How to Start a Business in Idaho in 8 Steps
When most people think of Idaho, potatoes and stones typically come to mind. This is no surprise, as Idaho produces more potatoes than any other state. It’s also home to over 72 types of precious and semi-precious stones.
Idaho’s entrepreneurial culture, however, often gets overlooked. If you’d like to start a business, Idaho is a great place to do so. It’s full of innovation and is consistently one of the top places for patents per capita.
Additionally, The Gem State has no shortage of business incubators such as the Idaho Innovation Center and Alturas Technology Park that can put you on the path toward success.
So if you’re wondering how to start a business in Idaho, you’re in luck because we’ve created this step-by-step guide.
If you have a business idea in mind, it’s a good idea to familiarize yourself with the following eight steps. This way, you’ll know exactly what it takes to bring your vision to life. From designing a business plan and selecting your entity all the way to obtaining financing, we’ll cover it all.
Step 1: Design a Business Plan
A strategic business plan is the first step to starting a business in Idaho. Essentially, a business plan is a roadmap for your business. It outlines your goals and how you plan to achieve them. In addition to keeping you focused, a business plan can attract investors and help you secure financing down the road. Make sure your business plan includes these components:
- Executive Summary: The executive summary should offer a quick overview of the issue your business solves, your solution to the problem, your target market, and financial highlights.
- Business Description: In the business description, indicate your business goals and the customers you hope to serve. You should also discuss how your business will stand out from competitors in your industry.
- Products and Services: In the products and services section, include key information on your offerings. Share any relevant copyright or patent information. Also, focus on how your products and/or services will benefit customers.
- Market Analysis: The goal of the market analysis is to dive deep into your industry, competitors, and customer demographics.
- Finances: Ideally, the finances section would include a sales forecast, profit and loss statement, balance sheet, and cash flow statement.
- Management: The management part of your business plan will introduce the managers in your business and summarize their skills and job responsibilities. You may want to create a diagram that shows your chain of command. This is also a great place to mention your business structure and whether you have a board of directors.
Step 2: Choose a Location
Fortunately, Idaho is in a prime Central Northwest location. It’s close to a handful of states including Washington, Oregon, Nevada, Montana, Wyoming, and Utah. While it may be tempting to choose a location near your home or in an area you personally enjoy, be strategic.
Customers want different things in different places. So think about your target audience and where they live. If you know they’re likely in Boise, it doesn’t make sense to select a location in Idaho Falls or Rexburg.
Additionally, consider your competitors. Ideally, you’d choose a location with less competition. You should also keep material and shipping costs in mind. If you plan to buy the bulk of your materials in one city, you may want to run your business out of there.
Step 3: Select Your Business Entity
The business entities in Idaho include: general partnerships, limited partnerships (LP), limited liability partnerships (LLP), limited liability companies (LLC), and corporations. The business entity you select will depend on the nature of your business and your particular goals and preferences.
Keep in mind that unless you choose a business entity and register it with Idaho’s Secretary of State’s office, your business will be considered a sole proprietorship. If you opt for a sole proprietorship, understand that you will be personally liable for any debts your business incurs.
To register your business entity, you’ll need to complete a form such as an Articles of Incorporation or Limited Liability Company Certificate of Organization. Once you do, both your legal structure and business name will be registered. If you’d like your business to be a sole proprietorship, all you have to do is register your business name. You won’t have to fill out any additional forms.
We recommend consulting with a business attorney if you’re unsure which business entity is best for your new venture. After all, your business entity will affect how you pay taxes, your degree of personal liability, how your business is structured, and more.
Step 4: Request an Employer Identification Number
Idaho does not issue a state tax identification number. However, you will be required to obtain a federal employer identification number (EIN), unless you are a sole proprietor who has no employees. Even then, there are benefits to obtaining an EIN that you may want to consider. You can request an EIN online for free on the IRS’ website.
Once you receive an EIN, you’ll use it on your federal and Idaho business income tax documents. An EIN will also be useful when it comes time for you to open a business bank account, establish credit, and hire employees.
Step 5: Apply for Business Licenses and Permits
Depending on your business type and location, you may need certain licenses and permits. Here’s a brief overview of some of the most common ones.
- Business Licenses: While the state of Idaho does not have a general business license, a number of cities require a business license in order to operate.
- Seller’s Permit: If you’ll be selling products and certain services, you may need to apply for a seller’s permit with the Idaho State Tax Commission.
- Professional Licenses: Depending on the service you offer, you may need to obtain a professional license to run your business. Professional licenses are necessary for individuals such as therapists, driving instructors, and collection agents.
Step 6: Get Insured
With business insurance, you can manage risks and grow your business. Although the type of insurance you should invest in will depend on your niche and circumstances, the most common types of business insurance include:
- General Liability Insurance: General liability insurance can protect your business from bodily injury, property damage, and personal injury claims. For example, if you own a restaurant and a customer falls on a slippery floor, general liability insurance will defend you if they file a lawsuit.
- Workers Compensation Insurance: Idaho requires workers compensation insurance for most businesses with one or more employees. This type of insurance can cover you in the event one of your employees gets injured on the job. If one of your employees sustains an injury and you do not have workers compensation insurance, you’ll be personally on the hook for their medical bills and lost wages.
- Professional Liability Insurance: If your business hires lawyers, accountants, doctors, or other professionals, professional liability insurance can protect them against negligence and other claims your customers may initiate.
- Product Liability Insurance: Product liability insurance may make sense if you’re selling a tangible product. It can save you in the event of lawsuits related to design flaws, manufacturing flaws, or insufficient product directions.
Step 7: Open a Business Bank Account
No matter the size or scope of your business, opening a business bank account is a wise move. First and foremost, a business bank account can help you separate your personal and business expenses and reduce the risk of confusion during tax time.
Also, if you decide to incorporate your business, a business bank account will be required. Lastly, a business bank account often comes with convenient perks such as higher credit limits and longer billing cycles than your personal bank account.
Before you move forward with a business account, do some research and explore all the options at your disposal. Remember that no two business bank accounts are exactly alike so it’s well worth your time to weigh the pros and cons of each. Once you find an account you like, get out your EIN and you’ll be ready to open it. Once this is done, look into business credit cards next so you can fully separate your personal and business finances.
Step 8: Fund Your Business
Unless you have a ton of cash on hand, you’ll likely need to secure some type of financing to get your business up and running. From crowdfunding and SBA loans to credit cards and traditional bank loans, there are plenty of options out there.
Keep in mind that traditional business loans are more difficult for a new business to qualify for, as they don’t have the time in business and revenue history that most lenders are looking for. However, startup businesses still have options, including SBA microloans, equipment financing, and personal loans for business use.
The state of Idaho also offers their own resources for entrepreneurs. Check out the Financing Your Business page on Idaho.gov’s website for detailed information on the loan and grant options that are available. Keep in mind that you may not qualify for each type of financing so it’s important to find out the eligibility requirements for each.
Also, remember that you’ll likely need to provide a business plan, financial statement, balance sheet, and income statement to get approved for funding.
The Bottom Line
Fortunately, starting a business in Idaho is a pretty simple, straightforward process. As long as you follow the steps we’ve discussed above, you should have no issues. If you’d like more information, we encourage you to check out the Business page on Idaho.gov. It’s full of useful, state-specific tips on how to start and run a business, file taxes, and hire employees.
- Sos.idaho.gov. “Choosing a Business Entity”
- Irs.gov. “Apply for an Employer Identification Number (EIN) Online”