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Business Taxes Payable by Your Idaho LLC

Business taxes are a fact of life, and your LLC will need to pay a variety of taxes to both the federal and Idaho governments. We’ll cover all the main taxes in Idaho including self-employment, payroll, federal, state tax and Idaho sales tax.

If you want help with your taxes, Incfile provides a complete Business Tax Filing service.

How Your Idaho LLC Will Be Taxed

The profits of a Idaho LLC are not taxed at the business level like those of C Corporations. Instead, taxes for a Idaho LLC work as follows:

  • 1

    Idaho LLC owners pay self-employment tax on business profits.

  • 2

    Idaho LLC owners pay state tax on dividends and interest.

  • 3

    All LLC owners pay federal income tax on any profits less federal allowances or deductions.

  • 4

    Employers pay payroll tax on any salaries they pay to employees.

  • 5

    Employees pay federal, state and payroll tax on their earnings.

Items 1, 2 and 3 are taxed as “pass-through” income for any LLC owners, managers or members who receive profits from the business. Any profits are reported on federal and Idaho personal tax returns, and that’s where you will pay those taxes.

Taxes Payable to the Idaho Tax Commission

There are two main types of tax that you will pay to the Idaho Tax Commission: state income tax and state sales tax.

Idaho State Tax on Your LLC Earnings

As an Idaho business owner, you will need to pay ID state tax on any money you pay to yourself. These earnings flow through to your personal tax return, which is where you will pay Idaho income tax. You will be taxed at the standard rates for Idaho state taxes, and you will also get to apply regular allowances and deductions.

Any salaried employees will also need to pay personal Idaho state taxes.

The Idaho state tax rates vary between 1.125% to 6.925% on taxable income. Individual income tax is graduated so higher earnings are taxed at a higher rate.

Get details on the Idaho state tax online here.

Your Idaho Sales Taxes

If you sell physical products or certain types of services, you may need to collect sales tax (also known as sales and use tax) and then pay it to the ID Tax Commission. Idaho sales tax is collected at the point of purchase. Idaho sales tax rates do vary depending on the region, county or city where you are located.

You will typically need to collect sales tax on:

  • Tangible, personal property and goods that you sell like furniture, cars, electronics, appliances, books, raw materials, etc.
  • Certain services that your Idaho business might provide

Most states do not levy sales tax on goods that are considered necessities, like food, medications, clothing or gas.

Get details on the Idaho state tax online here.

Federal Self-Employment and Income Taxes for Your Idaho LLC

There are a couple of different federal taxes that every LLC will need to pay, including Idaho LLCs. These are self-employment tax and federal income tax, which are taxed as “pass-through” income via your tax return forms.

Federal Self-Employment Tax

All Idaho LLC business members or managers who take profits out of the LLC will need to pay self-employment tax. This tax is also known as FICA, Social Security or Medicare tax. It applies to all the earnings you withdraw from your Idaho business. The current self-employment tax rate is 15.3 percent.

You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:

  • On profits of $20,000, you would pay self-employment tax of $3,060.
  • On profits of $50,000, you would pay self-employment tax of $7,650.
  • On profits of $80,000, you would pay self-employment tax of $12,240.
  • On profits of $120,000, you would pay self-employment tax of $18,360.

Pay Less Self-Employment Tax by Treating Your Idaho LLC as an S Corporation

The Internal Revenue Service allows LLCs to ask to be treated as an S Corporation for tax purposes. This can help you reduce the amount of self-employment tax that you pay by declaring some of your income as salary and other income as distributions or withdrawals.

You can do this by making an “S Corporation Tax Election” with the IRS using a form known as Form 2553. We can file your Form 2553 with the IRS on your behalf.

Incfile form 2553 S Corporation tax election for an LLC service

Speak to your accountant for more information on reducing your Idaho LLC self-employment tax through an S Corporation tax election.

Federal Income Tax

You must also pay regular federal income tax on any earnings you take out of your Idaho LLC. The amount of income tax you pay depends on your earnings, current income tax brackets, deductions and how you file.

You only pay federal income tax on your LLC profits that you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus LLC business expenses and other deductions for areas such as healthcare and some retirement plans. Speak to your accountant for more information.

Employee and Employer Taxes for Your Idaho LLC

If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your own unique situation.

FAQs on Idaho LLC Business Taxes

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