How to Start an LLC in Iowa in 2023 [Step by Step]

If you are looking at steps that you need to take on how to start an LLC in Iowa, you just need to follow these simple steps:

Firstly, in order to form an Iowa LLC, you will first need to file a Certificate of Organization and register this with the Iowa Secretary of State. This first step will cost $50.

The Iowa Secretary of State allows the registration of a Certificate of Organization by applying online, mail and even fax. The Certificate of Organization is a legal document that officially creates your llc in Iowa.

Steps To Forming an LLC in Iowa in 2023

Naming your Iowa LLC

After registering your certificate of Organization with the Iowa Secretary of State, you will then need to Name your Iowa LLC. When you start an LLC, choosing a name will be the first and most important step when forming an LLC. You need to make sure that your name is in compliance with Iowa naming requirements and will be easy to search for by future potential clients.

Here are some naming guidelines that you should abide by Iowa LLC naming requirements.

Firstly, you must form an LLC and include the phrase” limited liability company” in your name. You are free to use any of its abbreviations either LLC or L.L.C. as well. The name of your Iowa LLC also cannot include any words or phrases that might confuse your LLC in Iowa with a government agency such as the FBI, Treasury or even State Department.

Finally, there are some restricted words in the forming of an LLC in Iowa such as “Bank”, “Attorney” and “University”. If you want to include these words into your Iowa LLC, you will be required to produce additional paperwork and also include a licensed individual either a banker, lawyer or professor to be a part of your LLC in Iowa.

Other things that you should take into account when naming your LLC in Iowa is to make sure that the name you choose is actually available in Iowa. You have to make sure that the name you want to use when you form an LLC in Iowa is not already taken. There is an easy way to check by doing a name search on the State of Iowa website.

As the last step, in this modern times, you should make sure that an URL will be available with your business name. So we recommend that you do a check if there is a web domain available that will include your business name. This is a good step to take even if you do not plan to make a business website today, as you will be able to buy the URL so that others will not be able to obtain it.

After you have registered for a domain name, you should also consider setting up a professional email account eg. @yourcompany.com. Google has a G Suite feature that offers new businesses an email service as well as other tools such as word processing, spreadsheets and more.

Selecting a Registered Agent in Setting Up An LLC in Iowa

The next step after choosing a name for your Iowa LLC is that you must appoint a Registered Agent for when you start an LLC.

A registered agent can either be an individual or another business entity that is tasked with receiving the important legal documents related to the formation of your L.L.C. You should treat the registered agent as your LLC in Iowa’s contact with the State of Iowa.

You may elect anyone or any business entity as your registered agent as long as he/she is a resident of Iowa or is a corporation that is a registered agent service that is authorized to transact business in the State of Iowa. You may even elect yourself as your Iowa LLC’s registered agent.

Filing your Iowa LLC certificate of organization

In order to register for your Iowa LLC, as mentioned previously, you will need to file a Certificate of Organization. There are a few ways you can do this with the State of Iowa, you can either apply for it online or use mail or fax.

You have to take note that if your Certification of Organization will be filed on a hard copy, you will have to draft the document in accordance with the State of Iowa statutes.

The fee is a non-refundable amount of $50 and you should mail it to:

Lucas Building 1st floor
Lucas State Office Building
321 E 12th St
Des Moines, IA 50319

Their fax number is : (515) 242-5953

It is also important to note that the State of Iowa does not have a standard certificate of Organization to file by either mail or fax. You will have to create your own Certificate of Organization by following certain requirements.

At this point, it is also a good time to determine whether your limited liability company LLC will be member-managed or manager-managed.

Creating your own Iowa LLC Operating agreement

In Iowa, if you want to start an LLC, it is not mandatory to get an operating agreement, but it is advised to be a good practice to have one. An operating agreement is a legal document that provides an outline of the ownership and the operating procedures of the LLC in Iowa.

The operating agreement is important because it helps to ensure that all business owners are on the same page to prevent the risk of future conflicts.

Whether you are starting a single-member or even multi-member LLC, it is important that your operating agreement actually covers most of the topics as below. It is important to note that some of the stipulations below might not bear any weight on a single-member LLC but will be important to include for the sake of formality.

Organization

When the LLC is formed, who its members are, how the ownership is divided. A limited liability company with a multi-member structure may utilize an equal ownership structure or even assign various members different “units’ of ownership

Voting and management

It is important to identify whether the Limited Liability Company will be managed by its members or an appointed manager and how many members will be allowed to go on voting for business matters.

As a general rule, every member has one vote but you could give some members more voting power than others.

Capital Contributions

The amount of money that each member of the limited liability company has invested in the business and you should also take the time to establish an approach to raising any additional funds in the future

Distributions

This part stipulates how the profits and losses of the limited liability company will be divided among the members. The most common way is to distribute profits evenly. As such, if you want to divide profits a different way, you should input the details in your operating agreement.

Changes on the structure of membership

This part of the operating agreement dictates how roles and ownership will be transferred in the event that a member leaves the LLC. It is important to layout the process whenever a member buys out or replaces another member in the operating agreement.

