For every new business owner, creating a Series LLC in Iowa may be relatively difficult, especially if they are not familiar with the particular legal steps required by the Iowa government. If a Series LLC is what you’re really interested in, and you feel it’s right for your future business venture, but you’re not sure how to open a Series LLC in Iowa properly, this guide will help you understand how to start this process and dive into the intricacies of it.
If we’re talking about a Series LLC business, then it makes sense to mention the creation of an ordinary LLC. In the late ’70s, the first LLC was established in Wyoming. It’s a limited liability company, which is a popular business model in the industry and stands out for its flexibility.
But a Series LLC is an opportunity to expand the horizons of a basic LLC. The Series LLC was first figured out in Delaware. In general, you cannot open a Series LLC in all states of the country, it’s only available in a number of American states, including Iowa too.
As the name suggests, a Series LLC refers to a limited liability company, which consists of more than one division or, as it is shown in the name, series. However, every division in this Series can have different goals from their parent company (and more often, there is also a liability and asset diversity between these divisions), providing a certain degree of legal independence and security, when the series is formed correctly.
There are some key factors at play if we delve into the process of starting a Series LLC. Moreover, when you’re interested in taking your LLC company a step further, you should get more closely acquainted with the legal technicalities of the Iowa business formation process.
NOTE PLEASE: It’s essential to realize that even with the best resources about Iowa Series LLCs formation, it is not a guarantee of a very smooth process if you are not someone overly familiar with the aspects of the Iowa state law. It’s recommended you seek legal advice to assist you in opening a Series LLC in Iowa.
Nonetheless, when you strive to develop your company in a way that protects your personal assets, launching the Series of LLCs in Iowa will be an ideal course of action here. Besides, the best LLC formation service can do this for you in a secure and swift fashion, or you can form it yourself, using your own resources.
What Is the Meaning of the Series LLC?
- What Is the Meaning of the Series LLC?
- How To Form a Series LLC in Iowa: Important Steps
- Can I Outsource a Series LLC Formation?
- In Conclusion
As we have said before, a Series LLC means a group of divisions formed by one parent company. Despite each division operating under a single parent LLC, the idea of this business model is to offer each division owner more independence, financial autonomy, and also legal security. This primarily ensures the parent company and other LLC divisions are less likely to face a lawsuit specifically targeted at a single division in the Series.
It will be nothing new to you that a Series LLC has the same limited liability insurance to protect your personal property in the event of a lawsuit if you know what the ordinary business structure of an LLC looks like. That is, the owner’s individual assets, as well as the interests of other divisions, will not be at risk when an unrelated division of the LLC in the Series is sued.
This feature is what makes Series LLC so appealing to certain business owners in Iowa since it eliminates any legal dependency between all LLCs, which operate under the same parent company, and, at the same time, creates a so-called network of operations under a single parent company without the headache of registering multiple independent LLCs.
How To Form a Series LLC in Iowa: Important Steps
Think Of a Good Name for a Series LLC
As with all things, you have to start somewhere. In this case, you need to come up with a name for your company. It is usually a good idea to create a name, which will reflect the type of business that your company deals with in Iowa. Your LLC business name should be memorable. However, you should not miss the point that you have to incorporate the business model into the actual name, whether it is L.L.C., Limited Liability Company, or just LLC.
Another important factor in naming your serial business in Iowa is the LLC name search. There are many ways to optimize the process like the business name search tool designed to cross-check names that have already been taken by other Iowa entities.
Furthermore, there are several small naming restrictions in Iowa to consider. One of those is connected with corporate designations—those are entirely off-limits, meaning that definitive business descriptors should be kept out of an Iowa LLC name if they don’t reflect the type of business the company specializes in. For example, including “Hospital” in the name of a series LLC that has nothing to do with medicine.
Indeed, Iowa naming guidelines require entrepreneurs to tie each Iowa LLC division to the parent LLC by appending the names of subsidiaries with that of the main company. Additionally, all divisions have to be unique, so there should be a clear distinction between them.
For example, a parent company is “My Ring” and you need to set apart the pawnshop LLC and jeweler’s LLC divisions. So you might name them “My Ring Pawn Shop LLC” and “My Ring Jeweler’s LLC” respectively.
If there is something more you’d like to find out about how to start an LLC in Iowa, be sure to look through a more detailed guide on naming an LLC, which details the process of naming standard LLCs and Series LLCs.
Get an EIN
If you form an Iowa LLC, every division should be prescribed its own EIN that is an Employer Identification Number. It is an ID number issued by the Internal Revenue Service for paying taxes and other financial operations.
Similar to your personal SSN, the EIN functions as a nine-digit identification number used for the tax forms, financial documents, and issuing payments of your venture.
How to get an EIN if I set up LLC in Iowa? To obtain one, you need to download a free form from the official IRS portal, fill it out, and submit, after which the entity in question will be given its own EIN identification code.
Designate a Registered Agent
The next important step in creating an Iowa Series LLC is finding a reliable registered agent for your business. Of course, it may require a bit of careful consideration on your part.
Frankly speaking, you are free to pick any registered agent LLC who seems most appealing to you, however, above all, an LLC agent should be eligible to provide services in Iowa from a local office and guarantee quick communication with regional officials.
