Free Guide to Start an LLC in Iowa
Starting a business in Iowa can be an exciting time. Before selling your product or service though, the nuts and bolts of licenses, registrations, and taxes must be completed.
The guide below will show you the DIY process of forming an LLC in Iowa. However, you can also use an online LLC service handle the paperwork for you. We reviewed and ranked the 7 best available.
The Top 2 Worth Considering:
- Northwest Registered Agent is a great option if you are looking for premium customer support.
- IncFile is ideal if you are looking for the best pricing with excellent features.
Step 1: Name Your LLC
Selecting a name for your Iowa LLC is a first step, yet a very important one. A name that is unique and easy to remember is helpful in finding potential clients or retaining customers.
The name should indicate the product or service. It should also follow guidelines set forth by the state of Iowa.
The name of an LLC will likely appear on business cards and stationary, marketing materials, a website, legal contracts, business bank accounts, invoices and/or a building directory.
Iowa law requires that the business name includes the words/abbreviations, “Limited Liability Company,” “Limited Company,” “LC,” “L.C.,” “LLC,” or “L.L.C.” The abbreviations “Ltd.,” or “Co.” may also be used.
The words/abbreviations “Corporation,” “Corp.,” “Incorporated,” “Inc.,” “Limited Partnership,” “LP,” “LLP,” “L.P.,” or “L.L.P.” may not be used.
The name must also be different than other names already registered.
Let’s imagine that someone is considering opening a flower shop in Des Moines, Iowa. The name she is considering, Flowers by Fanny, is already in use. Instead, she decides to legally name her business Fanny’s Florals and Design, LLC.
Determine the Name is Available
Following the selection of a name but before filing the Certificate of Organization, check to ensure that your name is unique on the Business Entities Search through the Secretary of State’s office. Searching in other places, such as online, is also a good idea.
After you have determined that your chosen name is “distinguishable,” the name can be registered in order that you have exclusive rights for 120 days.
Optional: Name Reservation
Sometimes a situation may arise where an individual wants a particular name but needs time to organize his/her company before filing paperwork to create an LLC. In this case, a name can be reserved for 120 days in the state of Iowa. A 120-day renewal is also available.
The downside is that it does cost $10 for the reservation. An Application for Reservation of Name cannot be filed online. It can be faxed, mailed, or delivered in person. If delivered in person, the application is processed immediately. If sent or faxed, processing take 7 to 14 business days. During heavier filing periods, processing can take up to 21 days.
If mailing or delivering in person, use the following address:
Secretary of State Business Services Division
Lucas Building, 1st Floor
Des Moines, Iowa 50319
Applications can be faxed to (515) 242-5953.
Step 2: Choose a Registered Agent
Every LLC in Iowa is required to have a registered agent. This agent can be an individual or a company.
The role of the registered agent is that of a contact person between the LLC and the state. As stated on 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.”
Simply put, the process agent receives communications or documents from the state involving such things as taxes or lawsuits and communicates them to the LLC.
Some may wonder why an Iowa registered agent is necessary. The importance of the agent is to ensure that someone is always available to receive important documents even if the business owner leaves the office, goes on vacation, or is otherwise away. Also, having a registered agent is especially important if a physical office does not exist in Iowa.
The owner of the LLC can designate a registered agent on the Certificate of Organization application.
Individual as Registered Agent
Most importantly, the individual must be a resident of the state of Iowa. An LLC cannot act as its own registered agent. However, a member or manager can act as the registered agent for the LLC. Using a third party ensures that nothing falls through the cracks. The third party can be an accountant, an attorney, or even a friend. The agent must have a physical and mailing address in Iowa.
Registered Agent Service
If using a service, the registered agent must be a business or professional. We recommend either using an LLC formation service (like Incfile or Northwest Registered Agent) which gives you a free registered agent or ordering a registered agent service by yourself if you choose to DIY your Alaska LLC formation.
Step 3: File the Formation Documents with State
Let’s assume that fictional Fanny has selected both the name for her LLC and the registered agent. She is ready to complete the paperwork (called the Certificate of Organization) that actually creates Fanny’s Florals and Design, LLC in Iowa.
Unlike many other states, Iowa does not have a ready-made form to be completed online or printed out and completed. The LLC organizer(s) is responsible for creating his or her own. Minimally, the certificate of organization application must include the name and address of the LLC, the name and address of the registered agent, and the name(s) and signature(s) or one or two organizers. For more information read Iowa Code 489.201.
Filing this document can be completed online, by fax, delivering in person, or by mailing through USPS. The filing cost is $50. When you are ready, it is important to note a few details about each method to ensure that your application is fully completed in the time frame in which you need it.
In order to file online, you will need to scan your created Certificate of Organization application, and then go to the Business Entities Filing page. The scanned document can be uploaded on this page. Also, payment through credit card can be made on this page. Processing time is 24 hours.