Dissolution

The final part of the operating agreement is dissolution, At some point, all of the members of your LLC decide that they no longer wish to conduct business, you should officially dissolve it. This part of the operating agreement should essentially outline the hypothetical process of dissolving your business so this is an important part of the operating agreement.

Get an EIN for your LLC Iowa

EIN stands for an Employer identification number. An Employer Identification Number is a nine-digit number that is assigned by the Internal Revenue Service that helps to identify any business in Iowa for Federal tax purposes. You could treat the Employer Identification Number similar to a Social Security number for a business.

Sometimes, an EIN can also be referred to as a Federal Employer Identification Number (FEIN) or also a Federal Tax Identification Number (FTIN)

The main reason that you require an EIN is so that your LLC will be able to open a business bank account, hire employees as well as filing and managing Federal as well as Iowa state taxes.

In case you already previously have a sole proprietorship business in Iowa, you will need to get a new EIN when you convert it to an LLC as per requirement by the IRS. You can get your EIN for free from the IRS and easily done online or by mail.

Important steps after Creating an LLC in Iowa

Separating personal and business assets

When you start an LLC business in Iowa, it is important to separate your personal and business accounts. This is because if your personal and business accounts are mixed together, your personal assets will be liable in the event your Iowa LLC is sued. This is referred to as piercing the corporate veil in Business Law. As such, you should protect your LLC with the below steps.

Opening a business checking account.

You should firstly separate your personal assets from your company’s assets which is an important step for personal asset protection. On top of that, it would help to make accounting and tax filing much easier.

Getting a business credit card

If you were to get a separate business credit card for your LLC, it would help to separate personal as well as business expenses while simultaneously help to build on your company’s credit history which can be very useful when raising capital such as small business loans and so on.

Other steps that you should take to protect your corporate veil should include properly signing legal documents and documenting all company business.

Hiring a business accountant for your LLC in Iowa

This is an especially important step for less experienced business owners. A business consultant would be able to help your business from overpaying on taxes while simultaneously helping you to avoid any penalties, fines and other costly tax errors.

Doing this will also assist in making bookkeeping as well as payroll processes easier leaving you with more time to grow your LLC. Overall, a business accountant will allow you to manage your business funding much more effectively allowing you to discover areas of unforeseen loss or extra profit.

Obtaining business insurance for your LLC in Iowa

Business insurance will allow you to manage risks and focus on growing your business. There are three main types of business insurance that you are able to get for your LLC in Iowa.

General Liability Insurance: This is a broad insurance policy that helps to protect your business from lawsuits and is the most general type of insurance that most small businesses usually get.

Professional Liability Insurance: Professional Liability Insurance is insurance provided for professional service providers such as consultants or accountants that cover malpractice and other business error claims.

Worker’s compensation Insurance: This type of insurance provides coverage for job-related illnesses, injuries or deaths for employees. In Iowa, some businesses with one or more employees are required by law to have Worker’s compensation insurance.

Creating a website for your LLC in Iowa

Creating a website is a great step to forming a legitimate LLC in Iowa. It should be important for every single business to have a website even if you think that your business is too small or in an offline industry. This is because if you do not have a website, you are definitely missing out on a large percentage of revenue and potential customers.

Some business owners may feel that creating a business website will be something hard as they do not have any website-building experience. This may have been a reasonable concern back in 2015, however, web technology has made large leaps in advancements over the past few years and it makes creating a website for small business owners much simpler.

Here are a couple of reasons why you should be building your own website.

Most legitimate businesses have websites. You should not take into account the size or industry of your business as it should not matter when it comes to getting your business online.

Most social business accounts such as Facebook pages or a LinkedIn business profile should not be a replacement for a business website that you yourself as the owner can control.

When creating your own website, you can use tools such as GoDaddy Website Builder that makes creating a basic website extremely simple. You do not need to hire a web developer or designer in order to create the website that you want.

Promoting your LLC in Iowa

After setting up your LLC you should perform some marketing activities to let people out there know that you are in business. A press release would probably be one of the easiest and best ways in order to promote your business. A press release is one of the most cost-effective ways to promote your business as they provide publicity, establish your brand presence on the web, improve your website’s search engine optimization (SEO), drive more customers to your website, are a one-time cost in terms of effort and money while also having long-lasting benefits.

Keeping your LLC in Iowa compliant

Iowa LLC Licenses and permits

In order to properly operate your LLC, you will have to comply with federal, state and local government regulations. There are certain permits that you are required to get such as health permits, building permits and signage permits among others.

Details of business licenses and permits usually vary from state to state so you should read the details carefully and do not be surprised if there are short classes that you are required to attend as well.

There will also be fees for business licenses and permits that will vary depending on what sort of license that you want to obtain.

Iowa LLC Tax Filing Requirements

Additionally, depending on what is the nature of your business, you may be required to register for one of the many forms of State Tax

Iowa Employer Taxes

If you have employees in Iowa, you will have to register for an Unemployment Insurance Tax that you can do on the Iowa Workforce Development website. You as the business owner will also be required to sign up for the Employee Withholding Tax through the Iowa Department of Revenue for your employees.

