Owning a domestic or foreign LLC in Iowa is a great business decision considering the benefits of easy and affordable formation and streamlined management.
Working with our professional attorneys and business experts, we've spent the past two months looking into the costs of forming domestic and foreign LLCs in Iowa to help you plan your business funds wisely and avoid costly mistakes.
Quick Summary
- It costs $50 to incorporate an LLC by filing the Certificate of Organization with the Iowa Secretary of State.
- All LLCs in Iowa must file a biennial report to update the state on their business information and activities.
- Iowa LLCs are subject to different business taxes, including corporate tax and withholding payroll tax.
How Much Does an LLC Cost in Iowa?
An LLC in Iowa costs $50 to file your Certificate of Organization with the Iowa Secretary of State.
However, there are other filing costs that you can incur if you use add-on services like name registration, DBA filing, registered agent service, and much more.
Here’s an overview of the expenses needed for forming an LLC in this state.
Iowa LLC Filing Fee
To establish the formation of an Iowa LLC, one must fill out and submit a Certificate of Organization form, also known as the Articles of Organization.
It includes information such as the prospective company's name and the registered agent's contact details.
Filing the Certificate of Organization costs $50 at a standard processing time of 15-21 days. However, there's an option for a 5 business days turnaround that costs an extra $15.
Also, if you want your business filings processed much faster, you can pay an additional $50 for the rush filing option with 2 business days lead time [1].
Iowa Registered Agent Service Fee
In Iowa, you can act as your own registered agent for $0 costs. But while doing this saves you money, it can be challenging to handle all the duties of being a registered agent and running your company simultaneously.
It's, therefore, wise to hire a professional registered agent service who has an Iowa physical address, is accessible during regular office hours to receive notifications, and is eligible to handle legal paperwork and compliance.
Hiring an Iowa registered agent service will cost anywhere between $70-$300 per year, depending on your chosen company.
Iowa State Business Taxes
There are several business taxes that LLCs should pay to the Department of Iowa. These taxes include the following:
- Corporate tax: All Iowa business owners must pay corporate income taxes if they transact business in Iowa. This can be done online or by mail. Depending on how much money you make over the year, how you pay your staff, and other state expenses, this rate can range from 5.5% to 8.4%.
- Withholding tax in Iowa: 7.65% of your workers' earnings must be deducted by you as the employer. This sum should be kept separately in your company bank account to prevent any complications with the authorities.
- Sales and use tax: Once you register your Iowa business, you will also be responsible for covering the sales and taxes in Iowa. The state rate for this is 6%, and you may or may not also have to pay a municipal tax of 1%, depending on where your firm is located.
- Municipal business tax: Also, you'll be accountable for paying the state's company tax. This sum varies from 6% to 12%, based on factors including the need for an Iowa business license, company revenue, and an employee compensation policy for your company's expert service.
Other LLC Filing Costs
Here's a list of other Iowa LLC fees you should expect when establishing an Iowa LLC.
1. Application For Business Name Reservation
If you are reluctant to create an LLC immediately, you can request a name reservation with the Iowa SOS and pay a $10 filing fee to reserve a company name for 120 days.
To ensure you select a name that complies with state laws, conduct an Iowa business name search and read about LLC name regulations in Iowa.
2. DBA Name Registration
If your LLC operates under a name other than the one listed as its legal name, you must file a "Doing Business As" name registration. A DBA is also known as a fictitious name, an assumed name, or a trade name.
If your Iowa LLC firm opens additional branches, you must register for an Iowa DBA, enabling the general public to recognize your company and its services.
To do this, all members of your LLC must submit a Resolution to Adopt Fictitious Name and file it with the Iowa secretary of state for a $5 charge.
3. Iowa Biennial Reports
Every two years, each Iowa LLC conducting business must submit a biennial report [2].
A biennial report is crucial if you want your business entity to stay compliant with all state laws and be in the right standing with the SOS.
The type of filing you select will affect the filing fee and the turnaround time for the state to complete your report.
You must pay a $60 filing fee when you mail in your Iowa biennial report. Processing should take between 7 and 14 business days after submitting your report.
Online Fast Track Filing submission costs only $45 and is processed instantly. Online biennial report filing is the most time and money-efficient option for practically all LLCs in this state.
Failure to file a biennial report will result in your business going into a delinquent status and can ultimately be dissolved by the SOS.
4. Iowa Certificate of Existence
An Iowa LLC Certificate of Existence or good standing is a state document that provides evidence that your Iowa LLC complies with all applicable laws and tax regulations.
If you plan on applying for business loans, getting business insurance, or taking on potential investors, you'll need this certificate.
The Iowa certificate of existence is issued by the IA SOS and will cost you a $5 filing fee.
Note that this document is given to only compliant Iowa LLCs, so if you have any penalties or unpaid taxes, you must clear them before requesting a certificate of good standing.
5. LLC Operating Agreements
An LLC operating agreement is a statutory contract that specifies the management structure, membership qualifications, member responsibilities, and other essential details.
When formally establishing your company, it is often submitted with your Certificate of Organization.
This document will help you stay organized and ready for upcoming events that can impact your LLC in Iowa.
While you can draft an operating agreement for yourself for $0, it's best to hire a professional to create it for you at a cost ranging from $50 to $300, depending on the company.
6. Certified Document Copies
Certified copies are authentic and accurate duplicates of all the business filings sealed by the state.
Certified document copies include a Certificate of Organization, Certificate of Existence, operating agreement, or biennial report.
Iowa LLC owners can get certified copies of their business papers by phone, fax, mail, or in person for a $5 filing fee plus $1 per page.
The standard turnaround times take up to 2 days, including shipping time. Unfortunately, there's no rush filing option for this.
7. Employer Identification Number Registration
The Internal Revenue Service provides an exclusive Employer Identification Number (EIN) to each LLC operating in Iowa.Â
As a business owner, you will need an EIN when registering a business bank account, obtaining business licenses, filing taxes, and paying staff.
The IRS offers these free of charge, or you may have a professional get one for you for a $50-$100 filing fee.
After learning how much it costs to form an LLC, let's look at the filing fee for individuals who wish to form an LLC in a different state.
Iowa Foreign LLC Certificate of Authorization
LLCs classified as foreign were established in another state but want to expand into Iowa. These foreign LLCs must apply for a Certificate of Authority to the Iowa Secretary of State's office to conduct transactions there.
Note that you must also submit your Certificate of Existence and the filing documents during the foreign LLC registration.
You must file for the certificate of authority with the Iowa Secretary of State online and pay a $100 filing fee to start the process.
FAQs
How Long Does It Take To Form an Iowa LLC?
It takes 2-3 weeks to form an Iowa LLC with the Iowa Secretary of State. This is the standard processing time, but you can pay for expedited shipping for an extra $50 and get your papers filed within 2 business days.
How Do I File Taxes For My Iowa LLC?
You file taxes for your Iowa LLC by registering the entity with the DOR online or by mail. After the registration, you begin to pay withholding tax periodically, for example, annually or biannually.
Do You Need Professional Help With Your Iowa LLC?
Forming an LLC might be a sensible move to take advantage of the many tax and asset protection advantages in Iowa.
Although you can go through the process of forming an Iowa LLC by yourself, hiring a professional service could be your safest bet.
In that case, make sure to check our list of the best Iowa LLC service providers to assist you with the complicated legal process moving forward.
We've spent months testing these LLC services and can attest to their package affordability, service professionalism, quality customer care, and worry-free compliance.
References:
- https://sos.iowa.gov/business/formsandfees.html#DLLC489
- https://help.sos.iowa.gov/how-do-i-file-biennial-report#
