How to Form a Professional Corporation in Idaho (2024 Guide)

Steve Bennett
Business Formation Expert  |   Fact Checked by Editorial Team
Last updated: 
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Forming a Professional Corporation in Idaho

If you would like to start and learn how to form a corporation in Idaho, there are a few things that you should do now. However, in a professional corporation, professionals must create a special organizational structure to establish a professional or service corporation. Among the appropriate professions to organize a professional corporation in Idaho are accountants, physicians, engineers, architects, and attorneys.

Forming a professional corporation in Idaho or any business organization needs a certain number of steps. In this article, Webinarcare Editorial Team is going to share those steps. Keep in mind that these are general procedures. Depending on local law, it may be modified. For instance, your professional corporation may be subject to city or county-based rules.

What is a Professional Corporation in Idaho?

A professional service corporation (PSC), often known as a professional corporation (abbreviated as PC), is a particular type of organization that is permitted by state law to allow owners of specifically licensed professions to practice in the Idaho. A professional corporation’s owner is answerable for their own negligence or wrongdoing but is not held personally liable for the actions of other owners. The abbreviation PC or P.C. is frequently used to denote professional corporations.

This structure allows professionals to enjoy some of the benefits and protections of a traditional corporation while maintaining their professional status and abiding by the regulations of their respective licensing boards.

LegalZoom is the recommended corporation formation if you are thinking of forming a professional corporation from scratch. However, you can always start an LLC in Idaho, if you changed your mind.

WEBINARCARE EDITORIAL TEAM

How to Form a Professional Corporation in Idaho

To form a Professional Corporation in Idaho for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an Annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Idaho, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

To provide your service, you must be qualified and have a license. In most cases, you can now form a professional corporation after finishing your studies, passing the exam, and receiving your license. If you work in an industry that does not provide a license or professional certification, you should consider starting an LLC or corporation.

Step 2: Name your Professional Corporation in Idaho

After you have decided to form a professional corporation in Idaho, you must choose a name for your corporation. Here are some pointers to consider when naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • Limit of restricted words that need a license.
  • A unique name is needed with no match
  • No confusion with a government entity name.

In Idaho, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 4 months. You must file a name reservation application in the Idaho Secretary of State to keep the name.

If not already present, a professional corporation, professional association, service corporation, or professional service corporation must be included in the name. You may register your business under a different legal name if your preferred legal name is unavailable. Once you’ve decided on a name, you can apply for Idaho DBA (doing business as). This way, you can run a clinic or law firm under your name.

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Step 3: Choose the Idaho Registered Agent

The next step in forming a professional corporation is hiring a Registered Agent, who accepts legal paperwork for your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Idaho. Forming a professional corporation for your service will be easier if you have Registered Agent in Idaho.

Alternatively, you can serve as your own Registered Agent if you have the time. Usually, in Idaho, a Registered Agent costs is ranging from $50 – $150. To make it easier, you can hire Idaho Registered Agent Services for your professional corporation.

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Step 4: File the Articles of Incorporation in Idaho

After you hire a Registered Agent to form a professional corporation, the next step is to file the Idaho Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information, should be written. Include the names of all co-owners as well. All owners must demonstrate that they have the necessary licenses to practice the profession in question.

Filing the Articles of Incorporation in Idaho may be done with three ways, online, by mail and in-person. The Articles of Incorporation fee may vary from different state. However, in Idaho, it costs $120 for filing in-person and by mail. Create an account/Log in to the SOS site, get the online form, fill it, and submit online. For offline filing, Send the form by mail or drop it off in person to Office of the Office of the Secretary of State, 450 N 4th Street, P.O. Box 83720, Boise, ID 83720-0080.

Step 5: Write an Operating Agreement in Idaho

An operating agreement in Idaho is a document that contains all of your company’s organizational details. It is optional to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

Step 6: Designate the PC Board of Directors in Idaho

The next step is to form the first board of directors for your PC in Idaho. All of the initial directors must provide the owner with their contact information. The owner must keep records and submit them by the Idaho Secretary of State. As a shareholder and owner, you must ensure that a provision for appointing a new director is included in the By-laws. In Idaho, you must have Three directors in forming your Professional Corporation.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

Creating comprehensive corporate bylaws requires specific knowledge about the company, its structure, and operations. However, I can provide you with a general outline of what corporate bylaws usually include. It is crucial to consult with Idaho Business Attorney or a legal expert to ensure that your bylaws comply with the laws and regulations governing your jurisdiction and industry.

