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Starting a Business
I want to start a non-profit organization. How do I do that and are there special regulations?
To be classified as a non-profit, approval must be secured from the Internal Revenue Service. The process can be expensive and time-consuming and many business activities do not qualify. Your attorney can assist with the application process. Information about establishing a non-profit, tax reporting and maintaining non-profit status is found on the IRS website. After receiving IRS approval, the business can register with the Idaho Secretary of State’s office as a Domestic Non-profit Corporation.
Alternatives: Before establishing a non-profit, you may want to consider other, less expensive, ways to accomplish your goal. See Alternatives to Forming a Charitable Nonprofit for recommendations.
If you decide to move forward in creating a non-profit, you may find it helpful to go through the Business Wizard. You can search for information related to the primary activity of your non-profit and find out if you or your employees may need specific licenses or permits, such as occupational licenses.
Taxes: Non-profits are not exempt from all taxes. Your non-profit may be required to collect or pay state sales or use tax. If so, you will need to secure a sales and use tax permit from the Idaho State Tax Commission. For information and a list of exempt organizations, see the Tax Commission’s website.
Recordkeeping: IRS requirements for exempt organizations
Assistance: The Idaho Non-profit Center offers information about establishing a non-profit in Idaho, including establishing a board of directors, writing by-laws, recruiting volunteers, financial record keeping and more.
The Idaho Attorney General publishes the booklet, Service on an Idaho Non-profit Board of Directors, which explains the responsibilities and liability associated with serving on a nonprofit’s board.
If your nonprofit is engaged in activities involving children, the elderly, or vulnerable adults, your employees and volunteers will need a background check and to be fingerprinted. For information, visit the Idaho State Police website.
Closing/Selling: If you close your non-profit, sell it or convert it to a for-profit entity, you must notify the Idaho Attorney General using the form found here. The Idaho Charitable Assets Protection Act governs how you can legally dispose of the assets of the non-profit.
You will also need to notify the IRS of the closure or conversion of the non-profit and file a final tax report.
I plan to start my business in my home. Are there special requirements I need to know about?
Home-based businesses may need to conform with additional regulations, as well as those associated with your profession or the product or service offered. First, go through the Business Wizard to find requirements related to your profession, product or service. Then, read through the information below to learn about possible additional requirements.
Local Requirements: Call your local city clerk’s office to find out if you need a city business license or another special license or permit. Your business will need to comply with your city, county, and/or homeowner’s or neighborhood association regulations. If you rent your home or apartment or live in a condo, check your lease agreement or covenants to be certain a home-based business is allowed.
Legal Requirements: All businesses, including home-based ones, need to register their name and entity type with the Idaho Secretary of State’s office. To learn about the entity types recognized in Idaho, visit the Legal Structure section of this website.
The business must be operated by a full-time resident of the home, not an employee. The business must be a secondary use for the home; the primary use must remain that of a residence. The character of the home, interior and exterior, cannot be changed from that of a residence. The square footage allowed for business activities varies by community.
In most communities, a retail store, restaurant, coffee shop or similar business where customers come and go cannot be operated from a home. If you offer lessons (music, art, etc.), the number of students allowed at any one time may be limited.
The business must comply with local health, safety, and fire codes and with city and county ordinances. You may be required to conduct all business activities inside the home or an approved accessory structure (garage, shop, etc.). Equipment used in the business may be restricted in size, weight and power to that of normal household appliances.
You must also comply with local regulations concerning:
- exterior signage
- number of employees
- parking (employee and customer)
- waste disposal
- dust and vibrations
- air, waste water, or soil pollution
You may not be able to store supplies or materials in a yard, garage, or outbuilding or park vehicles or equipment in your yard or on the street.
- Food Preparation – Idaho’s Cottage Food law allows certain “low risk” foods sold directly to the consumer to be prepared in a home kitchen. This includes most baked goods and other products that don’t require refrigeration. Other foods, including baked goods that will be sold at a commercial establishment, sold on-line or across state lines, or contain imported ingredients must be prepared in a commercial kitchen. The commercial kitchen will be inspected and licensed by your regional health department. Visit the Home-Based Business section of the Food and Drug Administration’s website for more information.
- Child Care – If you care for seven or more children in your home (including your own) and you receive payment for one or more of them, a license is needed from your city clerk’s office and/or from Idaho Department of Health and Welfare. The home will be inspected by the health department and the fire marshal. (Note – some cities’ licensing requirements are more stringent than state requirements, so be sure to check.) You and your employees must secure annual training, including pediatric First Aid and CPR training. Federal and state regulations require everyone applying for or renewing a childcare license to check the Central Registry in every state in which the person lived in the past five years (including Idaho) and to submit proof of the check/checks. Anyone living in a home where an in-home daycare is operated must also submit proof of a check. Central Registries are databases maintained by individual states that contain records of child abuse and neglect investigations. Idaho Department of Health and Welfare maintains the Idaho database. In addition to a Central Registry check, some cities also require an FBI background check.
