corporations to follow a structured management outline, from Board of Directors, shareholders, management team down to employees, every position must be clearly defined, including the scope and responsibilities of every job position.
Company goals are executed smoothly, decision making is easier, task delegation is distributed fairly and every person knows his/her role to play within the organization preventing work overlap.
These are just some of the most important advantages if you form an Idaho Corporation. If you want to make sure that your business is fit to be incorporated as a Corporation, you can consult with an attorney or (if you want to save money) you can use a business entity comparison chart.
As with most government transactions, forming an Idaho Corporation will take time, require effort and patience. It’s not an easy task so you need to prepare yourself; read, ask others who’ve done it before and do your own research. Aside from all these, you also need to prepare financially because the process certainly needs money.
Some of the government fees that you need to pay for include name reservation, certified records, professional fees and other essential charges that may apply when organizing an Idaho Corporation.
Double Taxation simply means being taxed twice for corporate income. This can be prevented if you don’t pay your shareholders in the form of dividends for their investments. If you do, every co-founder or owner who receives dividend income will also be charged with personal income tax and double taxation occurs.
With all the benefits and perks that you get out from running an Idaho Corporation, the entity is also subject to strict government regulations.
Aside from the IRS, which is one of the major government agencies monitoring state businesses, there are also other numerous agencies that regulate entities in Idaho. Expect that when you incorporate under corporation, you’ll also have many compliance requirements every year, which means additional cost and time.
Corporations are one of the most difficult entities to dissolve and with this comes their ability to establish perpetual existence. However, this can also be a big problem in the future.
There are instances when you have to formally dissolve a corporation to avoid legal repercussions and penalties, but a corporation is not that easy to dissolve. You need to file a lot of documents and go through so many steps, not to mention you also have to wait for approval. From formation, operation and dissolution, everything is highly regulated.
Unlike other business structures, a corporation is mandated by Idaho state law to comply with numerous corporate formalities. Its main purpose is to fully establish that your Idaho small business is a separate entity. Some of the corporate formalities that you need to follow include regular board meetings, employee conferences, safe record keeping of business activities and more.
Selecting the best legal entity for your Idaho startup can be challenging. If you don’t fully understand your responsibilities during this process, you have to thoroughly research and read so you can make the best decision. Or, you can go to your local county office and seek assistance on this matter. A lawyer can also help explain the different entities, as well as the entire process of incorporating your Idaho small business.
At the end of the day, it’s up to you to decide. If you feel like a corporation is not for you, there are other options left like forming an Idaho LLC. One thing that an Idaho Corporation can assure you however is protecting you and your business completely. Make sure to put your business first above everything else, without a doubt you’ll make the right decision!
Please be aware that this is not legal advice – it is solely an informational guide. For details on how to form a Corporation in Idaho or starting a business in Idaho, a lawyer has the best answers for you.