How to Start an LLC in Iowa
How to start an LLC in Iowa in 6 easy steps
Step 1. Naming Your Iowa LLC
A distinct and distinguishable name is required for your Iowa LLC, and there are several other naming regulations that you will also need to follow.
Legally Required Designation
In accordance with Iowa LLC regulations, your LLC name must contain either the phrase “limited liability company” or one of the abbreviations below:
- LLC
- L.C.
- Co.
Unique Name
Your LLC name must be different from other businesses or LLCs within the state. You can perform a name availability search here using the Iowa Secretary of State Business Entities Search.
If you want to reserve an LLC name ahead of filing, you can fill out the Application for Reservation of Name and hold your chosen LLC name for up to 120 days. There is a $10 filing fee associated with this form, and you can file it online or by mailing it to the address on the form.
You may also want to conduct an available domain name search while you are looking for an LLC name. Even if you aren’t sure that you want a business website immediately, it is a good idea to purchase one ahead of time and save future stress.
Restricted Words
When choosing an LLC name, keep in mind that you are not able to include any words that run the risk of causing confusion between your business and a government entity. This can include words like “FBI,” “IRS,” “Treasury,” or “State Department.”
You should also be aware that using words such as “bank,” “attorney,” or “chiropractor” may require the presence of a properly licensed individual in your LLC, as well as the filing of additional paperwork.
Using an Assumed Name
In Iowa, you can use an assumed name or DBA (doing business as) name for your LLC. This means that you will continue using the legally registered LLC name on all official documents, but will start using a different name to interact with the public.
To adopt a DBA name, you will need to fill out a Fictitious Name Resolution with the Iowa Secretary of State. You can mail the completed form to the address on the document, or you can file it online. There is a $5 filing fee associated with the form.
Step 2. Choose a Registered Agent
A registered agent, also called an agent for service of process, is required for every LLC operating in Iowa. Your registered agent will be responsible for receiving all legal documents, government communications, and necessary tax documents, acting as a contact point between your LLC and federal agencies or the state of Iowa. They will also be the party that is contacted in the event of a lawsuit against your LLC.
You can appoint either yourself , any member of your LLC, or a registered agent service that is authorized to conduct business in Iowa as a registered agent. As long as your registered agent has a valid Iowa address and is available during regular business hours, they are eligible to be your registered agent.
Step 3. File Your Articles of Organization
After you have selected your LLC’s name and chosen a registered agent to appoint, you will need to file your Certificate of Organization with the Iowa Secretary of State Business Division. This document will contain information about your LLC and, once processed, will legally establish your business in the state.
The state of Iowa does not have a downloadable form that you can fill in, so you will need to draft up your own Certificate of Organization; you may choose to use a lawyer to help you with this.
The document must include:
- Your LLC’s name
- Your LLC’s address
- Your LLC’s registered agent’s name and address
- Applicable signatures of your LLC’s organizers
You may find more requirements about what to include on your Certificate of Organization here. There is a $50 filing fee for this document, and you can file it online or through the mail.
Online
If you wish to file your Certificate of Organization online, you will need to create the form and convert it to a PDF document. From there, you will need to create a Fast Track Filling account with the Iowa Secretary of State here then follow the prompts to file your document.
By Mail
If you wish to file your Certificate of Organization by mail, you will need to put your completed document into an envelope along with a check for the $50 filing fee, made out to the Iowa Secretary of State. You then need to mail the Certificate to the address below.
Lucas State Office Building
321 E 12th St
Des Moines, IA 50319
Step 4. Create an Operating Agreement
The state of Iowa does not require you to create an operating agreement for your LLC, but you may want to consider creating one anyway. This document sets clear guidelines for how exactly your LLC is managed, the rights that members or managers have, and what to do if your LLC dissolves or experiences a lawsuit.
If you choose not to create an LLC operating agreement, Iowa LLC law will dictate how your LLC is to be managed in the event of dissolution, conflict, or lawsuit. This will generally not be in your best interest, so creating an operating agreement is a good idea to protect yourself and your assets.
Most business bank accounts, loan applications, and other business services will require you to have an operating agreement on hand to demonstrate your LLC as a separately operating business entity.
Step 5. Get an EIN/Tax ID Number
After your Iowa LLC is legally established, you will need to apply for a Tax ID number, also known as an EIN (Employer Identification Number). Any LLC that has more than one member, any single-member LLC that wants to hire employees, or any entity that chooses to be taxed as a corporation is required to apply for an EIN with the IRS.
It is free to apply for your EIN with the IRS, and you can file the application online or by mailing it in.
Your EIN will be used to identify your business to the IRS on all tax documents and necessary government filings; the number acts much like a social security number for your LLC. If you want to hire employees, file federal taxes, open business bank or credit accounts, or apply for business funding, you will need an EIN.
Online
The quickest and easiest way to apply for your EIN is online, and you will receive your number as soon as your application is completed. Visit the IRS website to apply for your EIN for free.
By Mail
You will need to fill out this form when applying for your LLC by mail. If you are a foreign filer or do not have a social security number, leave section 7b blank. Mail the completed form to the address below. You can follow up on any questions with the IRS at (267) 941-1099.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Step 6. Keeping Your LLC Running
After your LLC has been legally established, you will need to keep up with regular requirements that allow your business to keep running legally and without issue.
File Biennial Reports
Each LLC operating in Iowa will need to file a report on its business every two years. The report is due by April 1st in odd-numbered years. The easiest way to file this form is to use the online Fast-Track Filing system provided by the Iowa Secretary of State. Once you have an account, you will be able to upload your report online.
