Follow our free guide to form an LLC in Iowa
Starting an LLC in Iowa is a process with multiple steps. But our informative guide will show you how to form an LLC in Iowa and walk you through the process.
Growing Economy Iowa has seen some substantial economic growth in the past few years, putting it just under the top 20 mark of states with the best GDP expansion. In the past decade, Iowa’s GDP is increased by 50%.
No Corporate/Franchise Tax Iowa does not charge a corporate or franchise tax for LLCs. The only taxes owed by the LLC members are personal income taxes.
Privacy for Owners Iowa does not require the identities of LLC members/managers to be disclosed in the Certificate of Organization. An organizer (the party who prepares and files the paperwork) is able to submit the formation paperwork instead.
Complicated State Income Tax Structure Iowa has one of the more complicated state income tax structures in the nation, with a sliding scale from .36% to 8.98% and 9 different tax brackets that range from $0 to $72,000. At the top of the scale, the 8.98% is among the higher income tax rates in the U.S.
Complex Corporate Tax Structure Iowa’s current corporate tax rate is on a sliding scale from 6% to 12%, depending on the company’s earnings—some business owners may end up paying four tax rates. Additionally, the 12% rate is the highest in the U.S.
No Growth in Wages There has not been a change in Iowa salaries for a few years; in fact, the average hourly wage actually decreased by .2% from 2017 to this year.
$50 filing fee/ $60 biennial report
No corporate/franchise tax
Creating an LLC in Iowa does not have to be stressful when you have the right kind of professional help. The first phase of LLC formation actually lays the foundation of your business and includes the following steps:
Before you file any paperwork, you have to find a name for your Iowa LLC. Keep in mind that both Iowa and the federal government have rules and restrictions concerning business names—see below:
Tip: Use a free business name search tool to ensure your company’s desired name is available.
Business Name Guidelines
The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C.
Your business name cannot be intentionally misleading to consumers
The name of your new LLC must not be similar to another organization’s name/trademark
Restrictions There are some restrictions on the state and federal level that restrict certain words from being used for a business name.
A few examples include:
“Lottery” and “Bank” are ineligible for use (any state)
Terms that represent educational or Veterans’ organizations are restricted
Terms related to the Armed Forces or civil servants (police, EMT, fire)
LLC business names associated with government and/or financial entities are not always restricted - it depends on the state. Additional paperwork may be required.
URL Availability Another part of choosing a business name is selecting the domain name for your LLC’s website. Check domain name availability at a number of online web services sites. Step 2: Establish Ownership
The owners of an LLC are actually known as either members or managers, depending on the chosen management structure of the business. All LLCs will have members, but not every LLC will have managers.
LLC Management Structures:
Member-managed: All members participate in running the LLC and making decisions for the company.
Manager-managed: An appointed manager oversees the daily operations of the LLC while the members take a more passive role (often as investors).
Iowa LLC Member Guidelines
Required Number of Members There must be at least one member or manager to form an LLC in Iowa.
Member Disclosure Requirements An organizer may sign and file the Certificate of Organization in place of the LLC members.
Age Restrictions LLC members in Iowa may be of any age.
Residence Restrictions There are no residency restrictions imposed on LLC members in Iowa.
Any LLC formed in Iowa must appoint a registered agent. Your business will not be officially recognized without this position.
What is a registered agent? A registered agent can be either a single person or business who accepts official government notices (including the Secretary of State) on behalf of the LLC.
Why do you need a registered agent?
Iowa requires all business owners to select a registered agent so that the Secretary of State has a consistent contact person for the business. The registered agent is also the recipient of any court-related mail, such as process notices and lawsuits.
What are the main requirements for a registered agent?
The registered agent must have a physical address (not a P.O. Box)
The registered agent must be available during business hours
Who can be a registered agent in Idaho?
An Iowa state resident with a physical address
An LLC or corporation licensed to operate in Iowa
Can I be my own registered agent for my business? By law, you can be your own registered agent as long as you have a physical address in Idaho.
Is being my own registered agent discouraged? LLC business owners are discouraged from acting as their company’s registered agent because it compromises their personal information since the registered agent’s name and address are listed publicly.
Tip: Avoid the hassles and choose Swyft Filings to fill the registered agent needs for small businesses in Iowa. Find more information here.
The most critical step in the formation of your Iowa LLC is filing the Certificate of Organization with the Secretary of State.
What is the Certificate of Organization? The Certificate of Organization is a legally binding document that is filed with the state government to officially form your LLC.
Why do I need the Certificate of Organization? Your LLC business in Iowa will not be legally recognized by the state government without filing this document. Consider the Certificate of Organization as part of your LLC’s foundation.
What is the cost of filing the Certificate of Organization? The filing fee for Iowa is $50.
What information is included in the Certificate of Organization?
The name and address of the LLC
The name of the organizer filing the paperwork
The name and location of the registered agent
The chosen LLC management structure
The duration of the LLC (perpetual or not)
Professional service businesses in Iowa can form a type of LLC known as a Professional Limited Company (PLC).
Professional Service Business Examples (for a PLC):
Accountants
Attorneys
Physicians (general, surgeon, podiatrist, dentist, optometrist, chiropractor, physical therapist)
Professional Counselors and Psychologists
Architects and Engineers
Veterinarians
Social Workers
A few points to consider:
All members of the PLC must be licensed in the profession of the business.