This is made to organize the timely exchange of paperwork between the office and the state, meaning that your chosen registered agent can process vital documents in a secure manner on time, which is necessary to manage lawsuits and regular payments.
What’s great about an Iowa Series LLC formation is that there’s no legal obligation to assign different registered agents to each LLC division, so you can work with just one agent, regardless of the side of the Series.
Prepare an Operating Agreement
Although the state of Iowa doesn’t place any legal obligation to confirm the creation of traditional or Series LLCs with the LLC Operating Agreements, it is still recommended you draft one. It will be exceptionally beneficial for the Series in Iowa as a whole to be appended by the internal document that outlines the operational goals of all LLC divisions.
Iowa Operating Agreement is best utilized when it is compiled with great elaboration. Moreover, it would be better to describe the functions of LLC divisions in Iowa in clear detail. If the document is thoroughly exhaustive on the topic of individual directions of the LLCs, it can save you the pain of writing numerous agreements to go with every enterprise.
Beyond that, the agreement will describe the hierarchy of each company, including the possible assignment of managers. Other information should ideally stipulate the course of action in the event of replacing ownership as well as management, or dissolution process for each Iowa LLC division. It won’t also hurt to add the information on owner voting privileges, asset distribution, investments, and more.
Create and Submit the Certificate of Organization
Most states require you to draft and file the document known as the Articles of Organization before you could officially commence a Series LLC. For Iowa residents, it’s also labeled as the Iowa LLC Certificate of Organization.
This official piece of paperwork is essential for all LLCs in Iowa, so when you apply for LLC, it is necessary to file an addendum specifying the precise classification of the intended business type.
The Certificate of Organization Iowa essentially states pertinent data regarding your business, from the entity to the legal information on your registered agent and the address of their Iowa registered office.
It also covers the main LLC organizer, such as their name and signature, plus some important info about other Iowa LLC members, especially their names, and the dates on which each division should be legally established.
When the Iowa LLC Certificate of Organization template is filled according to all legal requirements, the form should be submitted to the Iowa Secretary of State. In this state, the submission can be done online, via fax, or by mail. The state’s filing fee is $50 for all types of LLCs in Iowa. Standard review and approval time usually takes between 3 and 4 weeks.
Open a Business Bank Account
Any venture in Iowa, as well as in other states, should be tied to its own business checking account instead of having only the personal one of the owner.
The process of opening an LLC bank account for Series LLC in Iowa may seem a little bit lengthier given that LLC divisions require exclusive bank accounts all different from that of the establishing company.
It’s all for a reason. Such an approach is mandatory for sustaining the insulated structure of the serial ownership giving every division their financial independence and allowing them to operate at their full potential.
In this case, we recommend that you find a qualified accountant who will handle all financial operations, moreover, it would make sense to arrange a finance specialist for all divisions. It would also help to acquire accounting software to manage invoicing and other transactions.
Obtain LLC Licenses
While the state of Iowa does not require you to obtain any formal business license to form an Iowa Series LLC, certain industries are expected to apply for specific licenses or permits.
To see if your Iowa business needs a license or permit for legal operation in the state, there is a perfect guide compiled by Iowa SourceLink to help local entrepreneurs with sorting any licensing issues.
The service and retail industry requires a related company to apply for a seller’s permit at the Iowa Department of Revenue. Don’t forget that you may also be requested to oversee licensing on the federal level depending on the nature of the enterprise, while other businesses may require permits or licenses within the county where your primary operations take place.
Follow Maintenance Protocols
The main thing here is to understand that your work doesn’t end after all Iowa LLC formation documentation has been approved. The smooth sailing of any business, particularly a multi-division one, requires careful maintenance. In this case, we mean filing biennial reports.
Fortunately, it’s acceptable to fulfill your managerial duty with one general report that covers all divisions instead of submitting an array of separate reports, all of which have to be done in a timely fashion.
At their core, biennial reports exist to inform the relevant authorities in Iowa of the current status and past proceedings of your company. This detailed report should outline any changes. It concerns any revision in the company, as well as division names, addresses, changes in ownership or registered agents including their new addresses or names.
Can I Outsource a Series LLC Formation?
The state of Iowa provides you with two options to choose from: you may rely on your own abilities and save some money (but you can also miss some significant info or make mistakes in paperwork or legal processes) or go for the second option where you hire an attorney to assist you.
While certain states concede the outsourcing of the Series LLC creation process with the help of online service providers, like Northwest Registered Agent, this option is, unfortunately, not available for Iowa entrepreneurs.
If you hesitate that your legal knowledge is sufficient to manage the formation of an Iowa Series LLC solo, it’s strongly encouraged to seek the services of a licensed attorney.
Although it is rarely cheap, this method is the more reliable of the two, especially considering that the Iowa state regulations in regard to the Series LLC may seem rather unclear. For instance, preparing a supplement document for the Certificate of Organization may be difficult for you, especially without any knowledge.
Creating a Series LLC in Iowa is fairly similar to the process of forming a standard LLC. Yes, the state may require additional paperwork, such as specific documentation that comes adjunct with the Certificate of Organization. But, you can manage it.
When you can not, then you can entrust these complex organizational issues to an attorney. An experienced lawyer will supervise each step of starting a Series LLC in Iowa for you.