This guide to starting a LLC in Iowa provides step by step instructions on how you can file documents for formation, get tax IDs, set up company records, and more.
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The most used business structure, LLCs, are very affordable and allow owners to be flexible. Legally forming your LLC will establish your business, reduce your personal liability and allow you to be tax flexible. This step-by-step guide will assist you in this process.
Step-by-Step Iowa LLC Instructions
Check Name Availability
Your LLC’s legal name must not conflict with any other registered names. A name search can help you find out if your name is available.
Name Search Iowa Secretary-of-State Name Reservation Optional Suffix: Limited liability companies’ names must contain the words “limited responsibility company” or “limited firm” or the abbreviation L.L.C./LLC, “L.C.”, and/or “LC”. “Limited”, may be abbreviated by “Ltd.”; “company” may abbreviated by “Co.”
Select a Registered Agent
Before you are able to file your Iowa LLC formation paperwork, you will need a name and contact information for your Iowa registered agent. A registered agent can be described as a company’s legal representative who receives notifications about legal proceedings and other government notices.
A registered agent is required under state law for every LLC. When you file Iowa articles, an Iowa Secretary of State will designate the registered administrator.
Iowa Certificates of Formation
Iowa refers as the articles or organization the certificate. You can file the certificate for organization to establish your limited liability company.
Agency: Iowa Secretary-of-State Form:
Certificate of Organization
Filing Method Mail, fax, or on-line Agency Fee $50 Turnaround: ~1-2 business days Law:
Iowa Code- Chapter 489 Revised Uniform Limited Liability Company Act
Establish Company Records
Your LLC must maintain correct, complete books and records. Your LLC’s original articles of organization will be the first document you keep. Your LLC will create many other official documents such as:
- Minutes of the meeting
- Operating agreement
- EIN verification letter
- Amendments and other filings made during the LLC’s lifetime
You must create the Operating Agreement
It is possible to use a template to draft an Operating Agreement. This document will serve as the governing document. It specifies the legalities of the LLC’s operation, such hosting an annual meeting. The agreement will then be approved by you at your organizational meeting.
Hold the Organizational Meeting
The organizational meeting, which is the initial meeting of LLC members, is the most important. In order to hold this meeting, you’ll need your operating agreements and your filed articles. Keep minutes from this meeting and place them in your company record books.
Get a federal employer identification number (EIN).
EINs must be obtained if the LLC has more members or plans to hire employees. EIN is often required to open a bank or other financial account.
Agency: Internal Revenue Service Form:
IRS form SS-4
Filing Method Mail, phone and fax. online. IRS fee $0 Turnaround: Online immediately, or by phone. By fax, it takes 4 business working days. 4-5 weeks via post Notes: The IRS website cannot be accessed outside of certain hours. Before closing your session you should print your EIN. IRS Pub1635: Understanding Your EIN provides additional guidance.
Get Iowa State Tax Identification Numbers/Accounts
Iowa LLCs are required to file a registration for sales, use, automobile rental, withholding, or corporation taxes.
- Submit to
- Iowa Department of Revenue
Form 78-005a: Iowa Business Tax Registration
Iowa Department of Revenue. Online Training
- Filing Method
- Mail or
- The tax accounts/licenses required to calculate the state fee will impact the amount charged.
- 4-6 weeks
Consider Electing C-Corp and C-Corptaxation
Your LLC will be subject to passthrough taxation by default. Most LLCs do not change this tax classification. Some LLCs are eligible to elect S-Corp or C-Corp Tax Treatment.
- S-Corp treatment is an option that can help owners-employees making more than 75,000 per calendar year to lower their self-employment taxes.
- C-Corps face double taxation. First, the corporation pays income taxes and then the members pay distribution taxes. C-Corps can offer lower tax rates to retained earnings.
How to get a Business License & Permit
It is necessary to obtain the required licenses and permits in order for your business to be legally operated. It’s easy to navigate through the large number of state, federal, and local requirements by searching for your business type using the Small Business Administration Business License & Permit lookup tool.
Iowa Business License
Iowa does NOT require licensure as a general business license.
Iowa does have a local business license but not a general one at the state or federal level.
To Maintain Your LLC, You Need to File Ongoing Filings
You must file your federal and state taxes returns.
For good standing with the secretary, many states require business entities to file an annually required report. View the table below to see if Iowa LLCs must file an annual return.
Iowa Corporation Annual Report Requirements:
Agency: Iowa Secretary-of-State Form: Available online. To get a printable copy of the form, click on “No Account Required”. Filing Method Mail or . Agency Fee $60 Due: April 1 for even-numbered yeas Law:
Iowa Code SS 490.1622.
Penalties: No late fee. Within a few short months, you can dissolve your business or have it rescinded. Notes:
- Anyone who is authorized may file.
