How to Form an LLC in Iowa in 7 Steps
Forming a limited liability company (LLC) in Iowa involves many important steps such as choosing a name for your LLC, naming a registered agent, filing a certificate of organization, applying for an EIN and business and tax accounts as well as following Iowa state laws.
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Are you interested in forming a limited liability company for your Iowa business? A limited liability company (LLC) is a business entity that many small businesses choose to organize themselves when they are just getting started. An LLC can be the perfect business structure for entrepreneurs who want to explore new business ventures while protecting their personal assets.
7 Steps to Form an LLC in Iowa
Name Your LLC
Finding a legally proper Iowa LLC name should be one of your first acts in LLC formation. This process can be complex and time-consuming, but the LLC needs to operate legally in Iowa. Create a great name (that’s up to you) and make sure it’s unique and different from any other company’s name as per Iowa Code §489.112.
You should conduct a name search on the Secretary of State’s business name availability page to make sure that your chosen name isn’t already in use for an existing business. Iowa Code §489.112 requires that your LLC name contain one of these legal suffixes or abbreviations:
- Limited Liability Company
- L.L.C.
- LLC
- Limited Company
- Ltd. Co.
The name of the LLC cannot use any variation of the word “corporation.” It cannot use language considered obscene or that claims a profession or business affiliation that does not exist.
If you have a name in mind but aren’t quite ready to register your business, Iowa allows you to reserve your business name. The Iowa Secretary of State holds the name for 120 days under Iowa Code §489.113. Reserving a name is not a guarantee that your name will be approved, but it keeps anyone else from using it for that time.
Get a Registered Agent
Under Iowa Code §489.115, each LLC must have a registered agent. An Iowa registered agent is an individual or corporation designated by the LLC to accept service of process (legal documents) if a lawsuit is filed against it. The registered agent may be an Iowa resident, an Iowa profit or nonprofit corporation, or a foreign profit or nonprofit corporation qualified to do business in Iowa. In certain situations, the Iowa Secretary of State acts as an agent for service of process.
Most businesses that conduct business in Iowa are also required to maintain a registered office. The registered office address must be a street address, a P.O. Box is not acceptable. Also, the registered agent’s business office address must be the same as the registered office address.
File Your Certificate of Organization
You are now ready to register your Iowa LLC with the Iowa Secretary of State Business Services Division by filing your certificate of organization. You can file online with Iowa’s Fast Track Filing system. The Secretary of State does not provide an official form for the certificate of organization. If you file by mail or in person, be sure to state the requirements provided by Iowa Code §489.201 in your certificate:
- The name of your LLC
- The name and address of your initial registered office
- The name and address of your initial registered agent for service of process
- Organizer name
- The duration of your LLC (will be perpetual if duration is not provided)
- Organizer signature
The filing fee is $50. If you file by mail and pay by credit card, the credit card authorization form must be completed and submitted with your certificate.
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Draft an Operating Agreement
Then you should write an LLC operating agreement. This is not required under Iowa law, but it is a good idea to keep everybody’s interests clear. An Iowa LLC operating agreement can contain provisions regarding the following:
- Percentage of members’ ownership
- Voting rights and responsibilities
- Powers and duties of members and managers
- Distribution of profits and losses
- Holding meetings
- Procedures for transferring interest or in the event of a death
Get an EIN
If you have employees or the LLC has more than one member, you must apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS). An EIN is similar to an individual’s Social Security number but is assigned to businesses for income tax purposes. You can apply for an EIN on the IRS website. You will be subject to all federal tax withholding rules.
Set Up Business and Tax Accounts
You should confirm whether you need to set up accounts to maintain business requirements or report your LLC taxes. Confirm the state taxes that apply to your LLC and register with the Iowa Department of Revenue for applicable business permits. You can register online by creating an account with the GovConnectIowa filing system. If you want to register in person, by mail, or by fax, you can submit the Iowa Business Tax Permit Registration form to the Iowa Department of Revenue. There is no fee to apply for your required permits.
Check for Additional Federal or State Requirements
Check state and federal websites to determine if there are any specific rules for your business. For example, some LLCs may have to file a Beneficial Ownership Information Report (BOIR) with FinCEN. Under current law, LLCs created in the United States are “domestic reporting companies” and are exempt from the BOIR requirement.
However, laws may change, so stay up to date with state and federal requirements.
Business and Tax Requirements in Iowa
Your LLC may be subject to state requirements relating to business licenses, permits, and taxes. To ensure compliance with business and tax laws in Iowa, familiarize yourself with any mandatory regulations that relate to your business.