- Temporary Lodging/Airbnb – Homeowners who rent a room, cabin or another space to the public must register a business name with the Idaho Secretary of State’s office. If the rental is for 30 days or less, sales tax and applicable lodging taxes must be collected and remitted to the Idaho State Tax Commission. Some marketing programs, such as Airbnb and VRBO, will collect taxes for you. If you rent through another program, you may need to personally collect and remit taxes. For details, see Short-term Rentals. Contact your city clerk's office to learn about local regulations.
- Product Restrictions – Certain products cannot be legally manufactured, grown or raised in a home business. These include fireworks and other combustible items, drugs and drug paraphernalia, poisons, noxious weeds or insects, and sanitary and medical products. Some communities restrict the production of additional items, so check with your city clerk's office for details.
- Service/Sales Restrictions – Services involving risky or illegal activities, adult activities, loud noise, pollution or that create a nuisance for neighbors are restricted in home businesses. The sale of restricted items, such as alcohol, drugs or tobacco, poisonous reptiles or insects cannot occur in a home business.
- Animals – Businesses involving animals (including poultry and birds) are subject to additional regulations and licensing requirements, depending on the type and number of animals and the service provided. A kennel or breeder’s license may be needed; special waste handling and noise abatement procedures may be required, as well as other issues. Contact your city clerk’s office for information.
- On-line Businesses – If you operate an online business, you need to register a business name with the Idaho Secretary of State’s office. If the business involves sales, a sales tax permit secured from the Idaho State Tax Commission will be needed. The business will collect tax on sales to Idaho residents. If you sell food products online, see the “Food Preparation” information above.
- Party Plan Businesses – if you sell Scentsy, Pampered Chef, Mary Kay or another product involving home parties or sales events, check with your city clerk’s office to find out if you can hold parties at your home. Some Idaho cities restrict the number of attendees at open houses and similar events held at the dealer’s home (not at a customer’s home).
- Storage Space - If you allow people to store their RV, boat, trailer or another item on your property and you charge a fee, you are a business and must register with the Idaho Secretary of State and collect appropriate taxes.
- Yard/Garage Sales - If you hold more than two yard or garage sales in a 12 month period, you are a business. You need to register a business name and entity type with the Idaho Secretary of State and obtain a sales tax permit from the Idaho State Tax Commission.
Employees: Your city or county regulates the number of employees a home business can have and the number of vehicles they can park at the home or on a public street. State and federal employment-related posters must be displayed. You must also have workers compensation insurance, pay unemployment insurance taxes, establish a tax withholding account and comply with OSHA safety regulations. For more information on having employees, visit the Employer Issues section of this website.
Signage: Most communities regulate the size and type of signage allowed, if any, in a residential area. Contact your city clerk’s office for local requirements.
Tax Issues: Small business owners, including independent contractors, pay taxes on the profit from their business. They also pay self-employment tax and may need to make quarterly estimated income tax payments. For information, visit the Taxes section of this website and the Small Business and Self-Employed section of the IRS website. For Social Security and Medicare requirements for the self-employed, including independent contractors, visit the Social Security Administration website.
Insurance: All businesses need insurance, regardless of location. Check first with your homeowner’s insurance agent or an agent who writes policies for small businesses. Not all home-based businesses are covered by homeowner’s insurance, particularly if the primary activity, such as house painting, does not occur at the home. If homeowner’s insurance will cover your business, additional coverage may be needed for business equipment, inventory, or a business-owned vehicle.
If clients regularly visit your home, you have a dog or another animal that might harm a client, your business involves animals, or other issues, such as falls, might occur, you may need to increase your liability coverage.
For information on other types of insurance you may need, such as workers’ compensation or product liability insurance, visit the Insurance section of this website.
Security: Home-based businesses have unique security issues, including allowing strangers into the home, protecting mail, computer security, and personal safety issues, both in and out of the office. Mail, particularly checks and financial information, can be protected by using a mailing address other than your home address, such as a post office box or a mail box at a package shipping center.
Disaster Preparation: Like any business, your home-based one is subject to natural disasters, including fire, floods, earthquakes, structural damage caused by excessive snow, wind, falling trees and more. The U.S. Department of Homeland Security offers Business Toolkits to prepare your business for a natural disaster.
Zoning: Before opening a business in a home, check with your city or county planning and zoning department to be certain you can legally do so. Most communities do not allow retail businesses, such as stores, restaurants or coffee shops, to be located in an area zoned for residential use, nor do they allow trucks and equipment to be parked at a home or employees or large numbers of people to come and go. If a business is operating in violation of zoning regulations, it could be closed without notice.
Also check with your homeowner’s or condo association or your apartment lease to be certain the covenants allow a business in your home, particularly if employees, clients and/or delivery trucks will come and go.
Closing Your Home Business: When a business closes, several agencies need to be contacted. For information, visit the Assistance Resources section of this website and look for “Business Closure.”
CAUTION – If you are starting a home business in response to an ad about earning money at home, BEWARE! Work-at-home scams are among the most prevalent. Before sending money, meet with a counselor at your nearest Idaho Small Business Development Center or SCORE office, listed under Assistance Resources, Business Formation and Expansion, and contact the Better Business Bureau in both your community and where the business is located. Also see the information found on the Federal Trade Commission’s (FTC) website.