An Iowa entrepreneur may choose to set up a business as a limited liability company (LLC). This type of legal structure gives the owner benefits of the limited liability features that typically come with a corporation as well as the amazing tax perks and flexibility of operations a partnership offers.

Each state has different guidelines to form an LLC. Here are the guidelines to start a LLC in Iowa.

Getting Started

Naming the LLC

The first and most important step in creating a LLC is to choose a name. In the state of Iowa, the name of an LLC must contain the words Limited Liability Company or the abbreviation for those words which would be L.L.C. or LLC.

In addition, certain words that may result in confusion because they are already being used by Federal or State agencies, such as ‘FBI’, are strictly prohibited. Also prohibited are words such as ‘bank’, which is considered to be a restricted word. This requires the LLC to file additional paperwork for approval.

Once a name is chosen, a search must be performed to ensure the name is available and is not being used by another Iowa company or agency. A search can be performed to see if a business name is available in Iowa.

Assuming a website will be designed for the business, it is a good idea to search now to see if the desired URL and domain name is available so that it can be secured.

Choosing a Registered Agent

A registered agent, sometimes referred to as a statutory agent, must be selected for the LLC. A registered agent is an owner or a third-party individual who is designated to accept tax and other legal documents on behalf of a business. Iowa requires that the registered agent reside in the state or that it be a corporation who is authorized to conduct business in Iowa.

Filing the Certificate of Organization

It is necessary to register and file the Certificate of Organization for an Iowa LLC with the Iowa Secretary of State to officially form your Iowa LLC. The Certificate of Organization must include the following:

The Certificate of Organization for an Iowa LLC Requires:

  • Business Name
  • Name and Address of Registered Agent
  • Principal Office Address
  • Name, Address, and Occupation of each Member (Owners)
  • Member Voting Rules

The Certificate of Organization must be signed by all members and filed with the Secretary of State. The fee is $50 and is non-refundable.

Create Operating Agreement

The state of Iowa does not require an Operating Agreement to form an LLC.

Running Your Business

Getting Your EIN

What’s an EIN?

An EIN is an employee identification number, issued by the Internal Revenue service. Sometimes it is also called a Federal Tax Identification Number. It’s a unique number issued to each business.

You’ll need an EIN to

  1. Open a business bank account.
  2. File Federal and State Taxes
  3. Hire employees.

Before you get your EIN:

  1. Make sure your new business has been properly formed before applying.
  2. Be wary of paid sites. EINs are free direct from the IRS.

How do I get an EIN?

  1. Apply online: The easiest way is to apply online for an EIN. Note, the IRS website has office hours, and is only available Monday through Friday, 7am to 10pm. Yes, we also agree this is one of the most ridiculous things we’ve ever seen.
  2. Call: You can call 1-800-829-4933, between 7am to 7pm of your time zone, Monday to Friday.
  3. Snail Mail – You can download the form and mail it in.

Keep Business and Personal Accounts Separate

  1. Get a business bank account for your business. This will help you protect your personal assets from potential creditors and lawsuits, and will also make life A LOT easier come tax time.
  2. Get a business credit or debit card. This will help you keep your expenses separate and easier to track.

Accounting

No matter what business you run, accounting software and processes is a must for any small business. If you have an accountant, ask them which software they work with and recommend.

A good accounting system is necessary to:

  1. Track income and expenses, so you can easily see if you’re making money
  2. Makes filing income taxes so much easier.

Always try and find something that will:

  1. Sync with all of your bank and credit card accounts automatically – not just downloads, but auto sync.
  2. Automatch vendors, customers and other accounts.
  3. Let you accept credit cards and ach drafts with ease.

Employee Taxes

Businesses with employees in Iowa must register with the IRS as well as the state’s Department of Revenue and set up accounts for Unemployment Insurance Tax and Employee Withholding Tax.

Withholding Tax

An Iowa business with employees is required to withhold and pay employee income taxes to the state via the Iowa Department of Revenue. An LLC must register with the Department of Revenue then pay the Employee Withholding Tax on a regular periodic basis, typically quarterly.
Unemployment Tax

Iowa LLC rules require a business to pay State Unemployment Insurance (UI) Taxes. The Iowa Workforce Development manages the UI Taxes in Iowa.

 

Sales and Use Tax

Businesses selling goods and services to customers in Iowa are required to collect and pay sales tax. This is done by registering with the state via the Iowa Department of Revenue and making periodic tax payments. The amount due is determined by submitting the Sales Tax Returns to the state.

Permits

Any other necessary permits needed for an Iowa LLC can be found here.

Insurance

Worker’s Compensation Insurance

Worker’s Compensation Insurance is required for all Iowa LLCs with employees. This state mandated insurance provides coverage for employees who are injured on the job or suffer from a work-related illness or disability and is managed by the Iowa Workforce Development.

State General Liability Insurance

An Iowa LLC should obtain General Liability or Commercial Insurance. This protects the business assets and pays any costs for legal claims.

Keeping Your LLC Compliant

Every Iowa LLC must file a Biennial Report (Every two years) with the Secretary of State due on April 1st of odd numbered years. The cost for this Biennial Report is $45 for paper reports and $30 for reports filed online.

If the Biennial Report is not received by the date required by the State of Iowa, the business will go into a delinquent status. If the delinquency is not filed by August 8th, the state will administratively dissolve (shut down) your Iowa LLC.

How to File a Foreign LLC in Iowa

A foreign LLC is required to file an Application for Certificate of Authority to transact business in Iowa as a Foreign LLC. The cost to file is $100.