  • Name and Purpose of the Corporation
  • Registered Office and Agent
  • Shareholders
  • Board of Directors
  • Officers
  • Committees
  • Indemnification and Insurance
  • Conflict of Interest
  • Records and Reports
  • Amendments
  • Miscellaneous

Step 8: Hold the First Board of Directors’ Meeting

Gather the board of directors for the first meeting after drafting the corporate bylaws. This meeting will conclude with the appointment of directors to manage the company’s daily operations, approval of the bylaws, selection of the corporation’s financial reporting year, and approval of the stock issue. Minutes should be taken at all board meetings and kept with the company’s records.

Step 9: Request an EIN in Idaho.

After the operating agreement’s documentation, you should get or request an Employer Identification Number (EIN) in Idaho. The tax ID for your professional corporation will be an EIN. The Internal Revenue Service can provide an EIN (IRS). It has nine digits and is comparable to a social security number. Nevertheless, EIN is different from SSN. Only business-related tasks, primarily filing general taxes, are performed using it. The form needs to be filled out and submitted online to the IRS.

The application of an EIN in Idaho can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in several ways. It will give your professional corporation the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Step 10: Open a Bank Account and Prepare for Taxes.

You should open a business bank account as soon as you have applied for and received your Employer Identity Number because you will use this account for yourself, your clients, and your staff. Check out the Best Banks in Idaho for you to decide on which bank you are going to open an account.

Due to your organization’s increased legality and liquidity, having a US business bank account may make conducting business in Idaho easier. Most banks require an EIN for businesses other than sole proprietorships to open a business bank account. Also, keeping your accounts separate will prevent you from merging your personal and business finances. Also, filing taxes is simpler when you have an EIN. You can expect to pay employee and corporate taxes when you form a professional corporation.

Step 11: Get a Business License in Idaho

Before your professional corporation operates in Idaho, you must have Idaho Business License first. A business license is a formal document issued by a state government agency that allows you to conduct business in the geographic area governed by that agency. The cost of business licenses and permits in Idaho ranges from $50 – $300. You must check with the local authorities to see if any special licenses or permits are required.

Step 12: File Your Taxes in Idaho

Finally, you’ve arrived at the final process. Remember to file your taxes when you have obtained a business license and are ready to begin operations. To avoid a large tax bill, you should begin paying taxes quarterly as soon as possible. Each state has different tax requirements. Start examining the Idaho tax classification for the taxes that an LLC in Idaho must pay.

Main Characteristics of a Professional Corporation

In forming a Professional Corporation, the main characteristics must be distinguished before forming it. These are the general characteristics of forming a Professional Corporation in Idaho.

  • Limited Liability Protection: A professional corporation provides its owners, shareholders, or members limited liability protection like a regular corporation. This means the shareholders’ personal assets are generally protected from business debts, obligations, and lawsuits, except in malpractice or professional negligence cases.
  • Idaho Licensing Requirements: All shareholders must typically be licensed professionals in the same field in a professional corporation. The corporation must also comply with specific state regulations and licensing requirements that govern the profession.
  • Governance and Management: A professional corporation is governed by a board of directors, who the shareholders elect. The board appoints officers to manage the day-to-day operations of the corporation. All directors and officers must be licensed professionals in the same field as the corporation.
  • Taxation: Professional corporations are taxed as C corporations, where the corporation pays taxes on its income, and shareholders pay taxes on dividends received from the corporation. However, some professional corporations may be eligible for S corporation status, allowing pass-through taxation. Income, losses, deductions, and credits flow to the shareholders, who report this information on their income tax returns.
  • Restrictions on Ownership and Transfer of Shares: Professional corporations often restrict the ownership and transfer of shares to ensure that only licensed professionals in the same field can become shareholders. This helps maintain the professional nature of the corporation and adheres to state licensing requirements.
  • Malpractice Liability: While a professional corporation provides limited liability protection for general business debts and obligations, it does not shield shareholders from liability for their own malpractice or professional negligence. Shareholders can still be personally liable for their actions in providing professional services.

In summary, a professional corporation is a specialized corporate structure designed for licensed professionals, offering limited liability protection and a formal governance structure while adhering to state licensing requirements and regulations.

Maintain Professional and Business License in Idaho

You must maintain or renew your professional license regularly now that you have established your professional corporation. Even if your company is well-established, it is only meaningful if you have a valid operating license. And it makes no difference if your professional license is still valid for a year or two, but your business license has already expired.

Make time at least once a year to check the status of your licenses. You won’t miss anything important this way. You can address any issues that arise.

