Opening a Home-Based Business in Idaho
Idaho is an excellent state for entrepreneurs who want to open a home-based business. According to U.S. News, the state’s economy and population are both growing more rapidly than most other states. Idaho is both tax-friendly and business-friendly, which is reflected by the fact that an average of 6.1 new jobs are created during a new company’s first year. If you are thinking about opening a home-based business in Idaho, this checklist can help you get going along the right path.
Find Your Niche
Perhaps you already have an idea for your business, or maybe you are still looking for a concept. Either way, you need to define the services or products that you plan to offer. Make sure that your idea plays to your personal interests and strengths. Before you proceed, conduct some research. You need to ascertain whether the demand for your products or services exists, how much competition you will have, and whether you can offer the product or service in a unique manner, at a lower price, or in less time.
Check for Restrictions
There might be legal restrictions that could prevent you from operating a home-based business. Be sure to check your local zoning laws, lease, or HOA agreement for any restrictions. Some restrictions could apply to all types of home-based businesses, but others may only cover hazardous materials, signage, parking, or traffic.
Choose a Legal Structure
In Idaho, you can choose to make your business a sole proprietorship, a partnership, a corporation, or a limited liability company.
• A sole proprietorship is the most common choice among people starting a home-based business due to its simplicity. The primary drawback to a sole proprietorship is that your company is not a separate entity in the eyes of the law, so you remain personally liable for any debts, court-ordered payments, or commitments made or incurred by your business. You will report income and expenses for your business when you file your personal income tax return.
• A partnership is similar to a sole proprietorship in terms of taxes and liabilities. The primary difference is that it takes at least two people to form a partnership.
• A corporation is a complex and costly legal structure that requires a great deal of paperwork to create and administrate. It does offer the most protection for your personal assets; your liability is typically limited to the funds you invest in the corporation. However, there are tax issues to consider; your corporation is taxed on its revenue, then you are taxed on the income you receive from the corporation. Few home-based businesses need to incorporate right away, but it is common for entrepreneurs to switch to a corporation after being in business for several years.
• A limited liability company is a popular choice that combines some of the benefits of a corporation with the benefits of a sole proprietorship. Like a corporation, you can shield your personal assets. An LLC lets you avoid the double taxation present with a corporation; like a sole proprietorship, your company’s revenue and expenses are reported when you file your personal income tax return.
Determine Whether You Need a Registered Agent
A registered agent is a business or individual having a physical address in the state in which an LLC or a corporation transacts business. Your registered agent must be available to receive legal notices, communications or forms sent by the state, or summons on your behalf during normal business hours. Although you can designate yourself, a relative, or any other person to serve as your registered agent, this can limit their ability to be away from the stated address during business hours. At PhysicalAddress.com, we do not charge for serving as your registered agent if you utilize one of our other, highly economical services.
Choose a Virtual Address Service
You will need to register your home-based business with the appropriate agencies, and the next section will cover this in more detail. However, what you need to understand is that your registrations become public records, so anyone with a basic understanding of the internet will be able to view your legal name and your home address. Idaho requires a street address for your business, and it does not accept addresses that are PMBs or UPS stores. Using a virtual business address provider is a great alternative to using your home address that is completely acceptable for your Idaho registrations. In addition to protecting your privacy, a virtual address can make your fledgling business appear more professional.
Register Your Business
You must register your business with the Idaho Secretary of State prior to conducting any business activities.
• If you are starting a partnership or sole proprietorship that will do business under any name other than your legal name, you will need to file an Assumed Business Name, sometimes called a fictitious name or a DBA.
• If you are forming a corporation or an LLC, the business name is registered during the entity registration.
• If your business will make retail sales or have employees, you must register with the Idaho Department of Labor, the Idaho Industrial Commission, and the Idaho State Tax Commission.
• Some cities in Idaho require business licenses. These are issued by the individual city clerk’s offices, so contact your local city clerk to determine whether you need one.
• If you are starting an LLC or a corporation, you will need a Federal Employer Identification Number, abbreviated as FEIN or EIN. This is optional for a sole proprietorship with no employees, but you might want to consider obtaining one.
Open a Bank Account in the Name of Your Business
Separating your personal and business accounts is an important part of protecting your assets, presenting a professional image, and establishing a credit history for your company. Depending on the bank’s policies, it may be possible for a sole proprietor to open a business account by presenting proof of the DBA. However, corporations and LLCs virtually always need to give the bank their FEIN to open an account.
Create a Business Plan
A good business plan is a roadmap that establishes your planned course from the day you open your doors through the company’s first five years. Your plan should include at least the following six sections.
• Executive Summary: This is a general overview of your company that supports your reasons for believing it will succeed.
• Business Description: This is a discussion of the advantages that customers can gain from patronizing your company.
• Staff: This section details who will manage your operations and the number of employees you will need.
• Services or Products: Discuss the products or services you will offer, including any unique aspects.
• Market Research and Marketing Plan: If you have conducted your own market research, discuss your target customers and likely competition. Your marketing plan should detail your strategy for attracting and retaining customers.
• Financial Forecast: Your financial forecast predicts your expenses and income as well as the assets and liabilities you will acquire.
If this seems daunting, you can enlist the services of an accountant to prepare your business plan. There are also several free templates you can download from the internet to guide you. Keep in mind that most lenders will want to see your business plan if you plan to finance equipment, seek a loan, or solicit investors.
Discuss Your Insurance Needs With Your Agent
If you have employees, you will need to consider workers’ compensation and unemployment insurance. You might also want to consider commercial property insurance and professional liability insurance.
Establish Your Presence on the Internet
A website is a vital part of a home-based business. There are a few providers that will give you a free template so that you can design your own website, or you can hire a freelancer to build you a custom site. You will need to choose a domain name and register it. Try to pick a domain name that is easy to remember and relevant to your business. You should also create a business page or profile on the social media sites. It is also a good idea to create a Google profile for the company.