How to Start an LLC in Iowa (Step-by-Step Guide)

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FAQs

Can I form an LLC with just one member in Iowa?

Yes, you can form a single-member LLC in Iowa. The state allows both single-member and multi-member LLCs, providing flexibility for entrepreneurs and business owners.

Are there any naming restrictions for my Iowa LLC?

When naming your Iowa LLC, it must include the words “Limited Liability Company” or abbreviations like “LLC” or “L.L.C.” The chosen name should be distinguishable from existing business entities in Iowa. Additionally, certain restricted words may require specific approvals or licensing.

What documents do I need to file to form an LLC in Iowa?

To form an LLC in Iowa, you need to file the Articles of Organization with the Iowa Secretary of State’s office. This document typically includes information about your LLC’s name, registered agent, address, management structure, and duration, if applicable.

Do I need a separate business bank account for my LLC in Iowa?

While not a legal requirement, having a separate business bank account for your Iowa LLC is highly recommended. This practice helps maintain clear financial separation between your personal and business finances, simplifies accounting and tax reporting, and enhances the credibility of your LLC.

Do I need a registered agent for my LLC in Iowa?

Yes, you need a registered agent for your Iowa LLC. The registered agent is responsible for receiving legal documents and official mail on behalf of your LLC. The registered agent must have a physical address (not a P.O. box) within Iowa and be available during regular business hours to accept important correspondence and notices.

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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming an LLC is often the best option for a number of reasons.

An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.

Forming an LLC in Iowa follows a relatively standard process with the exception that the state refers to the LLC formational document as a “Certificate of Organization” rather than the more commonly used “Articles of Organization.” Additionally, filing fees are cheaper in Iowa than in most states.

Starting an LLC in Iowa step-by-step

1. Select a name for your Iowa LLC

Follow naming requirements

There are two major guidelines to follow when naming your LLC in the state of Iowa:

1. An LLC’s name must be distinguishable from the names of existing businesses on file with the Iowa Secretary of State.
2. An LLC’s name must contain one of the following phrases or abbreviations at the end: “Limited Liability Company”, “L.L.C.”, or “LLC.” The words “Company” and “Limited” can be substituted with the abbreviations “Co.” and “Ltd.”, respectively.

Need help coming up with a business name? Check out our free business name generator.

Reserve your LLC name with the Iowa Secretary of State

After selecting a name for your LLC, you may reserve it with the Iowa Secretary of State to ensure that another business entity doesn’t use it before you file your Certificate of Organization.

First, confirm that the name is available by using the Iowa Secretary of State Business Entities Search. If the name is available for use, you can file an Application for Reservation of Name to reserve it for up to 120 days. You have the choice of filing the application online or via postal mail. The reservation fee is $10.

2. Designate a registered agent

As in every U.S. state, forming an LLC in Iowa requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf. The registered agent must either be a state resident or business entity with a street address in Iowa OR if the individual or business is based out-of-state, they must have a business office in Iowa.

3. File a Certificate of Organization

An LLC is formed in Iowa through the filing of a Certificate of Organization with the Iowa Secretary of State. While most states provide a template or application for an LLC to use, Iowa requires an LLC to draft its own certificate. Once it’s completed, you can file the certificate online or via postal mail. The filing fee is $50, and payment can be made by check or credit card.

Your Iowa LLC’s Certificate of Organization is required to provide the following information:

• LLC name
• LLC address
• Registered agent’s name and address
• Election on whether the LLC is member-managed or manager-managed
• Duration of your LLC if it is not perpetual
• Signature of LLC’s organizer

4. Create an operating agreement

Although not a legally mandated step for forming an LLC in Iowa, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.

The operating agreement should do the following:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. Detail how the LLC will be run

Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.

5. Obtain an IRS Employer Identification Number (EIN) 

All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs). The nine-digit EIN is like a business’s social security number and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.

You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill your legal obligations

Once an LLC is registered, its members must fulfill legal requirements that apply for the duration of the company’s existence.

File Biennial Reports

All LLCs active in Iowa, including both those formed in the state and foreign LLCs doing business in the state, must file a Biennial Report with the Secretary of State every two years. The report is due by March 31 during odd-numbered years, only.

The Biennial Report can be filed online or by sending a paper copy by mail. The online filing fee is $30 and the mail filing fee is $45.

Obtain business licenses and permits

Iowa doesn’t impose a universal requirement for a general business license, meaning that not every business is obligated to obtain one. However, certain businesses must secure licenses based on their activities and industry. Among the most common licenses required is the sales and use tax permit, which authorizes businesses to collect and remit the 6% state sales tax to the Department of Revenue.

Check for business-specific license

Additionally, various professions necessitate specific business licenses regulated by the Iowa Professional Licensing Bureau. These professions can span a wide range, including accountants, architects, real estate brokers, and appraisal management companies.

Obtaining special licenses is mandatory for those engaged in the sale of specific products, such as alcoholic beverages or tobacco products. Consult the Iowa Business License Information Center to determine whether your LLC must obtain any state-issued business licenses or permits.

Check with the local government too

Each municipality may also have its own licensing requirements. For information on local licensing regulations, contact a city clerk in the city or county where your LLC is based. Call your city or county clerk to inquire about licensing.

