Articles of Organization

In order to get your Idaho LLC up and running, you must first file articles of organization with the Idaho Secretary of State, along with a $100 filing fee. The filing fee is $120 if the articles of organization are not typed or if they include attachments.

Your LLC is considered officially "organized" when the original and one copy of the articles of organization are received by the Idaho Secretary of State's office with the filing fee. The articles of organization must contain the following information:

• The company name
• The street address of the LLC's registered office in Idaho
• The name of the LLC's registered agent at that office
• A statement as to whether the LLC will be manager-managed or member-managed
• If the LLC will be manager-managed, the names and business addresses of the initial manager(s)
• If the LLC will be member-managed, the names and addresses of the initial member(s)

The articles must be executed (signed) by one of the following:

• A manager if the LLC will be manager-managed
• A member if the LLC will be member-managed
• An organizer if the LLC has not yet been formed
• An attorney-in-fact
• A fiduciary if the LLC is in the hands of a receiver, trustee, or other court-appointed fiduciary

An organizer can be any natural person over the age of 18, or a legal entity such as a corporation-but they don't have to be a member of the LLC. The person signing the articles must indicate beneath or opposite his or her signature their name and title within the LLC.

The articles can also contain other items that the members desire to include (presuming they don't conflict with state law), even if they are also included in the operating agreement.

One certified copy of the articles of organization will be issued by the Secretary of State's office, and the other certified copy will be returned to the organizer or members.

Registered Agent and Office

Idaho LLCs are required to have a registered in-state agent to receive official administrative and legal correspondence from the state. The registered agent can be an individual Idaho resident, or an LLC or corporation authorized to do business in the state. The business office of the registered agent must be the same as the registered office, and it must not be just a Post Office box.

The registered office may be any place of the LLC's business in Idaho.

Operating Agreement

Another vital document for the LLC is the operating agreement. The state doesn't officially require your LLC to have this-but it's important because it officially documents how your LLC will operate. The operating agreement should name the members, specify how much each member has invested, explain how profits will be divided, and state how much proportional "weight" each member has when issues are voted upon. This can be amended in a way that's specified by the agreement itself, or in a manner permitted by state law.

If the LLC has more than one member, the initial operating agreement must be approved in writing by all the members.

The operating agreement may also set forth meeting requirements such as the amount of required notice, what constitutes a quorum, voting rules, and so on, but it doesn't have to. Normally, however, the operating agreement does list requirements for the LLC that are already listed in state law and regulations. It can also include such items as restrictions or constraints on the power of the members to adopt, amend, or repeal the operating agreement. If there is more than one member, the operating agreement must initially be approved unanimously in writing by the members.

Membership in the LLC

An LLC is required to have one or more members; each member must be either a natural person or a business entity. Members may become a member of or acquire an interest in the LLC when it is first started (using the method set forth in the operating agreement), or with the written approval of all the LLC's members.

To join the LLC, the prospective member usually needs to make a contribution of some kind-for instance, pay cash or transfer property to the LLC-or make a binding obligation to do so. However, a member may be admitted to the LLC without acquiring a membership interest if the rules in the articles of organization and operating agreement permit it, or if the members vote to do so and the admission is documented in the LLC's records.

An LLC member can only resign in accordance with procedures stated in the articles of organization or the operating agreement. In Idaho, a member may resign after giving 30 days' written notice to all the other members, or as specified in the operating agreement. Some operating agreements prohibit withdrawal for the life of the LLC.

If the member has the right to withdraw, but the withdrawal still breaches the operating agreement, or if the withdrawal occurs as a result of the member's wrongful conduct, the LLC can recover damages, including the costs of replacing the services the withdrawn member was obligated to perform. The LLC may also offset these damages against the amount otherwise distributable to the member, in addition to pursuing any remedies provided for in an operating agreement or otherwise available under law.

Unless the operating agreement states otherwise, the dissociation (loss of membership rights) of an LLC member automatically causes the LLC to dissolve unless all the remaining members vote to continue the LLC within 90 days of the dissociation.

Unless otherwise stated in the operating agreement, managers are elected, removed, or replaced by a vote of more than half the members, and serve for an indefinite term.