State Business Tax
Your LLC must obtain certain business permits if specific taxes apply based on its business activities. The types of taxes requiring a business permit are sales and use, household hazard materials, withholding, water service excise, and fuel. You can find more information about state taxes and apply for your permits on the Iowa Department of Revenue’s business website.
State Employer Tax
If your LLC has employees, you must withhold the Iowa individual income tax (in addition to the federal income tax) on any wages paid for services performed in the state, unless the employee qualifies for an exemption. You must register as an Iowa withholding agent and apply for the tax permit in order to report and pay the withholding tax to the state. How often you’re required to file depends on your profits for the tax year.
LLCs with employees should register for an unemployment insurance tax account with the Iowa Workforce Development Unemployment Insurance Tax Bureau. Once you register, a determination will be made as to whether you’re liable and required to participate in the program and pay unemployment insurance taxes. You can find more information about unemployment requirements for employers on the Iowa New Business Fact Sheet. You may also have to apply for workers’ compensation insurance coverage.
Sales and Use Taxes
Your LLC is subject to the state sales tax if it sells tangible personal property, digital products, or taxable services. As a seller, you are responsible for collecting, reporting, and paying the sales tax to the state. Use tax becomes effective after the sale takes place and only on goods and services on which sales tax was not collected. If this tax applies to your business, you must register for a sales and use permit and report the taxes on a sales and use tax return.
Business Licenses and Permits
Iowa does not have a general business license. Instead, the state regulates the specific activity of a business and as mentioned above, you must register and apply for certain business tax permits. If your LLC practices a professional service, like accounting, engineering, land surveying, or real estate, the members providing the service must be licensed in the profession. A complete list of professions requiring licensing can be found on the Iowa Professional Licensing Bureau’s website. Depending on where your LLC is located or does business, you may also need to apply for local business licenses and permits. Contact your LLC’s local city or county government to find out what’s required.
Registration in Other States
If you want to do business in another state, you will likely have to apply to do business as a foreign LLC. You may need to request a certificate of good standing from the Secretary of State or otherwise prove your LLC exists and complies with state laws as part of the application process.
Biennial Reports in Iowa
LLCs in Iowa must file a biennial report every two years with the Secretary of State to keep business records current and accurate. You can file by mail, in person, or online with the Fast Track Filing system. The fee for filing online is $30. If you file by mail or in person, the filing fee is $45. Also, Iowa does not provide an official form for biennial reports so make sure you state all the information required under Iowa law. You need to provide your LLC’s name, the street address of the registered office, and the name of the registered agent. The first biennial report must be filed between January 1 and April 1 of the first odd-numbered year following the year you formed the LLC. After that, file biennial reports between January 1 and April 1 of each odd-numbered year.
Iowa LLC Formation FAQs
Pricing for your LLC in Iowa can vary depending on who is forming the LLC, the type of business, and whether you’re required to obtain local permits or business licenses. The Secretary of State provides a list of common fees and forms for LLCs.
The fee to file your certificate of organization and register your LLC is $50. If you file by mail or in person and want to pay by credit card, be sure to include the state’s credit card authorization form.
There are few different types of LLCs permitted in Iowa.
- Single-member LLC: A single-member LLC is owned by one individual or entity. For tax purposes, it’s considered a disregarded entity treated similarly to a sole proprietorship. Profits are reported on the personal tax returns of the owner. A separate business return for single-member LLCs does not have to be filed.
- Multi-member LLC: A multi-member LLC is owned by two or more members or managers who share control of the business. It’s often used by family members who want to go into business together. The LLC can be managed by the members themselves or they can opt to hire outside management making it manager-managed instead. There is no limit on the number of members a multi-member LLC can have.
- Professional LLC: Iowa law allows for a professional LLC designation, called a “Professional Limited Company (P.L.C.)" in Iowa. It may practice a profession through licensed members, managers, employees, or agents. The name of the professional LLC must include either “P.L.C." or “Professional Limited Company." It’s treated as a pass-through entity for tax purposes where profits and taxes are reported by members on their personal tax returns.
A certificate of organization is filed with the Iowa Secretary of State to organize and form an LLC. It proves that your business met all the conditions required to legally establish an LLC in the state of Iowa. You could need your certificate of organization to open a business bank account or merchant account for your LLC and to apply for financing. You should hold on to the original certificate approved and issued by the secretary of state. You can also access a copy online if you used the Fast Track Filing system for your initial filing. If you need a certified copy, submit a certificate request form to the Iowa Secretary of State. The fee is $5 plus a copy charge.
