Start an LLC in Iowa

A steadily growing economy and low maintenance costs of limited liability companies make Iowa one of the most favorable states for doing business. More and more entrepreneurs decide to form an Iowa LLC including the most advanced Iowa Series LLCs.

If you are planning to start a standard or professional LLC in Iowa, but aren’t sure where to begin, this DIY guide is the way to go. In the article, we’ll briefly cover the key steps to help you start an LLC in Iowa quickly and easily, including the necessary forms, fees, and requirements. In addition, we’ll talk about what needs to be done once the business is incorporated to ensure its success. 

How To Set Up An LLC in Iowa: Steps to Follow

Choose a Name For an LLC in Iowa

In the process of opening an LLC, every entrepreneur faces the need to choose a company name, which will be the basis of the future brand. 

A good name is a key to successful growth. It helps to attract new customers, determines the first impression your LLC makes, and affects its reputation. It is important to choose a name that is consistent with your company values and, of course, state law.

The basic Iowa naming requirements, outlined in Section 489.108 of the LLC Act, include the following:

  • The name must contain words or abbreviations that unambiguously describe the business as an LLC:
    • “Limited liability company”;
    • “Limited company”;
    • “L.L.C.”
    • “LLC”;
    • “L.C.”
    • “LC”;
  • There must be no other companies with the same or deceptively similar names registered in the state. Availability of the name can be checked by doing a free Business Entities Search on the Secretary of State’s website;
  • The name must not mislead the public as to the nature and purpose of the LLC.

If the name you choose meets all of the above criteria and you are ready to open an LLC in Iowa, you can move on to filing a Certificate of Organization. However, if you need some time, you may use the Iowa name reservation to keep the necessary name for 120 days. For a reasonable fee of $10, the state will reserve the chosen name for you, rejecting third-party applications to register it. 

You can submit an Application for Reservation of Name in 3 ways:

Online:

Filing online is the easiest and fastest option available. Simply upload the Application for Reservation of Name, fill in all the necessary information, and submit. 

Mail:

You may also mail your completed application and a check for the $10 (mandatory registration fee) to:

Secretary of State
Business Services Division
Lucas Building, 1st Floor
Des Moines, Iowa 50319

In person:

Residents of Des Moines and those planning to be in the area may bring completed and printed materials in person to the address above.

Fax:

Finally, the completed and printed name reservation application can be submitted by fax to:

(515) 242-5953

If the owner wishes, another step in naming an LLC can be obtaining a DBA, which stands for “Doing Business As”. A DBA name allows a company to operate under a name other than the official name listed on the Certificate of Organization legally. It empowers the LLC and is most often used for marketing purposes.

Appoint a Registered Agent for an Iowa LLC

An important prerequisite to the proper functioning of an LLC in Iowa is the timely receiving and processing of official government correspondence. Section 489.113 of the Iowa LLC Act requires companies to appoint a responsible person, called a registered agent. His presence is a prerequisite for conducting LLC business in Iowa since the state needs to be able to contact the business.

The range of people who can act as an Iowa registered agent is quite wide. If you are considering working with an individual as an Iowa registered agent, the candidate must meet such criteria as:

  • Be a resident of the state;
  • 18 years of age or older;
  • Having a physical address located in the state;
  • Ability to be at the LLC’s registered office during regular business hours.

On the other hand, hiring a professional Iowa registered agent gives businesses a number of advantages, such as:

  • Confidentiality;
  • Mobility;
  • Reliability;
  • The ability to expand to another state easily, since most online companies provide their services in all states, etc.

In addition, it is quite profitable, since some companies include registered agent service in their service packages. Among them, IncFile, whose starter package costs only $0, and Northwest Registered Agent, which is recognized as the best in the industry, are especially notable.

Obtain an EIN

The EIN or IRS Employer Identification Number is a unique 9-digit code that serves to identify a company’s tax records. It is required for such matters as:

  • Hiring employees;
  • Managing and paying taxes;
  • Opening a commercial bank account, etc.

Once you create an LLC in Iowa, you can apply for an EIN in 3 ways. Each one is free but has different processing times.

Online:

Applying online is perfect for those who want to get their EIN quickly, as you will be able to start using it immediately after submitting the form.

Please, note that the service is only available on weekdays from 7:00 a.m. to 10:00 p.m. EST. You should also have a valid individual taxpayer number, such as a Social Security Number, to complete the application.

Fax:

If you do not want to use the Internet and are willing to wait 4 business days for an EIN, you can fax your completed Form SS-4 to:

(855) 641-6935

Mail:

This is the slowest method, with a waiting time of about 4 weeks. 

To apply by mail, upload Form SS-4 to your computer, fill it in, following the instructions, print it out, and mail it to the address:

Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999

Prepare an LLC Operating Agreement

Although you can easily incorporate an LLC in Iowa without an Operating Agreement, having one makes the functioning of a company stable and comfortable. Mostly, this internal document governs matters such as:

  • The distribution of ownership interests among owners;
  • Compensation payment procedures;
  • The rights and obligations of managers or owners;
  • Change of members procedures;
  • Distribution of profits and losses;
  • Voting procedures;
  • Closure of the LLC, etc.

Among the benefits that owners receive with an Iowa LLC Operating Agreement are the following:

  • Confirmation of the separation of the owners’ personal assets from the company’s assets;
  • Standardization and acceleration of the daily operations of the LLC;
  • Increased reliability of the business in front of banks, potential partners, or investors;
  • The ability to avoid the application of general state default laws, which are used in the absence of LLC’s own management for procedures such as dissolution, voting, etc.

