The short answer
Start with the registrations: the Idaho Secretary of State for an LLC or corporation, a free EIN from the IRS, and Idaho Business Registration for a seller's permit and employer accounts if you need them. Then open a business-only bank account, choose accounting software, build a short chart of accounts and set a weekly receipt routine. Entity and tax choices belong with a CPA or attorney.
Settle the decisions that belong to others first
Before you open accounts or buy software, a few choices shape everything that follows: whether you operate as a sole proprietor, an LLC or a corporation, and how that entity is taxed. The Idaho Secretary of State calls choosing a business structure an important decision that can affect your taxes, liability and how your business operates. That decision belongs with your CPA or an attorney, not with your bookkeeper and not with a website.
What the bookkeeping needs from that conversation is simple: the legal name, the entity type, the tax classification, and the date the business starts. Write them down. Every account, permit and form that follows uses the same name and number, and mismatches are what cause rejected filings later.
Buying an existing business changes the first steps. The Idaho State Tax Commission says not to use the previous owner's seller's permit or withholding account: request a Successors' Liability Clearance Letter before the purchase to see whether the business owes sales tax you could become responsible for, then apply for new permits in your own name once the sale is final.
Register in the right order
Most new Idaho businesses go through the same sequence. The order matters because each step uses something from the one before it.
- Form the entity with the state. An LLC or corporation is registered with the Idaho Secretary of State through SOSBiz, with a registered agent who has a physical Idaho street address. A business that operates under a different name can file an assumed business name, which the Secretary of State says does not create a separate legal entity.
- Get an EIN from the IRS. The IRS issues EINs online at no charge and warns that you never have to pay a fee for one. It says to form an LLC or corporation with the state first, or the EIN application may be delayed.
- Complete Idaho Business Registration. One application sets up Idaho tax permits such as the seller's permit and, if you hire, the withholding account and the employer accounts with the Idaho Department of Labor and the Industrial Commission. The Tax Commission says online applicants receive permits in 10 to 15 business days.
- Arrange workers' compensation before the first hire. The Industrial Commission says coverage must be in place before the first employee is hired.
- Put the annual report on the calendar. Idaho Code requires an LLC or corporation to file an annual report with the Secretary of State each year, starting one year after formation, by the end of the month in which it was formed.
| Step | Where it happens | When | Keep in the books file |
|---|---|---|---|
| Entity and tax classification | Your CPA or attorney | Before anything is filed | The decision in writing, with the legal name |
| Form an LLC or corporation | Idaho Secretary of State (SOSBiz) | Before doing business as that entity | Formation filing and registered agent details |
| EIN | IRS, online and free | After state formation | The IRS confirmation letter |
| Seller's permit and employer accounts | Idaho Business Registration | Before the first taxable sale or first paycheck | Permit numbers and assigned filing schedules |
| Workers' compensation | An insurer or the State Insurance Fund | Before the first employee is hired | The policy and its renewal date |
| Annual report | Idaho Secretary of State (SOSBiz) | Each year, by the end of the formation month | A copy of each year's filed report |
Open the business accounts before the first sale
IRS Publication 583 says one of the first things to do when you start a business is open a business checking account and keep it separate from your personal account, and to deposit all business receipts into it. Add one business card and set every payment processor or app to pay out to that account. The goal is that every business transaction shows up on a business statement.
Owner money then has a clear path. Money you put in is recorded as a contribution, money you take out as a draw or distribution, and personal spending stays on personal accounts. If you pay startup costs from personal funds or lend the business money, record each with its date and a short note so your CPA can classify it. Separating business and personal spending explains how to record it when the two do mix.
Choose software and a short chart of accounts
Pick cloud accounting software before the first transaction, not after a year of spreadsheets. Bank and card feeds, saved reports and access for your bookkeeper and CPA all depend on it. If you choose QuickBooks Online, it helps to have the file set up by someone who knows it well; Carey Danielson is a QuickBooks Online Advanced ProAdvisor.
Then build the chart of accounts around the decisions you will make, not around a long default list. Set up a few accounts on day one that new businesses often miss: Sales Tax Payable if you collect sales tax, payroll liabilities if you will have employees, owner contributions and draws, and a clearing account for each card processor. Building a chart of accounts covers the design, and card and app payouts shows how the clearing account works.
Set a receipt and records routine
Publication 583 says the law generally does not require a specific kind of records, but your system must clearly show income and expenses, backed by supporting documents such as sales slips, paid bills, invoices, receipts, deposit slips and canceled checks. It also allows electronic records, if they meet the same requirements as paper.
- Receipts: photograph or forward each one the day it happens, to one shared place.
- Contractors: collect a Form W-9 before the first payment; see paying contractors.
- Vehicle: start a mileage log on the first business trip; see vehicle and mileage records.
- Sales tax: if you hold a seller's permit, note your filing schedule; see Idaho sales tax basics.
- Month end: reconcile every bank, card and loan account to its statement.
If you bring in a bookkeeper, what happens next
Some owners keep their own books for the first year; others want the file set up correctly from the start. Either is reasonable. Choosing a small business bookkeeper covers what to look for, and the year-end handoff to your CPA shows what the first year's books need to produce.
With Danielson Bookkeeping, the steps are the ones on how we work: a consultation, a records review, a written scope (what's included, what isn't, the schedule and the fee, agreed in writing before work starts), onboarding, and then reconciled books and reports on an agreed monthly date. New QuickBooks setup and monthly small business bookkeeping are both listed services. Tax preparation, tax planning and legal advice are not, so entity and tax questions stay with your CPA or attorney.