A certificate of good standing verifies your business was legally formed in Iowa, has been properly maintained, and is authorized to do business. It may be required to open business bank accounts, enter into agreements or contracts with other businesses, obtain business loans, and to register your business as a foreign LLC in another state or jurisdiction. You can print a certificate of standing online by searching the Secretary of State’s database for your business and choosing the link provided. Your certificate of standing should include a certificate ID that can be used to confirm the validity of your business with the online Certificate Validation.
To form an LLC in Iowa, you must:
- Choose a valid business name
- Choose a registered office and registered agent
- File a certificate of organization with the Secretary of State
- Pay the $50 filing fee
An LLC provides personal liability protection for members for debts and lawsuits of the business. There are fewer reporting and recordkeeping requirements for LLCs than for other kinds of entities, including corporations. Also, an LLC is a pass-through entity allowing you to avoid double taxation.
To maintain your LLC, you must file biennial reports and pay the filing fee ($45 for paper filing and $30 for filing online). File your first biennial report between January 1 and April 1 of the first odd-numbered year following the year that you originally formed the LLC. Then file biennial reports between January 1 and April 1 of each odd-numbered year. Also, make sure to register for and maintain any required business tax permits with the Department of Revenue.
No. The certificate of organization MUST be filed with the Iowa Secretary of State to form your LLC. It’s the document that is required to register your LLC as a valid legal entity pursuant to Iowa state law. An operating agreement is an optional internal document for owners, members, and managers of the LLC only. It’s an agreement between members that establishes rules and policies in the event of a dispute and defines the interest of each member. An operating agreement does not need to be filed with the state.
Yes. A trade name filing can be done if you’re doing business as (DBA) a name different from your registered business name. A trade name does not create any proprietary rights in the name. If you want to do business under a fictitious name, you must file it with the Iowa Secretary of State.
Iowa does not require businesses to obtain a general state business license. However, depending on the type of business your LLC conducts, you will likely have to register for state business tax permits with the Iowa Department of Revenue. If your LLC practices a professional service, you’re required to have a professional license as well. Your LLC may also be subject to local business licenses and permits depending on where it is located. You should contact the local county or city to confirm.
Yes. You can start an LLC online in Iowa by creating an account with the Secretary of State’s Fast Track Filing system. You will choose “form an Iowa limited liability company" and be directed to the “certificate of organization" page. You must indicate whether your LLC is domestic or domestic professional, an effective date, and whether your LLC has an end date or is perpetual. You will have to upload a certificate of organization in pdf format. Make sure your certificate states the street address of your registered office and the name of your registered agent for service of process. You will provide an electronic signature and pay the $50 filing fee. Business owners can instead choose an LLC formation service company to handle the online filing and registration of their LLC in Idaho.
The address for the Iowa Secretary of State is:
Secretary of State
Business Services Division
Lucas Building, 1st Floor
Des Moines, Iowa 50319
Business days are Monday through Friday and business hours are 8 a.m. to 4:30 p.m.
Some business owners recognize the benefits of using a registered agent service for their service of process. The advantages can include:
- Any lawsuits are not served at your place of business
- Your address remains private
- Ensures your LLC’s compliance with state requirements
- More availability to receive service of process
A domestic LLC is organized under and subject to the laws of Iowa.
If you want to do business in another state, you register as a foreign LLC with the government agency that oversees business formation in that state, typically the secretary of state. You should make sure your business name is available in that state, submit the application to register as a foreign LLC, pay the filing fee, and provide proof of your LLC’s legal validity in your home state of Iowa. Usually, you can do this by including a certificate of good standing or existence. Also, make sure you register for any applicable state business taxes.
Any foreign (out-of-state) LLC that wants to do business in Iowa must fill out an Application for Certificate of Authority with the Iowa Secretary of State. There is a $100 filing fee. A certificate of good standing or existence from the foreign LLC’s home state should also be provided.
To dissolve your LLC, file a statement of dissolution with the Iowa Secretary of State. You must “wind up" all business activities and ensure any liabilities or debts of the LLC are resolved. The filing fee is $5. You should also file a statement of termination stating the name of your business and that it’s dissolved. There’s an additional $5 filing fee.
No, not in Iowa. An anonymous LLC cannot be formed in Iowa. Business formation documents, like a certificate of organization, are public record and disclose the names and addresses of the LLC owners. Only Delaware, Nevada, New Mexico, and Wyoming offer anonymous LLCs at this time. LLC owners may use professional registered agent services to prevent their personal information from being included on business registration documents.
Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.
How to Start an LLC in Other U.S. States
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