How to start an LLC in Iowa in 7 easy steps
Starting a business in Iowa can be a whirlwind. There are many decisions on the table: When you finally build it, will your customers come? One of the most significant decisions is determining the structure of your business.
Do you need to limit your personal liability and protect your assets like a corporation? Do you need the flexibility to make decisions like a sole proprietorship? Building your business as an LLC has advantages, and plenty of new business owners find a flexible LLC structure is suitable for their needs. Depending on your goals, you may be among them.
Check out your other options if you aren’t sure that an LLC is the right business structure. When you’re ready to proceed, LLC formation in Iowa is not complicated. However, there are a few steps to complete to give your business the solid structure it needs to go the distance.
1) Check if your business name is available
Every business in Iowa needs a unique business name. It will help differentiate your business from the competition and create brand recognition in your community. It is also a legal necessity in Iowa. You can search the state’s business name database to find whether your preferred company name is available. If it’s already in use, you won’t be able to register it. This includes nearly identical names, such as if another business uses the plural or possessive version of a name you want to register. For example: Grant Wood’s Art Supply Store and Grant Wood Art Supply Store are too close.
It’s not enough for your name to be unique. You’ll need to include “Limited Liability Company” or an abbreviation as part of your registered name. This can consist of “LLC,” “L.L.C.,” “Ltd.” and “Co.” at the end of your name.
There are some additional rules in Iowa. Your business name cannot contain certain words like “treasury,” “FBI,” or “Iowa police.” These can confuse customers into believing your business is an official organization. Your name may not contain trademarked terms like “Olympic” nor imply your business carries out illegal activities.
You can do business as an entity that is not the Iowa LLC name you register. This DBA, also known as a “fictitious name” or a “trade name,” must be registered with the Iowa Secretary of State. Just fill out a fictitious name resolution and file it online. Alternatively, you can mail your copy. Either way, you’ll have to pay the $5 filing fee.
2) Claim your name
Almost ready to file? You can reserve your favorite business name for up to 120 days by filling out an application for a Reservation of Name for your domestic limited liability company. There is a $10 fee for the service, and you can return your form by mail or file online.
Ready to secure your name permanently? You’ll have to complete your LLC’s Articles of Organization, also called the Iowa Certificate of Organization. You’ll file your business formation documents with the Secretary of State in Des Moines in the Lucas Building. There is no form to fill out, but your Certificate of Organization should meet all Iowa LLC Act guidelines. There is a one-time $50 registration fee. In 15 to 20 business days, you will have an approved LLC in Iowa.
Congratulations!
As you work through this process, your LLC will need to designate a registered agent residing in the state of Iowa. This person or corporation should have a physical address in Iowa, be available during business hours, and be ready to communicate all your LLC’s business with the state. The registered agent will be the primary point of contact for service of process, tax documents, and compliance correspondence. There’s no need for this person to be a member of the LLC, and many LLCs choose to use a registered agent service.
Most Iowa businesses will also need to have a registered office, which is not a post office box, in Iowa. Your registered agent’s business office should be the same as the registered office, though you can change your Iowa registered agent or office at any time.
3) Write your LLC operating agreement
An operating agreement is not a legal requirement for forming your LLC in Iowa. It can even seem excessive for single-member LLCs. After all, very few people write a contract with no one else to sign. However, legal experts recommend it. Why? Because as your company grows, this legal document will offer guidance into your internal procedures and afford extra protection to members from legal liability. If you’re a one-person show, the operating agreement can also protect you by clearly stating that your LLC is not liable for personal debts.
Operating agreements have the following advantages:
- Credibility for your business as a professional entity
- Strength for the “corporate veil” that protects your personal assets
- Paths for succession in case of the death of members or the dissolution of the company
- Clarification about how your business works when a default rule may undermine your operations
- Help to define the role of the manager and their duties
- Rules for how investment works
Your operating agreement should be a unique document, and you can refine it as your needs change and your business grows.
In a sense, that makes it a living document between members. You can help define your processes and show your intent, especially when you do not want your business governed by state rules. A written document also protects you from claims from members that your LLC had an oral operating agreement.
Plenty of online templates can help you craft the sections you’ll likely want to cover in an operating agreement. Ultimately, this document will make it clear how you’ll manage your LLC and that you are free from personal liability should your company face a lawsuit.
4) File your Biennial Report
In Iowa, your LLC is required to file a report every two years with basic information about your business. Sometimes called a “Statement of Information,” the Biennial Report is one of the primary requirements of an LLC in Iowa. It can be required quickly after forming your LLC since the due date is between January 1 and April 1 in the first odd-numbered year after you formed your LLC.
For instance, if you formed your LLC in December 2020, you could have filed your first biennial report in January 2021.
