Starting a new business can be an exciting adventure, but many people get bogged down before they ever hang out an “Open” sign. There are many legal obligations to running a small business, and navigating the system and filing the proper paperwork the right way can stall your grand opening if done incorrectly.

That's why I have made it my business to help new Idaho businesses get off the ground. I've helped dozens of businesses in North Idaho with the legal paperwork required to start a small business. Here are some of the things that a small business in Idaho needs to get started:

CHOOSING A BUSINESS STRUCTURE

Whether your new company will be an LLC, an S-Corp, a C-Corp, or a sole proprietorship, you must decide on a legal structure for your business. There are pros and cons to each of these structures.

An LLC, or Limited Liability Company, protects you and your personal assets from liability if your business ever gets sued or declares bankruptcy. This means that your personal home and other assets won't be at risk. With an LLC, you can file your taxes as part of your personal income, but you will probably have to pay self-employment tax.

An S-Corp is a corporation that, for federal tax purposes, is treated as a pass-through entity, meaning that S-Corps are taxed under Subchapter S of the Internal Revenue Code (IRC), which is where the name “S-Corp” comes from. An S-Corp can issue stock, has governors (board of directors, officers, and shareholders). Owners of an S-Corp enjoy the same personal protection from liability as with a C-Corp; however, an S-Corp passes its income and loss through shareholders, eliminating the “double taxation” of having to pay taxes as both the owner and the company. Each shareholder is subject to his or her own individual tax rate on profits and losses passed through to him or her, recorded as net income on a tax return.

A C-Corp creates a legal entity that is entirely separate from the owner(s). Structuring your business as a corporation provides the greatest level of personal protection from liability, but they are more expensive and complicated to form, and they file a separate income tax on their profits.

REGISTERING YOUR BUSINESS NAME

Once you've decided on a structure for your business, you will need to register your business name with the Secretary of State of the state where your business is located. There are a few ways you can register your business name:

•  An Entity Name, which legally protects your business at the state level

• A Trademark, which legally protects your business at the federal level

• A DBA (Doing Business As), which doesn't offer any legal protection, but may still be required, depending on your location and business structure

• A domain name, which claims your business' web address. (optional, but recommended)

APPLY FOR A FEDERAL TAX ID NUMBER

Your federal tax identification number, also known as an EIN, allows you to legally hire employees, pay federal taxes, apply for business licenses, and open a business bank account. Your business will need an EIN if you plan on hiring and paying employees, filing employer tax returns, operating as a corporation, or use a tax-deferred pension plan.

APPLY FOR A STATE TAX ID NUMBER

Some states don't require a state tax ID number as they do not collect taxes from businesses, but tax obligations vary from state to state, so this may be another item to put on your checklist.

OBTAIN BUSINESS LICENSES AND PERMITS

Depending on the type of business you're starting, you may need to get licenses and permits at the state and federal level. State licenses and permits vary depending on your location and what your primary business activities entail.

PROTECT YOUR BUSINESS WITH INSURANCE

It's a good idea for all businesses to have some level of business insurance, for further personal liability protection, even with the protection of a specific business structure. Business insurance protects not just your personal assets, but can protect some of your business assets, as well. Some types of insurance are required by law - unemployment and disability insurance, for example - but it may be a good idea to purchase business insurance as well, to protect your new business from risks. Some common business insurance types are general liability insurance, product liability insurance, and commercial property insurance.

This list of five things will need to be completed before you can open a business bank account. If all of this seems daunting, DON'T PANIC! That's why I started my consulting firm: to help small businesses through every stage of their business, from start-up to flourishing! For just $199 (plus filing fees), I will do all the research, legwork, paperwork, notary, and filing of the forms you will need to complete the set up of your small business. Learn more about this service or contact me at (208) 755-8335 or email me at debbie@debbieaferguson.com