Filing Annual Report in Idaho

In Idaho, you must submit a report. The owners’ and Registered Agent’s names and contact details are listed in the Annual Report. Also, it should include all of your yearly financial activity. You must submit the report every 1 year (by the end of the anniversary month) in the Idaho Secretary of State.

FAQs

What is a professional corporation in Idaho?
A professional corporation in Idaho is a specific type of corporation formed by licensed professionals who require a specific license to practice their profession in Idaho.
What types of professionals can form a professional corporation in Idaho?
Professionals who can form a professional corporation in Idaho include lawyers, doctors, accountants, architects, and engineers.
Do all states have professional corporations?
Each state has its laws regarding professional corporations. Therefore, it is best to check with the Secretary of State to determine the regulations and requirements in an individual state.
What are the benefits of forming a professional corporation in Idaho?
Forming a professional corporation in Idaho provides limited personal liability protection for the owners, as well as other tax and financial benefits.
How long does it take to form a professional corporation in Idaho?
The timeline for forming a professional corporation in Idaho varies depending on factors, but on average, it takes two to four weeks.
How much does it cost to form a professional corporation in Idaho?
The cost of forming a professional corporation in Idaho varies depending on factors such as filing fees, documentation services, legal services, etc.
Can a professional corporation be formed by one person in Idaho?
Yes, an individual professional may form a professional corporation in Idaho.
Can foreign corporations form professional corporations in Idaho?
Yes, foreign corporations can form professional corporations in Idaho; however, legal guidance is necessary.
Can an existing corporation be converted to a professional corporation in Idaho?
No, an existing corporation can not be converted to a professional corporation in Idaho.
Is annual reporting required for a professional corporation in Idaho?
Yes, annual reporting is required for a professional corporation in Idaho, which includes paying the prescribed annual fee.
Does Idaho law restrict the ownership of professional corporations?
Idaho law restricts ownership of a professional corporation to licensed professionals who operate within their area of professional expertise and service.
Is there a residency requirement for shareholders and directors of a professional corporation in Idaho?
There is no residency requirement for shareholders and directors of a professional corporation in Idaho; The shareholders and directors can either be residents or non-residents of Idaho.
Can a professional corporation operate in multiple professional fields?
Yes, a professional corporation in Idaho can operate in multiple professional fields but can only offer services for the licensed professional fields of the company shareholders.
Does a professional corporation protect shareholders from personal liability in Idaho?
Yes, a professional corporation shields shareholders and officers from personal liability for any claims resulting from professional negligence and other liabilities provided the shield does not implore gross negligence.
Is there a cap on the number of shares allowed in a professional corporation in Idaho?
There is no cap on the number of shares allowed in a professional corporation in Idaho.
What should I consider when naming my professional corporation in Idaho?
The naming of a professional corporation in Idaho should adhere to the guidelines and regulations of specific authorities. At any point, if there is confusion on the best naming applies the licensing board and attorney recommendations.
Can sole proprietors incorporate as professional corporations in Idaho?
Yes, sole proprietors can incorporate as professional corporations in Idaho retaining compliance adherent regulations of concern entities.
Can out-of-state licensed professionals an acceptable party to expert ownership in a professional corporation in Idaho?
No, out-of-state licensed professionals cannot own controlling shares or manage a professional corporation in Idaho. With the requirements of owning and practicing the concerned profess careers in Idaho.
Is a professional corporation required to hold regular board meetings in Idaho?
Yes, it is mandatory for a professional corporation in Idaho to hold its board meetings upholding the guidelines laid in association with operating the meeting stipulations and regulators.
Can physicians form wellness plan corporation in Idaho?
Yes, physicians must acquire licensing for wellness-owned clubs or salons, not covered in Idaho business licensing regulation.
Can a professional corporation have non-professional shareholders in Idaho?
No, non-professional shareholders can not be shareholders of a professional corporation in Idaho.
Are professional corporations exempt from paying federal taxes in Idaho?
No, professional corporations responsible paying state and federal taxes, Income taxes social security and Medicaid contribution, well surpassing gains presented rules and capital allocation.
Can experienced intern help a professional corporation in Idaho?
Yes, licensed fresh graduate to work as an unlicensed intern in a specific pedagogy professional domain while cooperating mutually between law and oversight tenure designated community.
Can family members of licensed professionals be a shareholder in Idaho?
Yes, family member shareholders regarded as a licensed educator, professional, or employee in the pedagogy occupants of a company can function as significant shareholders.
Can corporations, including LLCs or trust companies, become partners in a professional corporation in Idaho?
No, corporations comprising trust entities and LLCs can’t become partners in a professional corporation in Idaho
Do professional corporations in Idaho require specific licensing fees?
Yes, the process for forming a professional corporation in Idaho entails payment of a certain licensing fee for the first session and annually indemnify for any under funds standing in yearly renewal.
Are good standing certification and proof of a license mandatory for forming a professional corporation in Idaho?
Yes, proof of a relevant license to be accrued for specified professions should belong to ensure an Idaho professional corporation standing ability.
