Think about your LLC a year from now: raking in profits and taking Iowa by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Iowa.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Iowa startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Iowa
Optional: LLC Name Reservation Fee
- $10 for hard copy submissions
Required: Certificate of Organization Fee
- $50 for online or paper submissions
Overall Iowa LLC Formation Costs
LLC Name Reservation Fee
Say you have a perfect name lined up for your LLC. The only problem is that you’re not quite ready to start the business. You might look into filing for a name reservation. This service is completely optional, but it can be helpful in securing a business name. You’ll pay $10 to place a 120-day hold on your desired name. That said, filing the Certificate of Organization will automatically register your name, so if you’re ready to start your business, you’ll save money and time by skipping the reservation.
Certificate of Organization Fee
This is the big one, the most important form that you’ll file to start your Iowa LLC. The state won’t recognize your business as official until you’ve successfully submitted the Certificate of Organization. Anyone filing this form must do so online, through the Fast Track Filing system, and pay a $50 fee. As long as your certificate is accepted, you won’t have to file it again, so this is the only time you’ll need to pay this fee.
Even after filing the Certificate of Organization, certain business types are required to obtain professional licenses before conducting business in Iowa. As an example, automobile dealers must apply for a Regulated Loan License (among others) because they offer small loans to consumers. Additionally, most cities and/or counties have their own licensure requirements. Depending on your business type and location, your LLC might need multiple licenses. Or, it might need none. Consult Iowa’s Licenses and Permits page, along with your local government, to determine which ones your LLC requires.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Registered Agent Service
Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Iowa business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. Since legal counsel is an investment, it’s important to find the right fit for your business. Sites like Avvo can help you navigate the vast amount of lawyers out there. They provide access to an attorney database, which is sortable by location, rates, specialties, and more, so you can be sure you’re finding a great Iowa business attorney.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Iowa. Foreign LLCs file an “Application for Certificate of Authority” instead of the Certificate of Organization.
All foreign business entities are required to foreign qualify in Iowa, or they could incur some pretty severe penalties. The $100 filing fee makes the Application for Certificate of Authority more expensive than the Certificate of Organization, but they are both only one-time filings, so it’s a $100 that you won’t need to spend again.
LLC Biennial Fees
Some states require Annual Reports to keep their business information current and accurate, but Iowa requires Biennial Reports. During every odd-numbered year, your LLC must file a report between Jan. 1 and Mar. 31. You can file online for $45 or on paper for $60, and you can count on making this payment every two years.
Iowa doesn’t subject it’s LLCs to a “franchise” or “privilege” tax like some other states. And federally, LLCs – which are classified as “pass-through” entities – do not need to file corporate tax returns.
However, there are certain circumstances that might require your company to pay specific Iowa business-related taxes. If your business has employees, for example, it may owe a withholding tax. Or, if you sell merchandise, you might need to pay a sales tax. You will need to register for these taxes on the Iowa Department of Revenue website. Find more information here.
It’s not quite as common, but if you’ve structured your LLC to be taxed like a corporation, it will need to pay the corporate income tax, which ranges from 6-12%.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
While the state doesn’t charge late fees for filings, failure to submit them on time will result in delinquent status. If an LLC fails to file a Biennial Report, update its registered agent status, pay the necessary taxes, or make other required filings and remains delinquent for too long (60 days for most forms/fees) it risks being administratively dissolved by the state.
Delinquent businesses also lose their good standing with the state, which means that they will not be able to request a Certificate of Standing or make new filings until you’ve reconciled all late payments, filings, etc. Without a Certificate of Standing, you won’t be able to foreign qualify in most other states, apply for business loans, renew professional licenses, and more.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Iowa.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like Biennial Reports – so your business doesn’t fall out of good standing.