- Original signatures are not necessary.
Iowa LLC FAQs
- How much does it cost to start an LLC in Iowa?The state fees to form an Iowa LLC range from $50 up to $60 depending on factors like whether or not you reserve your business name. The Iowa Secretary of State website has the most current fee schedule.This does not include licenses or permits, ongoing costs such as filing your Iowa biennial reports (which is due on odd-numbered year).
- What are the benefits of an LLC in Iowa?LLCs are a popular choice for business structure because they offer liability protection to the owners with minimal requirements. LLCs offer greater flexibility than corporations and are exempt from certain types of taxation.Iowa is not an exception. An LLC is a great choice for small business owners. An Iowa LLC can have many benefits:
- Protect your personal assets against the legal liabilities and debts of the business
- Flexible management and ownership structures that are tailored to your business and its owners.
- Corporations have fewer reporting and maintenance requirements
- Exemption from double taxation. Owners pay personal taxes only, and not corporate profits or individual earnings.
- Legitimizing your company will increase your chances of finding investors
This comprehensive article explains in detail the advantages of an LLC business structure.
- How is an Iowa LLC taxed? As stated above, LLCs offer the advantage of avoiding double taxation. The LLC pays no income tax and passes the income to its owners. Each owner then pays taxes as regular income on the earnings. This is a departure from most corporations where profits are taxed at both the business and individual shareholder levels. Business owners can save significant money by using the LLC tax structure instead of C corporations (the most popular type of corporation). Although LLCs can elect to be taxed like corporations if they so choose, this could lead to double taxation for owners. This is sometimes a good thing for larger LLCs.Federal taxes are administered by the IRS based on each member’s share of an LLC. If you own 50% or more of an LLC, and you are entitled to 50%, the IRS will tax 50% of the LLC’s earnings. Importantly, LLC owners may be required to pay self employment tax to the federal government. This is to make up the fact that they do not directly pay any taxes related to Medicare and Social Security.
Iowa supports pass-through taxation when it comes to state income taxes. LLCs are treated as corporations unless the owners elect to be taxed separately. Iowa LLCs may be subject to non-income-related taxes. Iowa business taxes could include:
- State employer taxes (if you have employees)
- If you sell products, state sales tax
- If you have employees, state unemployment tax
- Taxes on certain products (e.g. liquor or tobacco)
- Use of certain minerals and other public resources is subject to tax
- What is the processing time to form my Iowa LLC? Your Certificate of Organization will be approved usually within 24 hours if you file online through the Iowa Secretary of state’s Fast Track Filing System. You can submit your Certificate of Organization by mail or fax, but processing times may take several days or even weeks.
- Do I need to file my operating agreement with the state of Iowa? You don’t need to file the LLC’s operating agreements with Iowa. Iowa does not require LLCs to have an operating agreement. An operating agreement certifies your business and prevents future disputes between owners. It also allows you to tailor the rules of the LLC to your specific needs and expectations.
- What tax structure should I choose for my Iowa LLC? Pass-through taxation is a popular choice for entrepreneurs. While owners pay federal and state taxes on income earned from their business, the LLC doesn’t pay taxes. An LLC with multiple members is automatically classified by the IRS as a partnership. Each member must pay their fair share of taxes. Your LLC’s operating contract can be modified to specify your ownership percentages. Certain LLCs, especially those with high earnings, may opt to file taxes as corporations. Certain LLCs have distinct tax benefits from this option. It is a good idea to consult a tax professional to explain the pros and cons of each tax system.
- Does Iowa allow a Series LLC? Iowa law allows for the creation of a Series LLC structure. This is where multiple LLCs are managed under one “umbrella” LLC entity. Individual LLCs, sometimes called “cells”, may have different members and assets. They also might have different obligations. The theory is that the individual cells and the umbrella LLC can be shielded from the legal liabilities and debts of others. This provides valuable protection for small businesses.
- Which licenses and permits are required for an LLC in Iowa? It is your responsibility to ensure that your Iowa LLC holds all licenses and permits required by law. Because licensing is subject to change by industry and location, and can take place at the federal, state and local levels, it’s not possible to find a central point to verify that you have the right permits and licenses. It’s up to you to research.Our business license report service is available if you don’t have time or the desire to research all of this, or you simply want to be sure that your business has all the permits and licenses it legally needs.
- How to dissolve an Iowa LLC? The members of an LLC must vote to dissolve it before the process can begin. Please refer to the Iowa business dissolution guide for further information.
- Do I need to form an LLC in Iowa if I already have an LLC in another state? You don’t have to start a new LLC if you already own an LLC in another state. Your existing LLC must be authorized to do business in Iowa because it is considered a foreign LLC. This requires you to file for and obtain a Certificate of Authority.