Idaho LLC advantages and disadvantages
An Idaho LLC advantages and disadvantages
- Idaho LLC offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like alimited partnership
or a Subchapter S Corporation,
are generally prime candidates for a business juststarting. The state of Idaho gives public support to an Idaho LLC.
An Idaho LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Idaho to your LLC. Your Idaho LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Idaho LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.
Should I form a Idaho LLC?
An advantage of a Idaho LLC is that you can gain the protection of law in terms of separating out your personal assets
from the future liabilities of your Idaho LLC as it conducts business, and where its creditors could look into litigation
in order to satisfy the LLC's financial obligations. A tax benefit of an LLC is that your Idaho LLC qualifies as a "pass
through" vehicle, accordingly is not taxed at either the state of federal level, so long as your Idaho LLC remains in good corporate standing. Indeed, failure to maintain good standing in terms of corporate formalitiees and related filings could mean that your Idaho LLC could be re-classified as a corporation by the Federal Government, thus establishing an immediate corporate tax liability and possible fines and penalties.
Idaho LLC Advantages and Disadvantages
Advantages of LLC
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of LLC
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By Idaho and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing
your llc purpose, the names of your initial Idaho LLC members, the name and address of your Idaho registered agent,
the details of which will be introduced into the body of your LLC operating agreement and related Idaho LLC formation
documents assembled for application to the state of Idaho.
Idaho’s 2009 Business Tax Climate Ranks 29th
Idaho ranks 29th in the Nation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. The ranks of neighboring states were as follows: Washington (12th), Oregon (9th), Nevada (3rd), Utah (11th), Wyoming (1st), and Montana (6th).
Idaho’s Individual Income Tax System
Idaho's personal income tax system consists of eight brackets with top rate of 7.8% kicking in at an income level of $24,736. That top rate ranks the state 10th highest among states levying personal income taxes. Idaho's 2006 individual income tax collections were $846 per person, which ranks 25th highest nationally.
Idaho’s Corporate Income Tax System
Idaho's corporate tax structure consists of a flat rate of 7.6% on all corporate income. Among states levying corporate income taxes, Idaho's rate ranks 20th highest nationally. In 2007, state-level corporate tax collections (excluding local taxes) were $127 per capita, which ranks the state 34th among states that tax corporate income.
| Idaho LLC advantages and disadvantages