The PLC is only allowed to provide services for which the business was formed.
The members are still subject to whichever licensing boards govern the PLC’s profession.
An LLC Operating Agreement is not legally required, but it is still considered necessary for the continued success of your Iowa LLC.
What is an LLC Operating Agreement? The LLC Operating Agreement is an in-house legal document that defines the role of each member, discusses their rights to the business, and lays out the duties involved in operating the business.
Why do I need an LLC Operating Agreement? The LLC Operating Agreement defines the roles of the members and provides direction for daily operations. It also ensures a level of stability and structure to the LLC and reduces future disputes.
Do I need to file the LLC Operating Agreement? You do not need to file the Operating Agreement with the state; it is for use by the LLC ownership and remains in-house.
What goes into an LLC Operating Agreement? While every LLC Operating Agreement is different and specific to its business, most documents include the following information:
List of the members/managers and their roles
Designation of authority in the LLC
Initial capital contributions of the members
Voting designations and percentages of the members
Member transfer/addition rules and restrictions
Distribution of profits
Meeting schedule
Tip: Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.
The majority of Iowa-based businesses must register for an EIN. Your LLC business cannot conduct business without this identification.
What is an EIN? The EIN is a nine-digit number that is created by the IRS to uniquely identify your business with the federal government.
What does EIN stand for? EIN is an acronym for Employer Identification Number. It is also known as a Federal Tax ID.
Are all businesses required to have an EIN? Federal law dictates that certain types of business entities register for an EIN:
Any business with employees (even if owned by one person)
Any business with more than one member
A partnership (LLC or C-corp)
Please Note: A sole proprietorship is not required to have an EIN, but it is still recommended.
Why does my LLC business need an EIN? The more common reasons you would need an EIN are:
To hire employees
To open a bank account in the U.S.
To file your company’s taxes
To pay independent contractors
In short, if you make money through your business and it has employees, you must have an EIN.
Is the EIN publicly listed? The EIN for any business is a matter of public record.
Can I use my Social Security Number as the EIN? You can use your social security number for the EIN; however, it is not recommended since this information is publicly listed.
Swyft Filings offers EIN services for small businesses in Iowa. Find more information here.
Once the foundation of your Iowa LLC is laid, the next phase of the formation process adds more structure for your business and gets you ready to go.
The Next Set of Steps:
Iowa does not impose a corporate or franchise tax on LLCs. The LLC members are only required to pay state and federal income taxes on the pass-through revenue.
State Income Taxes Iowa’s state income tax rates are listed in the table below:
Corporate Tax Information If you choose to have your LLC taxed as a corporation, your business will be responsible for paying the state’s corporate tax. See chart below:
Iowa sometimes charges an Alternative Minimum Tax (AMT) of 7.2% in certain situations.
Additional Tax Information Other taxes your LLC may need to pay:
Sales Tax — 6%
Consumer’s Use Tax ($120 biennially)
Employee Withholding Tax
Unemployment Tax
The licenses and permits required for an LLC in Iowa can vary, depending on a number of variables:
Location (city and county)
Type of Business
Industry
Any businesses that pay the following taxes will need to apply for a business permit:
Sales Tax
Consumer’s Use Tax
Withholding Tax
Retailer’s Use Tax
Hotel/Motel Tax
Auto Rental Tax
Tip: If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.
Iowa LLCs are must file a biennial report with the Secretary of State to keep the business information and status updated.
What is a biennial report? A biennial report, also called a periodic or annual report, is filed with the Secretary of State on to maintain current information about your business.
What kind of information is in the biennial report? The information requested in the biennial report is similar to what is in the Certificate of Organization:
The name and address of the business
The name and address of the registered agent
The business’s EIN
Is the biennial report part of public record? The biennial report filed on behalf of your LLC is a matter of public record.
Fees and Due Date
Fee: $60 Due Date: Jan 1 - April 1, due on the first (and subsequent) odd year following LLC formation Frequency: Every two years Implications of Late Filings: LLC dissolution is not filed by Aug 8th
Swyft Filings helps you stay compliant by providing stress-free solutions. File your biennial report with us today.
After you have completed all other formation procedures for your Iowa LLC, you can now request a Certificate of Good Standing for your business.
What is a Certificate of Good Standing? The Certificate of Good Standing is issued by the Secretary of State and confirms that your business has been properly formed and meets all state specifications.
Who issues the Certificate of Good Standing? The Certificate of Good Standing is generally issued by the Secretary of State.
When can I request a Certificate of Good Standing for my business? Submit your request for a Certificate of Good Standing after your LLC is officially formed.
Why do I need a Certificate of Good Standing? The Certificate of Good Standing provides security that your LLC is in good standing with the state government — it puts other businesses and financial institutions at ease when conducting business with you.
Additionally, some states require a Certificate of Good Standing before a business can apply for Foreign Qualification.
Does the Certificate of Good Standing have an expiration date? The Certificate of Good Standing does not expire/does not need to be renewed.
Swyft Filings can create a Certificate of Good Standing for your Iowa LLC. Click here for more information.
Every day, business owners from all over the nation rely on Swyft Filings to help them file an LLC online and maintain their company.
Looking for answers? You came to the right place. Read the FAQ or contact our team for more information.
Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
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