If you’re looking for a reliable DIY guide for starting an LLC in Iowa, look no further.
Below you’ll find all the information you need to launch your business and handle any associated costs.
Follow each step carefully and your LLC will be established and ready to hit the ground running. We’ve also included helpful resources along the way.
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Step 1: Name Your LLC
What’s in a name? Quite a bit, actually. Your business name is your Iowa LLC’s identity, its personality, its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.
Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.
While you can (and should) be creative with your business name, there are certain state requirements that it must follow.
Check out Section 489.108 of the Iowa LLC Act, which outlines specific LLC name requirements. It states that your name must contain one of “limited liability company,” “limited company,” “L.L.C.,” “LLC,” “L.C.,” or “LC,” and be completely distinguishable from every other name on record with the Secretary of State.
But if you discover that your desired name is already taken, you might be wondering how to distinguish it without changing it entirely. Typically, altering the following elements will not be enough:
- Punctuation and spacing
- Capitalization and special characters
- Articles (“a,” “an,” and “the”)
- Conjunctions (like “and,” “but,” and “or”)
- Singular vs. plural versions of the same word
- Business type designators like LLC, Ltd., Inc., and LP
Instead of small, syntactic changes, you will need to make substantial alterations to the name’s key words.
Consider this: your friend Fanny wants to open a flower shop in Des Moines, Iowa. The name she wants, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the Secretary of State’s records.
Determine the Name is Available
Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Certificate of Organization without first confirming it’s available. Use the Secretary of State’s Business Entities Search to see if there’s an existing business using your desired name.
Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.
Optional: Name Reservation
You may have fallen in love with a particular name, but still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can apply for a renewable 120-day name reservation.
Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can place a hold by mailing or hand-delivering an Application for Reservation of Name and a $10 payment to:
Secretary of State
Business Services Division
Lucas Building, 1st Floor
Des Moines, Iowa 50319
You may also fax your document to (515) 242-5953.
Obtaining a name reservation is quite helpful if you aren’t ready to start your business, but if your LLC is ready to go, you’re better off skipping this step and using that name on your Certificate of Organization instead.
Step 2: Choose a Registered Agent
Fanny’s LLC is quickly taking shape, and if it’s going to operate in Iowa, she’ll need a go-between for state and legal communications. This is called the registered agent.
A registered agent is a key component of your budding LLC, handling all of its sensitive communication with the state so you don’t have to. According to the Iowa Secretary of State website, “the registered agent is an individual (or a corporation depending on the business organization) designated by the entity to accept service of process if a lawsuit is filed against the entity.”
Taxes, lawsuits, maintenance requirements, and more – the registered agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate. Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside Iowa.
But maintaining an agent isn’t just a convenience, it’s required. The LLC Act, Section 489.113 states that all Iowa LLCs must maintain a registered office and registered agent at all times.
Now for the practical application, the “how-to.” Putting your registered agent on the record is just a matter of listing the agent’s name and address on your Certificate of Formation. As soon as your application has been accepted, your agent will be official.
You have two options for who can serve as a registered agent: an individual or a company.
Individual as Registered Agent
You may think that an individual registered agent would need specialized training or experience, but this isn’t the case. Anyone can serve as your registered agent, as long as they are an Iowa resident, have a physical address in the state, and are at least 18 years old.
Many times, using a third party like an attorney or consultant will ensure that nothing falls through the cracks, but family members, friends, and business partners are valid options too. You can even appoint yourself, provided you meet these requirements and don’t mind the additional responsibilities.
Registered Agent Service
It can be a lot easier, though, to use an LLC formation service like ZenBusiness (or even IncFile and Northwest Registered Agent), so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free registered agent service. Or, if you’d rather start your LLC on your own, you can use a national registered agent service to cover your agent duties.
During the life of your LLC you may, at some point, need to change your registered agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing registered agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.
Step 3: File the Formation Documents with the State
This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.
She’s reserved her unique business name, designated a registered agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Certificate of Organization. This filing creates a record for Fanny’s Florals and Design, LLC with the Iowa Secretary of State, giving it the authorization to commence business in the state.
