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What to Think About When Starting a Business

If you’re thinking of starting a new business, you will need to consider the business type that best suits your needs. Also, you may need to obtain an Individual Tax Identification Number. To be sure, if you own or operate any form of business, you will need to file taxes.

Why Would I Want to Create and Maintain a Business Structure?

  1. If your business creates jobs, a business structure will give you the advantage of being able to choose from a wide variety of tax incentives.

  2. You could obtain limited liability if you register your business.

  • Limited liability to some degree protects business owners from being sued. While it is impossible to completely remove the threat of being sued, a limited liability business entity or structure (hereafter referred to as “business structure”) decreases the business owner’s risk to the amount the owner has invested in the business, unless the business owners have given a personal guarantee or have committed a tort (a lawsuit for something that is their fault).

  • Limited liability formalizes your business structure with the state. You must file specific information with the government: typically your name, address, and contact information for a real person who can be served if the business is sued; the name under which the business will operate; and information relating to the rules by which the business will be governed.

For more information, or to register your business, visit the Idaho Secretary of State’s website: https://sos.idaho.gov/business-services-resources/.

What If I Don’t Have a Social Security Number?

  • If you are not eligible for a Social Security number, you will need to get an Individual Tax Identification Number (ITIN) from the Internal Revenue Service (IRS).

  • Instructions for an ITIN application can be found at https://www.irs.gov/individuals/individual-taxpayer-identification-number.

  • The information you provide is not shared with other government agencies.

  • For further assistance with this process, contact a tax professional, a tax attorney, or the IRS.

What Business Type Best Suits My Needs?

The major types of businesses include sole proprietor, general partnership, limited liability partnership, corporation, and limited liability company. The table below outlines some of the differences between these types.

Section 30 of the Idaho Statutes provides more detail. See Idaho Code § 30-21-201(1)-(5) and Idaho Code § 30-21-102(11)(A)(i)-(x) for business- structure filing requirements; Idaho Code § 30-29 for corporations; Idaho Code § 30-23 for partnerships and limited liability partnerships; and Idaho Code § 30-25 for limited liability companies.

Authors: Jonathan Meier, Student, College of Law, University of Idaho, Christy Dearien, Research Associate, Grant and Project Development, University of Idaho, John Rumel, Professor, College of Law, University of Idaho, Paul Lewin, Associate Professor and Extension Specialist, Agricultural Economics and Rural Sociology, University of Idaho

PLEASE NOTE: This handout does not offer or substitute for legal or tax advice.

This work was supported by the Agriculture and Food Research Initiative (AFRI) Award No. 2016-69006-24831 from the USDA National Institute of Food and Agriculture.