Ongoing Requirements

Idaho LLCs must file an annual report with the Idaho Secretary of State's office before the last business day of the anniversary month of the LLC's organization. Unlike most states, there is no filing fee if the report is filed by the due date. The report must include the following information:

• The LLC's name and the state or country where it was organized
• The street address of its registered office
• The name of the LLC's registered agent at that office
• The street address of the LLC's principal place of business
• If the LLC is manager-managed, the names and addresses of the manager(s)
• If the LLC is member-managed, the names and addresses of the current member(s)

Idaho LLCs are also required to keep the following records and documents open for inspection at its principal office:

• A list of all current and former members and managers
• A copy of the articles of organization and any amendments
• Any powers of attorney under which the articles have been executed
• Copies of the LLC's federal, state, and local income tax returns and financial statements, for the past three years
• Copies of current and former operating agreements and any amendments
• A document listing the amount of cash and/or agreed value of property or services contributed by each member
• Times or events that would trigger any additional member contributions
• A document specifying any events that would require the dissolution of the LLC

Also, it's a very good idea to keep on file and available the minutes of the meeting of the board and any committees of the owners or members.

Dissolution

An LLC is dissolved when any one of the following events occurs:

• Event(s) specified in the articles of organization or operating agreement that
• All LLC members agree in writing to dissolve the LLC
• A member's dissociation (loss of membership rights) unless all members consent to continue the business within 90 days
• Event that makes it illegal for the LLC to continue
• A court order ordering dissolution
• Administrative dissolution

Taxes

An LLC does offer some tax advantages over a corporation's structure, including the availability of more deductions. The biggest advantage is that an LLC is not required to be a separate tax entity like a corporation. Instead, it can be a "pass-through entity" for tax purposes, so that the LLC owners (members) show business losses or profits on their personal tax returns.

Idaho's business income tax rate is 7.6 percent of taxable Idaho income. The state imposes a minimum tax of $20 on all companies.

Articles of Incorporation

Idaho state law requires that articles of incorporation are filed with the Idaho Secretary of State by one or more incorporators with the following requirements:

• The incorporator signs and files the articles of incorporation with the Secretary of State.
• The name and address of each incorporator.
• The articles must specify the number of shares of each class that the corporation is authorized to issue.

The filing fee is $100. If the articles are not typed or if attachments are included, the filing fee is $120.

Some other items that aren't required-but which may be included in the articles of incorporation-are:

• The names and addresses of the initial directors.
• Eligibility requirements to be a director.
• The corporate purpose.
• Circumstances where shareholders can be liable for corporate debts.
• Provisions for managing the business and regulating the affairs of the corporation.
• Personal shareholder liability for corporate debts in certain situations.
• Limitation of directors' liability to the corporation or its shareholders in certain situations.

Registered Agent and Office

Idaho corporations must have a registered in-state agent-either a natural person who is an Idaho resident or a corporation authorized to conduct business in the Gem State. The registered agent must have a business office that is the same as the registered office.

Bylaws

A corporation is required to keep its bylaws available at its primary executive office, but it is not required to file them with the state. The incorporators or board of directors should adopt the corporation's bylaws at their first meeting, insuring that there is no conflict with the corporation's articles of incorporation. They should also keep them updated as time goes on. Bylaws set forth the corporation's basic operating principles from both the managerial and legal perspectives, and should include (as a minimum):

• What authority directors have, how many there are, and how long they serve
• Duties and responsibilities of officers and how long they serve
• How consensus on major decisions is reached, both with and without meetings
• How, when, and where shareholders' and directors' meetings are held
• How the corporation's stock is issued
• Requirements for publishing annual financial information to shareholders

Directors and Officers

The board of directors makes the corporation's major decisions. Directors must be natural persons of at least 18 years of age; the articles of incorporation or bylaws may prescribe additional qualifications.

Officers of the company must be either listed in the bylaws or elected by the board. At least one officer must authenticate the corporation's records, as well as prepare the minutes of directors' and shareholders meetings. Any officer may hold more than one office in the corporation, unless otherwise prohibited by law or the corporation's articles of incorporation or bylaws.

The board must also report certain information about director indemnification and expenses and promissory note issuance to all shareholders with or before notice of the next shareholders' meeting.

Required Reports

Idaho corporations must file a report with the Idaho Secretary of State each year (except for the year of incorporation) that includes:

• The corporation's name and its state or country of incorporation
• The address of its registered in-state office and the name of its registered agent at that office
• The address to which officers' correspondence should be mailed
• The names and business addresses of the directors, president, and secretary

Taxes

Idaho's business income tax rate is 7.6 percent of taxable Idaho income. The state imposes a minimum tax of $20 on all companies.