If faxing the application, credit card payment can be made using Iowa’s Credit Card Authorization form. The fax number is (515) 242-5953. Processing time is 7 to 14 business days. During heavier filing periods, it can take up to 21 business days.
Hard Copy Filing
Your created application, along with a check or money order (payable to Secretary of State), can be mailed or delivered in person to the following address:
Iowa Secretary of State Business Services
Lucas Building 1st floor
321 E. 12th St
Des Moines, IA 50319
Processing time is 7 to 14 business days if the application is mailed. During heavier filing periods, processing can take up to 21 days. If delivering the application in person, processing is completed immediately.
Step 4: Create an Operating Agreement
An operating agreement in the state of Iowa is recommended though not required. The agreement is a contract that defines the operations of the LLC, includes terms and conditions, states the responsibilities of its members, and ensures legal protections of its members.
All owners of the LLC must be in agreement of the terms in the agreement and sign before a notary public.
The operating agreement is useful for both multi-member and single-owner LLCs. In both cases, the agreement provides protections.
For example, in the case of the multi-owner LLC, the terms can stipulate what should happen if a death or divorce occurs among one of its members. In the case of the single-owner LLC, the agreement could be used in court as evidence that the LLC is separate from the individual owner.
The operating agreement can be created in two ways. Some individuals may choose to write the agreement on their own, using an online template. In this case, forms are available that are specific to state. Be sure to use the correct multi-member or single-member form.
The alternative is hiring an attorney to create the document. The benefits of using an attorney are ensuring the document doesn’t exclude any important information, adheres to state law, and invalidates default provisions that may not be what you wish.
Step 5: Get an EIN
An EIN is an Employer Identification Number. Anyone who runs their business as a corporation or partnership must file for this 9-digit number in order to identify the tax accounts of a business. The number can be applied for in one of the following three ways:
Applying online is the quickest method. The process can be completed between 7 a.m. and 10 p.m. EST, Monday through Friday. When the form is completed, the information will be immediately validated and a number issued while you are still online. In order to apply online, a valid individual taxpayer number, such as a Social Security number, is required.
Form SS-4 can be downloaded, completed and faxed to 855-641-6935, twenty-four hours, seven days per week. The EIN will be provided within four business days.
If either of the above methods are unavailable, Form SS-4 can be mailed, though processing will take approximately four weeks. The form can be mailed to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Think you’re ready to open up shop now? Guess again!
Step 6: Taxes, Licensing & Income Reporting
Businesses like Fanny’s Florals and Design, LLC may be official after completing the above steps, but it is important not to overlook a few critical details.
On the federal level, most LLCs do not pay taxes directly to the government. Instead, they report income and losses on the owner’s personal 1040 tax returns. Schedule C is often used for reporting. Unless the LLC chooses to be taxed as a corporation, a single-member LLC is taxed as a Sole Proprietorship and a multi-member LLC is taxed as a Partnership.
Similarly, most LLCs will pay state tax on pass-through income via their personal income tax returns. The exception is if an election is made to tax the LLC as a corporation.
In some cases an LLC is required to apply for a business permit. This includes businesses that have employees, and therefore, need to pay a withholding tax and businesses that sell merchandise, and therefore, need to pay a sales or use tax. The permit can be completed online or by hard copy.
If mailing or delivering the permit application in person, use the following address:
Registration Services Iowa Department of Revenue
PO Box 10470
Des Moines IA 50306-0470
The form can also be submitted by fax, (515) 281-3906.
Finally, an LLC may need to file and pay a local tax to a city, municipality, or county.
A professional license may be needed before a business can begin operations. To determine if you are required to obtain a professional license, visit the licenses and permits page on the state of Iowa website.
After an LLC is formed, a biennial report must be filed with the state of Iowa by March 31 during odd-numbered years. (You are not required the file the year of formation.) Notification will be sent prior to the due date. The biennial report costs $45 to file online or $60 to file a hard copy through the mail or in person.
If the biennial report is filed online or in person, processing will be completed immediately. If mailed the report will process in one to two months.
When all of the mechanics of setting up an LLC in Iowa have been completed, someone like Fanny can get down to the business of setting up a website, creating a logo…or purchasing flowers!
Need Help Creating Your LLC?
We recommend LLC formation services because it allows you to knock off an important thing off your checklist so you can focus all your energy on actually starting a business.
Can you do it yourself? Absolutely.
However, a service that forms an LLC for you will help with ongoing maintenance and keep you notified of any requirements you should adhere to.
As we mentioned earlier, IncFile and Northwest Registered Agent are the top LLC services available. If you’re not familiar with them, as a point-of-reference many of our readers like to compare them to the most well known LLC service, LegalZoom.