More information about what is to be included on this form can be found here.
If you want to file your report by mail, you will need to download the form after you log into the Fast Track Filing system. Further instructions and mailing addresses will be provided on the document.
It costs $30 to file your biennial report online and $45 to file it through the mail.
Separate Your Business Finances
A business credit or debit account can help keep your LLC’s finances separate from any personal ones, establishing the LLC as an independently operating business. It is not required by Iowa to open a business bank account, but it may be a good idea to establish one anyway.
You will most likely need to show your Articles of Organization, Operating Agreement, EIN, or possible other LLC documents to open a bank account for your LLC. Compare all of your options before making a choice on which bank account to open, as different banks will have varying minimum required balances or credit spending limits.
Keep up With Federal and State Taxes
Taxes are a necessary part of running your business, and you will need to keep up with both federal and state taxes to ensure that your LLC avoids any major penalties or fines.
Federal Tax Requirements
There are several different tax structures you can choose from to use in your LLC that may meet different company needs; each tax structure comes with its own unique type of federal taxation. This article can help you gain an in-depth understanding of the differences between each type and help you decide which is best for you.
In general, most LLCs are taxed as sole proprietorships or partnerships. This means that you will be expected to file Schedule C along with your individual income tax return to declare any income that you receive through your LLC.
When using this tax structure, you should keep in mind that you will most likely need to pay self-employment tax (which has a rate of 15.3%), in addition to any income tax. You may also need to make quarterly estimated tax payments to avoid any IRS fines; the IRS website gives more details on this.
If you want, you can choose to have your LLC taxed as an S Corporation or a C Corporation. You will need to fill out IRS Form 8832 and IRS Form 2553 to declare this. After these forms have been processed, your LLC will be treated as a corporation and expected to file a separate corporate tax return with the IRS.
Iowa State Business Taxes
Your LLC will not be required to pay any kind of state business tax as long as it is being taxed as a pass-through entity (either a sole proprietorship or a partnership). If you have elected for your LLC to be taxed as a corporation, however, you may be liable for state corporate income tax.
The tax rate depends on your income, and you will need to pay it through the Iowa Department of Revenue. More information on this tax can be found here.
Iowa does not have a separate franchise or privilege tax that you will need to pay, no matter which tax structure your LLC has.
State Sales and Use Taxes
If your LLC will be selling goods or services, you will be required to get a sales or use tax permit through the Iowa Department of Revenue. You can find information about whether or not a sales tax permit is required for your business here.
After you have your sales or use tax permit, you will need to file your returns online with the Department of Revenue here. You will also be able to use the Department website to look at the calendar of due dates for tax filing and find more information about calculating your owed amount.
State Employer Taxes
If your LLC will have employees, you will be required to pay both withholding tax and unemployment insurance taxes. Withholding taxes can be registered for and paid through the Iowa Department of Revenue on a periodic basis, the timeline of which depends on your business and how much you owe.
Unemployment insurance taxes will need to be paid through the Iowa Workforce Development government department. The website will also answer your questions on how to calculate how much is owed, when to pay, and how to file your taxes.
Acquire Necessary Permits and Licenses
While Iowa does not have any requirements for a state-wide business permit or license, permits or licenses may be required by the city or county that your LLC is located in. Other licenses, including professional permits, may also be required depending on the type of business you have.
You can search the database at the Iowa Economic Development Authority website to determine which licenses your LLC needs. You can also use the website to answer questions about starting up your business and the regulations that your professional licensing might need to meet.
Additionally, you may be required to obtain certain permits and licenses for your LLC on a federal level. Whether this is needed depends mostly on the type of business you are running and the services you are offering. For help determining if you need to meet additional federal licensure requirements, you can use the directory on the US Small Business Administration’s website.
Iowa LLC Resources
Below, we have a list of all the resources you may need to access while setting up your LLC in Iowa.
- Available LLC name search
- Available domain name search
- Reserve an LLC name
- Reserve a Fictitious name
- Certificate of Organization guidelines
- Certificate of Organization online file
- IRS EIN free application
- IRS Form 8832 and Form 2553 for LLC corporation declaration
- Iowa Fast Track Filing system
- Iowa Department of Revenue
- Iowa Workforce Development
- Iowa Economic Development Authority
- US Small Business Administration
Iowa LLC FAQs
The answers to these frequently asked questions may help clear up any lingering questions you have about starting your LLC in Iowa.
In Iowa, it costs $50 to file your Certificate of Organization. You may also need to pay $10 to reserve an LLC name ahead of time, or $5 to file for a DBA name in the state.
The cheapest way to start an LLC in Iowa is to file your Certificate of Organization online or by mail without reserving a name ahead of time or applying for a fictitious name. Doing it this way will only cost you $50 to get your LLC up and running.
How much your Iowa LLC pays in taxes depends on the individual tax structure you have set up for your business. If you elect to have your LLC taxed as a corporation, you may need to pay additional state corporation taxes, and if you have employees or sell goods and services through your LLC, you may need to pay withholding tax, unemployment insurance tax, or sales and use taxes.
You will need to file a state report with the Iowa Secretary of State biennially, or every two years. The report is due by April 1st in odd-number years, and can be filed online for $30 or through the mail for $45.
If you are finished conducting business under your LLC, you will need to file a statement of dissolution with the Iowa Secretary of State’s office, the guidelines of which can be found here.
You may also need to consult your operating agreement to make sure you adhere to the agreed-upon guidelines for finishing up and closing down your business.