The Secretary of State requires LLCs to file Certificates of Organization online through the Fast Track Filing portal. You will need to create an account if you haven’t already. Then, once you’re logged in, select the appropriate form and follow the instructions to complete it.
Filing a Certificate of Organization costs $50, so have your payment ready when you file. Your completed application will be processed right away.
Step 4: Create an Operating Agreement
The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.
There’s no Iowa state law declaring that your LLC must adopt an operating agreement. Still, this document doesn’t just offer standardized procedures and optimize efficiency, it also protects your assets in legal disputes and legitimizes your company in the eyes of courts, banks, government agencies, and more. You should think twice before proceeding without one.
Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution. But if she decided to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to the tax structure.
If you’ve decided to draft an agreement, there are two ways to go about it:
- Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but we recommend getting one through ZenBusiness, which includes a free LLC operating agreement with every package. This will save you a lot of time and money.
- Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it complies with state law, includes all necessary information, and avoids the state’s default laws.
What are default laws?
Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the state will make that decision for you.
Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.
Step 5: Get an EIN
There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.
Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation or partnership, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.
The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:
Need to get this done quick? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.
You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.
Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Okay, so you’ve filed the Certificate of Organization, designated a registered agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!
Step 6: Taxes, Licensing & Income Reporting
For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep an Iowa LLC running smoothly and in good standing with the state.
Before you start doing business, create a plan for the following potential LLC requirements:
As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.
Unless you’ve structured your LLC to be taxed like a corporation, your state income taxes will operate the same way federal ones do, where owners report business income as part of their personal returns. While some states impose “franchise” or “privilege” taxes on their LLCs, Iowa does not, so you won’t need to worry about that either.
But you’re not in the clear just yet. There are still some business-related taxes your LLC may owe if it meets certain conditions. For example, if you sell merchandise, your LLC will be responsible for Sales and Use Taxes, and if you hire employees, it will need to pay a Withholding Tax. You can register for any of these taxes online or by mailing/hand-delivering a paper application to:
Registration Services Iowa Department of Revenue
PO Box 10470
Des Moines IA 50306-0470
Or, you can submit it by fax to (515) 281-3906.
Plus, depending on your LLC’s location, it may owe a local tax to its city, municipality, or county. Consult your local government’s website to find out.
The Certificate of Organization may have already made your business legitimate, but your LLC might still need to obtain a license before doing business. This all depends, however, on the type of business you run.
Our friend Fanny, for example, may need to apply for licensure through the Department of Agriculture before she opens her flower shop’s doors in Iowa. And if she decides to sell snacks to her customers, she would need a Food Service License from the Department of Inspections and Appeals. To determine if your LLC needs a specific license, visit the state’s licenses and permits page.
Once you’ve taken all the steps to start your LLC, you’ll be off and running, making deals and growing the company. But when things are moving 100 miles per hour, don’t forget that Iowa requires all of its businesses to submit one important recurring filing: the Biennial Report.
After your LLC is off and running, it will need to file a Biennial Report in each odd-numbered year (excluding the year of formation). You can either file online for $45 or by mailing/hand-delivering a hard copy for $60.
Mark April 1 on your calendar because that’s the due date for your Biennial Report. If you fail to file a Biennial Report on time, your LLC will be labeled “delinquent,” and if you still haven’t filed within a few months, the state can administratively dissolve your business.
And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your Iowa LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.
Need Help Creating Your LLC?
If you even skimmed this guide to look over the steps, you likely got a sense of how many moving parts there are when starting an LLC. Can you do it all yourself? Absolutely. We have complete confidence in you.
But if you’d rather hand it off to someone else and not have to worry about it again, we recommend using an LLC formation service. This way, you can go about your other business responsibilities with the confidence that everything will be submitted correctly and punctually.
Plus, an LLC formation service can handle maintenance items like Annual Reports, so you can take them off your to-do list. And on top of that, many services also provide a registered agent.