Understand state taxes

In Iowa, an LLC itself does not have the obligation to pay state income tax directly. Instead, various state taxes may be applicable to your business, contingent on its organizational structure and operations.

Federal taxes

For federal tax purposes, most LLCs, including those in Iowa, are classified as pass-through entities. In this arrangement, the LLC itself is not subject to federal income tax. Instead, profits and losses “pass through” to individual members, who report them on their personal tax returns. Consequently, Iowa LLC members pay income tax individually based on their share of the LLC’s profits according to their federal tax brackets.

State taxes

In Iowa, regardless of their federal tax status, all LLCs are obligated to pay an annual minimum franchise tax of $100. This payment is due by July 1st of each year.

Depending on your industry and the nature of your business activities, your Iowa LLC may also be subject to various other state taxes, such as payroll taxes, which entail withholding and remitting employer payroll taxes if you have employees, unemployment taxes, and gross receipts taxes that apply to specific industries like hotels and restaurants.

Register with the Iowa Department of Revenue

Certain Iowa limited liability companies, including those that collect sales tax and those with employees, must register with the Iowa Department of Revenue. Registration can be done online or by submitting a completed paper application through the mail or in person at the DOR office.

Understand BOI reporting

It is crucial to note that a federal Beneficial Ownership Information (BOI) reporting requirement came into effect on January 1, 2024, as per federal law. Here’s what you should know:

• This federal requirement is applicable to almost all LLCs within the United States, including those in Iowa.
• The reported information includes details such as the names, addresses, dates of birth, and government identification of beneficial owners and individuals with control over the company.
• For companies formed before 2024, the deadline is January 1, 2025.
• Any business formed in 2024 has 90 days from their confirmation of formation to file, and in 2025, this will become 30 days.
• The designated platform for submitting these reports is FinCEN’s BOI E-Filing System.

Learn more about BOI reporting.

Post LLC tasks

Set up business bank accounts

For LLCs specifically, maintaining a separate business bank account helps you keep your personal and business finances distinct. This clear separation simplifies record-keeping and accounting, making it much easier to track income, expenses, and profits for your LLC. It also ensures that your personal assets are protected in case your business encounters financial difficulties or legal issues, as they are less likely to be at risk.

Before jumping in, research different banks and financial institutions to compare account types, fees, and features. Look for a bank that offers business-specific services, such as merchant services for processing payments or business credit cards for potential financing needs. Many new banks have services designed specifically for small business owners and LLCs. Some of our favorites include Found, Relay, and Mercury.

These offer digital-first banking that can avoid many of the fees and red tape that large banking institutions often impose.

Obtain a Certificate of Good Standing

The Iowa Secretary of State issues Certificates of Good Standing for Iowa LLCs.

• How to obtain the certificate: To obtain one, you have several options, including online, mail, fax, or in-person requests, with the online method being the quickest and most convenient. The fee for a Certificate of Good Standing is $10, and processing times are typically 24 hours for online requests and up to 2 business days for other submission methods.
• Why you need one: This certificate serves to verify that your LLC is currently registered and in good standing with the state of Iowa, having met all requirements, such as filing annual reports and paying necessary fees while adhering to state regulations for its specific entity type. You may require this certificate for various purposes, including opening a business bank account, securing financing, qualifying for government contracts, or maintaining a favorable standing with regulatory agencies.

Build a website

For most people, the first thing they will do when looking for a vendor or business is go to the internet. In today’s competitive landscape, many people turn to the internet for information and decision-making, so not having a website can put your LLC at a disadvantage compared to competitors who have an online presence.

While every LLC owner knows a website is necessary, you might not know where to start. Follow these steps to get started:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Pick a web builder like Domain.com or GoDaddy to create a site with no coding experience necessary.
4. Tailor your site to your customers, adding appropriate pages, content, and images.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review, test, and publish your site.

Consider costs to set up an LLC in Iowa

• Incorporation fees: Setting up an LLC in Iowa can be very cost-effective. The only mandatory cost upfront is the LLC filing fee for your Articles of Organization, which is $50 when done online and $55 when done on paper (in person or through the mail). Expedited processing times can be paid for as well.
• Biennial Report filing fees: Every other year, you must file a report with the state to confirm or update the information you provided on your formation documents. The cost to file this report electronically is $30.
• Registered agent service fees (optional): If you’d rather not serve as your company’s registered agent, you can hire someone to fill the role. Registered agent services will collect documents for your company and let owners know if something arrives. Services cost $50 to $200 per year.

Foreign LLCs doing business in Iowa

An LLC formed in a state other than Iowa that intends to do business in the state must first register with the Iowa Secretary of State.

Follow these steps to do business in Iowa as a foreign LLC:

1. Comply with Iowa LLC naming guidelines and confirm that your name is available for use in Iowa by checking the Iowa Secretary of State Business Entities Search.
2. Appoint an Iowa registered agent.
3. File an Application for Certificate of Authority with the Iowa Secretary of State. The filing fee is $100. When filing the application, you must include a Certificate of Existence or Certificate of Good Standing from the LLC’s home state. The certificate must be dated within 90 days of its filing with the Secretary of State.