If you have decided to write an operating agreement for an LLC in Iowa, you can get this document in 2 ways:

  • Write it yourself: even if you are not experienced or educated in this sphere, you can easily write an operating agreement. This document can be as long or as short as you want. Its structure and content are also entirely up to the owners. When writing it, you can rely on one of the free templates on the Internet or use a template provided by an online company. For example, ZenBusiness includes a free operating agreement in every service package. Along with the affordable price of $49, this makes them one of the best options for starting a business;
  • Use the services of an attorney: this method is more expensive, but the help of an experienced business lawyer guarantees a high-quality document. You will get the most individualized and elaborated operating agreement, which takes into account all the peculiarities of your LLC.

File Iowa Certificate of Organization

A key step in the Iowa LLC registration process is the approval of company documents by the secretary of state. Unlike most other states, there is no ready-made form for Iowa LLC formation documents. You will need to draw them up personally, guided by the requirements of the state, or hire a specialist.

Generally, the Certificate of Organization in Iowa includes the following information:

  • LLC’s name;
  • Registered agent’s name and address;
  • The mailing address;
  • Choosing whether your LLC will be member-managed or manager-managed;
  • The duration of LLC;
  • The signature of the LLC’s organizer.

You can file the documents to the Iowa Secretary of State online, by mail, or by fax. The required state fee is $50.

Online:

The fastest and most affordable option is to file your LLC application online. In this case, the Certificate of Organization will be processed immediately.

Mail:

For those who have a preference for paper documents, mail delivery is available. The prepared Certificate of Organization and a check for the mandatory fee should be mailed to:

Lucas State Office Building
321 E 12th St.
Des Moines, IA 50319

Depending on the workload at the Secretary of State’s Office, processing may take up to 2 weeks.

Fax:

If you prefer to use fax and are willing to wait 2 weeks, the Certificate of Organization can be filed by phone number:

(515) 242-5953

How To Keep an Iowa LLC Compliant?

Get Permits and Licenses for an LLC 

In order for your company to start doing business in Iowa, in most cases, you need to get Permits or Licenses. Their type and number depend on where the LLC operates in Iowa, as well as the sphere you choose to do business in.

The good news is that a general LLC business license is not required in this state. However, some cities and counties impose additional requirements for companies registered in their territory. 

If you have any questions or want to learn more about LLC licenses in Iowa, then visit the licenses and permits page for a lot of useful information. 

File LLC Biennial Reports

A company’s reputation is the key to its success and steady growth. To keep your business in good standing with the state, it is important to file the Biennial Report to the secretary of state after you register LLC.

Iowa LLC Biennial Reports are required by law to be filed every odd-numbered year between January 1 and April 1. You can do this online or by mail.

Online:

By filing the Iowa Biennial Report online, you save not only energy and time but also money. The required registration fee is $15 less than the hard copy processing fee, which is only $45.

Mail:

If you prefer paper documents, you can mail a completed hard copy and a check for the $60 state fee to:

Secretary of State
First Floor, Lucas Building
321 E. 12th St.
Des Moines, IA 50319

If you miss the regular reporting deadline, the LLC will receive a “delinquent” status. If the delinquency is not corrected by August 8 of the reporting year, the state may subject the company to administrative dissolution.

Open a Bank Account for an Iowa LLC

Another important step in creating an LLC in Iowa is opening a commercial Bank Account for your company. Firstly, this will allow you to separate personal and corporate funds, thereby protecting the action of limited liability. Secondly, a separate Bank Account for the needs of the business greatly simplifies the accounting.

The basic documents that a bank may need to open a corporate Bank Account are:

  • A copy of the Iowa LLC Certificate of Organization;
  • The LLC operating agreement;
  • Iowa LLC’s EIN;
  • Iowa LLC bank resolutions (for multiple LLC members).

Pay Business Taxes

Once an LLC is formed, each company is responsible for paying taxes.

At the federal level, most LLCs are not separate taxing units. Tax liability is transferred to the business owner who files personal 1040 tax returns and/or Schedule C, which shows income and expenses received from the business.

As for Iowa state taxes, the situation is similar to federal taxation. LLCs do not file separate tax returns and do not pay taxes on their own behalf. The exception is for companies whose members have chosen the corporate tax system. Also, unlike some other states, there are no “franchise” or “privilege” taxes among LLC taxes in Iowa. 

However, there are some taxes, which depend on the type of company’s activity. For example, you will be required to pay Iowa Sales Tax if your business sells goods or provides services. Also, businesses with salaried employees are responsible for paying Withholding Tax. For any of these tax categories, you must register by applying online or sending a completed paper application to the address:

Registration Services Iowa Department of Revenue
PO Box 10470
Des Moines IA 50306-0470

If you prefer to work by fax, they also accept documents by phone number:

(515) 281-3906

Finally, in addition to federal and state taxes, a city, municipality, or county may set its own tax requirements. Visit the local government’s website for more information.

To Sum Up

If you’re getting ready to run an Iowa LLC business, you’re probably busy and pressed for time. You can take some of the responsibility off your hands by outsourcing the hassle of setting up an LLC online to one of the professional, high-quality LLC formation services.

These companies provide a full range of business startup and maintenance services. Most of them can not only register an LLC at an affordable price in any of the states of America but also provide various useful features. For example, reputable services like IncFile, ZenBusiness, or Northwest offer a registered agent for free with the purchase of any of their service packages. By hiring such a company, you are investing in your own business and its future.