Starting a new business is an exciting and daunting experience! Brian Webb Legal is here to help. When forming a new business in Idaho, you might be wondering which type of business entity is best for your specific situation. Below is a collection of information we have compiled for you, to help you consider this major decision prior to meeting with us. See a comparison chart of the business entities recognized in the State of Idaho.
Sole Proprietorship
A sole proprietorship is an unincorporated business owned and run by one individual with no distinction between the business and the owner. The business owner is entitled to all profits and is responsible for all business debts, losses and liabilities. It is quick and easy to create, however the disadvantage is that the no personal liability protection.
Partnership
A partnership is a single unincorporated business business owned and operated by two or more individuals. Similar to a sole proprietorship, a general partnership is easy to create and start, but offers no personal liability protection Any debts, losses, or liabilities are divided among the partners. If you choose to create a partnership entity, we strongly recommend creating an operational agreement.
Limited Liability Company (LLC)
An LLC is a business that is its own legal entity, and has its own EIN. An LLC is responsible for its own debts and lawsuits, not the owners. It can be a single member or a multi-member LLC. LLC’s don’t have the burdensome and expensive regulations and formalities of a C corp, or S corp, making it an great way to start a small business in Idaho.
S Corporation (S Corp)
An S Corp is a type of corporation created through an IRS tax election. An eligible domestic corporation can avoid double taxation, which means you pay tax at the personal rate and your profits are your salary. S Corps are often recommended for smaller entities and start-ups because they provide liability protection, and can reduce tax burden.
Corporation (C Corp)
A C Corp is an independent legal entity owned by shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs. A C Corp files and pays corporate income taxes directly. Corporations can be more complex than other business structures because they have additional tax and legal requirements. Corporations are generally suggested for established larger companies with multiple employees.
Yes, you can create your business entity by printing off the required forms from the internet. However if you are not sure which entity is right for you, it makes sense to get an expert opinion, and if needed, have an experienced business attorney guide you through the process and help you avoid common mistakes.
If you are in need of assistance in getting your new business launched, the lawyers at Brian Webb Legal are happy to help. Call to schedule your consultation today at 208-331-9393.