Iowa Sales Tax

If your business is dealing with the sale of physical products, a seller’s permit will need to be obtained from the Iowa Department of Revenue Website. This certificate allows your business to collect sales tax on taxable sales.

Sales tax is also known as “Sales and Use Tax” and is a tax that is levied by all states, counties or municipalities on transactions of a business that involve the exchange of certain taxable goods or services.

Federal LLC Tax requirements

LLC’s will also need to report their yearly income to the IRS using two types of forms which are the FOrm 1065 Partnership Return as well as Form 1040 Schedule C depending on if the LLC is multi-membered or single member.

Iowa LLC Biennial report

Iowa LLC’s require a Biennial report to be filed to the Secretary of State in Iowa and can be done online. There is a filing fee of $60 which is non-refundable and the due date is between January 1st and April 1st of every odd-numbered year.

There are no late filing fee charges if you miss your filing deadline, however, the Secretary of State may administratively dissolve your LLC after a few months due to failure of filing an annual report.

An LLC may face certain fines or even automatic dissolution if they were to miss out on one or more state filings. In the event that this happens, an LLC business owner may run the risk of loss of the limited liability protection.

To avoid this, a registered agent can help to prevent this outcome by notifying you of any upcoming filing deadlines and also by submitting mandatory reports such as the Biennial report on your behalf.

Hiring workers

If you are planning to hire employees, you should stay compliant by referring to the below steps

Firstly, you need to verify that the new employees are certified to work in the US, and report employees as new hires to the secretary of state. You will then have to provide workers’ compensation insurance for employees and also withhold employee taxes.

Other important information To Form An LLC in Iowa

Registering as a Foreign LLC in Iowa

If you wish to form a foreign Llc, it will allow you to operate as one entity in multiple states. If you want to do business in Iowa but have an existing LLC, you are required to register as a foreign LLC and can be done by mail.

The fee is $100 that is non refundable and you should mail it to

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

Certificate of good standing

In Iowa, a certificate of good standing, which is also known as a Certificate of Existence is used to verify that your L.L.C was legally formed and is currency properly maintained. You are able to get your certificate of good standing online.

You should obtain such a File when you are seeking funding from banks or other lenders, forming your business as a foreign LLC in another state and obtaining or renewing specific business licenses or permits.

Dissolving an LLC or foreign L.L.C. in Iowa

If in the future you do not wish to conduct business with your LLC or Foreign LLC, it is important to officially dissolve it to prevent any trouble related to tax liabilities or penalties. There are two main steps which are closing your business tax accounts and filing an Article of Dissolution.

Frequently Asked Questions (FAQs)

What is an LLC?

LLC stands for Limited Liability Company and is a simple business structure that is more flexible compared to a traditionally incorporated entity while still providing many of the benefits.

Am I required to get a DBA or Trade Name for my Business?

If you are forming an LLC in Iowa, most of the time you do not need to get a DBA, This is because the name of the LLC can be used as your company’s brand name and you will then be able to accept any payments such as checks under your company’s brand name.

You should only consider registering a DBA if you want to perform business under a name that is not your company’s brand name.

Can I be my own registered agent?

Yes, you or anyone else in your company can serve as the registered agent for your Iowa LLC

Will using a Registered Agent service over being my own registered agent worth it?

If you opt for a professional Registered Agent service, it can be a more affordable way to manage all government related filings for your LLC in Iowa. This is because, for most businesses, the advantages of using a professional service will definitely outweigh all the filing fee and annual costs.

What is the processing time to form my Iowa LLC?

Immediately after payment is received

What is the difference between a domestic Iowa LLC vs a foreign LLC?

An LLC will be referred to as a domestic LLC when it conducts its business in the home state that it was formed. When a person refers to an LLC, it is generally referred to as a domestic LLC. A foreign LLC must be formed when an existing LLC wishes to expand its business into a neighboring or another state.

Do I need to file the operating agreement with the secretary of state?

No, you do not, an operating agreement is an internal document that you should keep for future reference.

How do I get an EIN if I do not possess a social security number?

A social security number is not required if you want to get an EIN. All you need to do is simply fill out IRS Form SS-4 and leave section 7B blank, you can then contact the IRS at (267) 941-1099 in order to complete your application.

What tax structure should I select for my LLC formation?

When you get your EIN from the IRS, you will be informed of the different types of tax classification options that are available but most LLC’s in Iowa would opt for the default tax status. Some LLC s in Iowa however have the option to reduce federal tax obligation by selecting the corporation (S Corp) status.

What is the minimum wage in Iowa?

The minimum wage in Iowa is $7.25 per hour

How often do I need to pay my employees?

The state of Iowa allows wages to be paid in any frequency as long as it is on a reliable schedule and happens once per month.

How to Dissolve an LLC in Iowa?

If you’re looking to shut down operation and dissolve your business entity, you must formally dissolve the business structure as per Articles of Dissolution. The failure to properly dissolve within the time-frame would result in potential legal implications, penalties and tax liabilities. The methods into dissolving your business entity could be carried via closing your business tax accounts or through filling the Articles of Dissolution.