Can nonresident shareholders retain ownership of a verified Idaho professional corporation?
Not necessarily, depending on proactive consistency resolutions with taxation, insurance coverage or with various tasks limiting ability of non-resident ownership for specific fields.
Does Idaho provide additional taxation exclusives for mutual trust or medical companies registered a second similar company branches in auxiliary states-regions?
Idaho grants no exclusive taxation related breaks in lieu of multi-local amenities, assets or firms associated with registered trusts, expanding chains to be higher works and remitted tax managers among others urging entities raise revenue income deductibles.
What is a professional corporation (PC) in Idaho?
A professional corporation in Idaho is a legal entity designed for certain professions, where shareholders have limited liability for professional malpractice claims.
Which professions can form a PC in Idaho?
Professions that can form a PC in Idaho include accountants, architects, engineers, attorneys, chiropractors, dentists, physicians, optometrists, podiatrists, and veterinarians.
How do I incorporate my professional practice in Idaho?
To incorporate a professional practice in Idaho, start by filing Articles of Incorporation with the Idaho Secretary of State and obtain any required licenses, permits, or registrations for your profession.
Can I be personally liable for malpractice as a shareholder of an Idaho PC?
As a shareholder of an Idaho PC, you have limited liability for professional malpractice claims, but you may be held personally liable if you personally commit malpractice.
What are the tax implications of forming an Idaho PC?
An Idaho PC is a separate taxable entity, so the corporation pays income taxes on its profits. Shareholders must also pay taxes on any dividends received, but they can deduct certain business expenses.
Do I need a lawyer to form an Idaho PC?
While you can form an Idaho PC without a lawyer, it is often recommended to consult with a professional to ensure compliance with Idaho law and procedure.
What is the name requirements for an Idaho PC?
The name of an Idaho PC must comply with the Idaho State Code. The name must not make the PC indistinguishable from another entity and it should include “Professional Corporation” or the abbreviation, “P.C.”
How many shareholders are required to form an Idaho PC?
An Idaho PC must have at least one shareholder.
How do I register my Idaho PC with the Idaho State Bar Commission?
Attorneys must register their Idaho PC with the Idaho State Bar Commission and provide their Articles of Incorporation.
Is the Board of Accountancy involved in forming an Idaho PC?
Yes, the Board of Accountancy must approve licensed individuals wanting to participate in forming an Idaho PC.
What is the Professional Licensing Board’s requirements for forming an Idaho PC?
Professionals from various fields, such as doctors, lawyers and dentists, must comply with the Professional Licensing Board when forming an Idaho-licensed business entity like Professional Corporations.
Are there annual report requirements for Idaho PCs?
Yes, Idaho PCs are required to file an annual report with the Idaho Secretary of State, but it also includes some licensing and tax requirements in order to conduct business in the state.
Do Idaho PCs need to hold annual meetings for directors and shareholders?
Yes, Idaho PCs are required to hold annual meetings for directors and shareholders.
Are there capitalization requirements for an Idaho PC?
There are no specific capitalization requirements for Idaho PCs, but the Board of Accountancy and Professional Licensing Board require licensed professionals adhere to any capitalization setting or physical setting changes.
Can non-professional employees of the Idaho PC own shares or stocks?
No. Only licensed professionals in specified fields are allowed to own shares in a Idaho professional corporation.
How do I dissolve an Idaho PC?
To dissolve an Idaho PC, file Articles of Dissolution or some other form of official request with the Idaho Secretary of State and discontinue business operations fully.
Can my Idaho PC participate in partnerships with other firms or professionals?
Yes, Idaho PCs can participate in partnerships with other professionals, partnerships or service corporations and remain compliant with state laws.
When I form an Idaho PC, how long is the processing time for my request?
Generally, after filing documentation, the request will be processed with one business day.
Can I file online when I am going to form an Idaho PC?
Yes, you can form an Idaho PC and file Articles of Incorporation online through the Idaho Secretary of State’s website.
Can you see the names of shareholders of Idaho PCs?
The specific names of shareholders may or may not be available to the public depending on the profession.
Can shareholders of an Idaho PC change their class of stocks in the future?
Vote holders of an Idaho PC may, in accordance with the Idaho Code, decide to alter or reduce size, stock classes, preferences, restrictions and other terms applicable to shares of each of the corporation’s classes or series.
Can licensed individuals structure their Idaho PCs under foreign laws?
Idaho PCs must be structured under Idaho laws but they can obtain authority to conduct business in other states.
Can an Idaho PC continue operation after bankruptcy?
An Idaho PC may continue operation after the conclusion of bankruptcy proceedings but there are certain laid down obligations the company must meet.
Can an Idaho PC entirely exist as a sub-s for larger companies?
Yes, Idaho PCs wholly own other locations and small businesses in the same interests in which they submitted their Articles.
Is there a way I can convert a pre-existing entity to an Idaho PC?
Yes, you have two paths provided you have complied with necessary regulations and procedures
Can I combine different professions into one Idaho PC?
Idaho PC does permit individuals from different professions shares the same Professional Corporation when they are dependent on provision of professional activities.
Does Idaho welcome foreign owners in their ProfCo jurisdictions?
Persons with foreign status are also permitted to establish Idaho PCs for professional activities.
What are the format legal distinctions for spouses in Idaho PCs?
It is possible for married couples who own the idea franchise therefore own shares in the Idaho Professional Corporation, however, there are specific statutes regarding spousal impact, health-seeking activities or malpractice considerations that may take effect.

