Founding a Startup in Idaho
When you found a startup in Idaho, the format of the business matters to your success just as much as your minimum viable product. Starting a new business means choosing the type of company formed and considering the income tax implications of your choice. Let’s consider your options before you visit a business attorney.
What Form Will Your Company Take?
Few individuals found a corporation as a startup. Most people start with a limited liability company (LLC) or a professional limited liability company. A few found an S-corporation, which refers to a small business corporation.
These various types of businesses differ in many ways, including how each pays taxes and the ownership and management structure. With respect to taxes, the most popular choices include an LLC, corporation, and a partnership.
What The Forms Have in Common
Each of these formats for businesses require formal, legal establishment paperwork, including an operating agreement. This document includes general governance details of the business and its managers’ duties.
How The Forms Differ
More complex types of business, such as corporations and partnerships, require more paperwork. According to The Houston Chronicle, a corporation also requires the corporate charter, business bylaws, and the formation of a board of directors. To form a partnership requires filling a partnership agreement that defines the business’ structure, partners, profit sharing, buyout provisions, and much more.
LLCs, S-corporations, and partnerships all use a pass-through tax system, according to The Balance Money. That means that the business passes its earnings and losses to the owners, who pay personal income taxes on their share of the taxable income of the business.
Corporations exist as a separate tax entity. Their chief financial officer (CFO) files business taxes and pays taxes at the corporate tax rate.
How Do You Know Which Option Works Best for You?
Your new business differs from other businesses, so there can be no one-size-fits-all solution. When you decide to found a startup, contact business attorneys in Boise, ID. Meet with an attorney who specializes in the formation of companies to discuss how you will run your business and determine which options work best for your situation.
Your lawyer will also complete all the paperwork for you, ensuring your business meets compliance requirements. If you change your business in the future, you’ll need a lawyer again to update the filings, such as a partnership amendment.
Finding the right business lawyer can ensure that your startup meets and remains in compliance with local, state, and federal laws. Before you begin your business plan writing, contact a business attorney to plan your company’s format.