How Much Does an LLC Cost in Iowa (Breakdown of Filing Fees)
Owning a domestic or foreign LLC in Iowa is a great business decision considering the benefits of easy and affordable formation and streamlined management. However, you need to consider the cost before forming one.
As an expert in Mergers and Acquisitions and a Master's Degree holder in tax law, I assisted multiple individuals and businesses in forming their limited liability companies.
Working with our business experts in the state, 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.
In the venture of setting up an LLC, utilizing the expertise of an Iowa LLC service can be beneficial in sidestepping mistakes that might prolong the process.
- It costs $50 to file the Certificate of Organization with the Secretary of State for your Iowa LLC.
- Once the state approved the business, additional expenses you may incur include licenses and permits, registered agent service, taxes, biennial report, and other pertinent document.
- Corporate-taxed LLCs in Iowa face tax rates between 5.5% and 8.4%, based on earnings and expenses, according to the Iowa Department of Revenue.
- My clients attest that it is relatively low cost to start and maintain an LLC in Iowa. The state only requires biennial reports.
Cost to Start an LLC in Iowa?
The initial cost of forming an LLC in Iowa constitutes mandatory fees and optional expenses.
1. LLC Formation Filing Fee ($50 - Mandatory)
Filing the Certificate of Organization costs $50 at a standard mail 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 .
When I helped a client file for an LLC, I opted to submit the application online since all filings are processed immediately.
2. Registered Agent Fee ($80-$300 Annually – Optional)
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.
Hiring an Iowa registered agent service will cost anywhere between $80-$300 per year, depending on your chosen company.
3. Name Reservation Fee ($10 - Optional)
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, I advise clients to conduct an Iowa business name search and read about LLC name regulations.
Expenses Following the Approval of Your LLC
Here's a list of other Iowa LLC fees you should expect when establishing an Iowa LLC.
1. Business License (Depending on the Line of Business - Mandatory)
Depending on the line of business or profession, the LLC may be required to obtain the necessary permits or licenses to operate in the state. The cost will depend on the required license or certification.
In my experience, it would be a good practice to consult with the local Small Business Administration to determine if your line of business requires permit or a license.
2. Biennial Reports ($60/Mail-$45/Online - Mandatory)
Every two years, each Iowa LLC conducting business must submit a biennial report . According to the Iowa Secretary of State, this requirement has led to the submission of over 50,000 biennial reports annually, ensuring that a significant portion of active businesses in Iowa remain compliant with state regulations.
You must pay a $60 filing fee when you mail in your Iowa biennial report. Iowa LLC processing time 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.
I remind clients to file on or before the due date to remain in good standing with the state.
"Biennial reports in odd-numbered years are due by April 1, and since there's no standard form, paper submissions require creating a report based on guidelines in state statute IAC § 489.209."
- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions
3. Taxes (Depending on Income Bracket - Mandatory)
There are several business taxes that LLCs should pay to the Department of Iowa.
These taxes include the following:
- Corporate tax: LLCs taxed as a corporation are subject to a corporate tax. 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%, according to the Iowa Department of Revenue.
- 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: 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: 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.
4. Operating Agreement ($100 - $200 - Optional, but Recommended)
An LLC operating agreement is a statutory contract that specifies the management structure, membership qualifications, member responsibilities, and other essential details.
While you can draft an Iowa LLC operating agreement for yourself for $0, I inform clients of the importance of hiring a professional to create one. They specifically ensure the document is legally binding. The cost is between $100 to $200, depending on the company.
5. DBA Name Registration ($5 - Optional)
If your LLC operates under a name other than the one listed as its legal name, you can file a "Doing Business As" name registration.
To do this, submit a Resolution to Adopt a Fictitious Name and file it with the Iowa Secretary of State for a $5 charge.
6. Certificate of Existence ($5 - Optional, but Recommended)
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.
The Iowa Certificate of Existence is issued by the IA SOS and will cost you a $5 filing fee.
When clients inquire of the importance of obtaining this documents, I inform them it's necessary when applying for business loans, getting business insurance, or taking on potential investors.
7. Certified Document Copies ($5+ $1 per additional page - Optional, but Recommended)
Certified copies are authentic and accurate duplicates of all the business filings sealed by the state.
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.
8. Employer Identification Number ($0 - Optional, but Recommended)
The IRS issues an EIN free of charge, or you may have a professional get one for you for a $50-$100 filing fee.
As a business owner, you will need an EIN when registering a business bank account, obtaining business licenses, filing taxes, and paying staff.
What is the Interest Rate for Late Tax Payments in Iowa?
The interest rate for late tax payments in Iowa is 5% for both late filing and payment.
What Payment Methods Can I Use To Pay Iowa's State Fees For Filing My LLC?
The payment methods you can use to pay Iowa's state fees for filing your LLC are cash, check, credit card, and accounts receivable.