Also Read

How to Save Money While Forming Idaho Professional Corporation

First and foremost, conducting thorough research and self-education is critical. Understanding the legal requirements and guidelines for setting up a professional corporation in Idaho can help avoid unnecessary expenses. By familiarizing oneself with the necessary paperwork, licensing requirements, and other legal obligations, individuals can potentially avoid costly mistakes, legal disputes, or rejections that can result in wasted time and resources.

One practical way to cut costs is to streamline the process by utilizing technology and online resources available. Nowadays, there are various online platforms that offer convenient ways to file necessary documents, submit fees, and obtain necessary permits. By utilizing these services, individuals can avoid the expenses associated with hiring lawyers and accountants for basic administrative tasks.

Another significant expense when forming a professional corporation is engaging legal services. While consulting with an attorney is advisable, there are ways to reduce costs. To save money, individuals should consider utilizing legal services selectively, seeking professional advice solely for complex legal matters that require expert input. For routine tasks or more straightforward legal matters, individuals may research templates or seek guidance from reputable online resources, thereby reducing their reliance on expensive legal consultations.

Similarly, the financial aspects of forming a professional corporation can be effectively managed by employing strategic cost-cutting measures. Careful consideration should be given when selecting a bank, as some financial institutions offer better terms and packages specifically tailored to businesses. By comparing banks, their services, fees, and interest rates, individuals can make an informed decision while saving money on essential functions such as banking and bookkeeping.

Market research also plays a vital role in saving money during the initial stages of setting up an Idaho professional corporation. It’s essential to evaluate and compare the cost of necessary insurance policies, including liability and malpractice insurance. By requesting quotes from different insurance providers, individuals can make an informed decision and secure the most cost-effective option without compromising the coverage needed to protect their business from potential liabilities.

Furthermore, networking and seeking guidance from professionals who have already established successful professional corporations in Idaho can be highly beneficial. Joining local business associations, attending workshops, or seeking mentorship from experienced entrepreneurs can provide valuable insights, insider tips, and even potential cost-saving opportunities during the formation process.

Lastly, proper budgeting and expense tracking are paramount when trying to save money while forming a professional corporation. Creating a comprehensive business plan, establishing a reliable cost-tracking method, and adhering to a strict budgetary plan can help individuals stay focused on essential expenditures, avoiding unnecessary or impulsive expenses that can quickly add up.

Remember, forming an Idaho professional corporation does not have to break the bank. By doing proper research, embracing technology, seeking selective professional assistance, strategically managing finances, and engaging with the right network, individuals can keep expenses in check without compromising the legal and financial aspects required for a successful establishment.

Conclusion

In conclusion, forming a professional corporation in Idaho is a strategic decision for licensed professionals who seek to combine their expertise and services under a single corporate entity. This business structure offers limited liability protection, a formal governance structure, and compliance with state licensing requirements. However, it also comes with certain restrictions on ownership, transfer of shares, and personal liability for professional malpractice. By carefully considering the advantages and disadvantages of a professional corporation, professionals can determine whether this structure aligns with their business goals, regulatory requirements, and risk management needs, ultimately contributing to a more organized, secure, and compliant professional practice.

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