The Secretary of State will assign “delinquent” status to your LLC and dissolve it in August following the non-filing of the biennial report, so it is vital to keep up-to-date on this requirement. Don’t worry yet; the Secretary of State should send you a notice that the report is due, along with a temporary code you’ll need to file.
You can file your Statement of Information online and pay state fees of $45 or by mail for $60 every two years. Online reports are processed immediately. The Secretary of State takes up to two weeks processing time for paper forms, so online filing is a quicker approach.
You’ll need to know:
- The registered name of your LLC
- Your LLC’s Corporation Number, which you can find by searching the SOS business entity website
- A temporary code from the Secretary of StateYour Tax ID number
- The street address of the LLC’s primary place of business
- The Registered Agent and their address
- The LLC’s mailing address
- The kind of business your company conducts
- The names and addresses of all members of the LLC
5) Pay your taxes
Along with S-corporations, LLCs are called “pass-through” entities. In other words, an LLC is not required to pay federal or state income taxes. Instead, profits pass through to members who must be aware of their tax obligations for reporting earnings on their income tax returns.
It is possible to choose to have your LLC treated as a corporation for business tax purposes, in which case, your LLC will be subject to Iowa’s state corporate income tax. To have your LLC treated as a corporation for tax purposes, you’ll first need to file IRS form 2553, which you can access from the IRS website. Then your company will file a tax return. You’ll want to check out Iowa’s marginal rates applied to your net taxable income to see if this approach is right for your business. A tax lawyer or CPA can also help you decide which option is better for federal and state filing.
If you have any employees, your LLC will need to register to pay employer taxes. You will need to withhold taxes and pay employment taxes to the Iowa Department of Revenue after registering your business with the State Department of Revenue. Don’t forget unemployment taxes. You can register to pay this tax with Iowa Workforce Development through MyIowaUI as you prepare to pay quarterly taxes.
6) Wrap up other regulation and sales tax requirements
Do you need a sales or use tax permit in Iowa? If your LLC sells taxable goods, property, services, or even digital products, the answer could be “yes.” Unless you sell through a marketplace that collects sales tax on behalf of Iowa customers, you’re likely to need an Iowa sales tax permit. Applying for a license online is simple.
You can also get permits for other kinds of tax situations if they apply to your new venture:
- Retailer’s Use Tax
- Consumers Use Tax
- Automobile Rental Tax
- Hotel/Motel Tax
If your business sells goods in Iowa, you’ll also need to register with the Department of Revenue and remit sales tax payments. You’ll pay semi-monthly, monthly, quarterly, or annually depending on the amount of tax you collect. Iowa’s tiered system means you’ll want to pay attention to changing filing requirements as your business grows and collects more sales tax in Iowa.
After registering for state taxes, you’ll still be on the hook for filing your federal taxes. You’ll get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) to function as a business identification, like your Social Security Number works when you file personal taxes. It will allow you to open a business bank account for your new business, effectively separating your business and personal finances.
While there is no LLC tax and owners will pay personal taxes on profits, having an EIN is one more way LLC owners strengthen the corporate veil between themselves and their companies, protecting their assets. Bonus: it also improves your LLC’s credit score so that your business has cash flow when it needs it.
7) Get your Iowa LLC insurance in minutes by following these steps
Once you’ve made it through the initial gauntlet of paperwork, it’s time to protect all your effort with the right small business insurance in Iowa. Getting the right type of LLC insurance is easier than you think. Most businesses will need liability insurance and combine their coverage with business property and business interruption insurance.
And if you have employees, don’t forget to include workers’ compensation insurance.
At Huckleberry, we won’t make you jump through hoops to find the insurance you need. WIf you’re unsure, we can even give you 7 reasons why buying online makes sense (for one, coverage starts instantly). Here’s what you need to do:
- Navigate to Huckleberry.com and click the “Instant Estimate” button. You can quickly get quotes for all the types of coverage you may need.
- Enter your relevant business and personal information. You’ll need industry information, a payroll estimate, and a revenue projection. Don’t worry; we keep the math to a minimum.
- In less time than it takes to shuck an ear of Iowa sweet corn, we’ll give you a quote with multiple small business options.
- Still not convinced? Check out our quick rate estimator for a ballpark figure of what you’d pay for business insurance. The workers’ compensation calculator can help you estimate your rate in minutes.
Setting up your LLC in Iowa is not difficult, but it requires keeping track of all your steps and paperwork. Once you’ve made it this far, you’ll have a good idea of the basics you’ll need to know to start your LLC and stay in good standing in the Hawkeye State.
Structuring your business as an LLC can be the first step in protecting yourself and your new venture. An LLC offers liability protection that keeps you safe when disaster strikes. Know what else protects your investment? Small business insurance, so look into the various coverages right for your LLC, including workers’ compensation insurance. It helps give you peace of mind so that you can get back to building something you love.