How to Start an LLC in Iowa
Looking to start the business of your dreams? Before you move on to actually run your company, there are foundational steps you must first take. Most importantly, you will need to form your company as a legal entity, such as an LLC or corporation. For Iowa entrepreneurs, this process is handled by the Iowa Secretary of State’s office.
For most businesses, the best business entity structure to choose is a limited liability company (LLC). These are simpler to set up than a corporation, but still offer personal liability protection by separating the business from its owners. You can form an LLC in Iowa with relative ease, but you’ll want to do your research before.
In this guide, we’ll show you exactly how to start an LLC in Iowa. For simplicity, we’ll break this guide down into simple steps that anyone can follow. Complete these steps, and you’ll be well on your way to building the business you’ve always wanted!
Consider utilizing an LLC formation service
For the easiest process possible, it’s well worth considering using an LLC formation service to help you start your new company. These services walk you through the process, simplifying and expediting the entire process.
For most entrepreneurs, we recommend either ZenBusiness or Northwest Registered Agent. ZenBusiness has budget-friendly plans (starting at just $39), while Northwest Registered Agent offers personalized service at great rates. Either company would be an excellent choice to help you start a limited liability company in Iowa.
Of course, this step is optional: You can complete the necessary paperwork on your own. But if you want to save time and money, it’s definitely worth looking into ZenBusiness or Northwest Registered Agent.
Name your new company
The first step you must take is to select a name for your new business. You will want to find a memorable, unique name that will fit your business well. More importantly, you must find a name that meets the requirements laid out by the state of Iowa, including:
- The name must be distinguishable from the names of other businesses in Iowa
- The name must contain “limited liability company”, “L.L.C.”, or “LLC”
- The name cannot contain government-related words or phrases, like “FBI”
- The name cannot contain restricted words, such as “Bank” or “Lawyer”, without additional paperwork
Once you find a name that satisfies these requirements, you’ll need to make sure it’s available. You can do this by using the Business Entities Search feature on the Iowa Secretary of State’s department website.
Using trade names in Iowa
It’s also worth noting that businesses in Iowa can use trade names, also known as “doing business as” or DBA names. These are secondary names used for branding purposes, that can essentially be “attached” to existing businesses. For example, “ABC, LLC” could do business under the name “XYZ”, or “XYZ Plumbing”, if the LLC registered those trade names.
Appoint a registered agent
All LLCs in Iowa must appoint a Registered Agent to represent their business. The Registered Agent can be any Iowa resident, or Iowa company licensed to do business in the state. You can be your own Registered Agent, you can appoint an employee, or you can hire a professional service.
What is a Registered Agent? Essentially, this individual or company is tasked with receiving legal documents, tax forms, and notice of lawsuits for your company. They are the public-facing entity that represents your business. They must publicly list a physical mailing address (no PO boxes allowed), and are responsible for receiving all important documents for the business.
While you can be your own registered agent, there are substantial benefits to using a professional service. A Registered Agent service will ensure that everything is handled professionally and that nothing important slips through the cracks. Using a service also protects your privacy – if you are your own Agent, you’ll need to have your mailing address publicly listed.
Create an operating agreement (optional)
Note: This step is optional, but recommended.
Most LLCs should have an operating agreement. This is particularly important for multi-member LLCs and companies with shared ownership. However, this step is technically optional, as the document does not need to be submitted to the state of Iowa.
An operating agreement establishes key details about a new company and is kept on file internally. Crucially, it establishes ownership structure and agreements between multiple owners. Thus, this document is essential for reducing the risk of future ownership disputes.
To draft an operating agreement, you can use a service like ZenBusiness, which provides useful templates. You can also search the internet to find a template, or engage the services of a local attorney to help you.
File LLC Certificate of Organization
The formal documents that need to be filed in order to form an LLC are the Articles of Organization. In Iowa, this form is called the Certificate of Organization. This form collects key information about your new company and is submitted to the Secretary of State for processing. The Iowa LLC fee is $50 and is nonrefundable.
There are two ways to file the Certificate of Organization: Online, or by mail.
To file online
Create an account and fill out the Certificate of Organization online. After logging in, you will find a “File a Document” link in the upper menu. Select this and locate the Certificate of Organization. Pay the $50 processing fee by credit card or bank transfer.
To file by mail
Read the requirements here, then draft your own Certificate of Organization. Include a check for $50, and mail the document to:
Lucas State Office Building
321 E 12th St
Des Moines, IA 50319
Note: Iowa does not have a standard Certificate of Organization form that can be submitted by mail. Businesses are expected to draft their own certificates, which must meet all the requirements. If you need help, consider using a company like ZenBusiness.
Wait for your documents
Once you have submitted everything, you will need to wait for your documents to be processed. In Iowa, this generally takes 2-3 weeks. Expedited processing may be available for an additional charge.
Apply for an EIN
An EIN (employer identification number) is a tax ID number that’s used by the federal government (IRS) for tax filing purposes. In a way, it’s like a social security number, but for a business instead of an individual. An EIN is also required to hire employees, so unless you’re a solo operation, you will definitely need an EIN.
EINs are handled on the federal level, which means your state-level LLC application with Iowa will not issue you an EIN.
The good news is that it is very simple to apply for an EIN, and it’s also free. You can complete the application in just a few minutes. Click here to learn more on the IRS website.
Apply for business licenses & permits
Once your LLC is established, you will also need to apply for various permits and business licenses. An LLC itself is just a business entity – it’s not necessarily licensed to do business in the particular area where it plans to operate. You may need to apply for:
- Sales tax permits
- Business licenses in the city or county where you plan to operate
- Professional licenses for certain industries
- Specialized permits for certain industries
- Liquor licenses
- Other specialized permits and licenses
The requirements in this category vary depending on the type of business you are operating, as well as where you are operating it. Some requirements are met on the state level, but most are processed locally with city or county governments.
To learn more, check out this Iowa business license resource.
Keep your business in good standing
Finally, there are ongoing requirements that you should learn about and complete, in order to keep your company in good standing with various federal, state, and local governments. This includes tax filings, permit renewals, annual reports, and more.
The specific ongoing requirements will vary depending on the type of business, and where it’s located. You will want to research the specifics of your firm as soon as possible. Here are just a few of the potential requirements that your business may have to meet:
- Federal tax filings
- Federal and state employer tax filings (payroll tax)
- Federal quarterly tax filings
- State tax filings
- Iowa Biennial Report (due every two years)
- Local tax filings (city/county)
- Sales tax filings
- Business license renewals
- Business permit renewals
- Ongoing Registered Agent requirements (required for the life of your company)
All of these requirements can seem overwhelming, but they don’t need to be. By researching the required steps from day one, and making a plan, you can stay on top of things and avoid issues. We recommend adding key due dates to a calendar so that you never miss a due date.
Open a business bank account
For any business, keeping finances separate from the finances of the owner(s) is very important. This makes accounting easier, and also protects personal assets from lawsuits related to the business. So, as soon as possible, you will want to open a business bank account and use it for ALL business transactions.
Most financial institutions have business accounts now, so you can simply look around to find a bank in your area that suits your needs. Business accounts have more requirements than consumer accounts, so be sure to call ahead to learn what documents and information you will need to open the account.
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