A Helpful Guide on How to Start an LLC in Iowa
You've wanted to start your own business for some time now, and now you're finally ready to put those dreams into action. You have considered what type of business entity would be best for you and decided that a limited liability company is a perfect solution. This article will help walk you through the six steps to opening an LLC in Iowa so that you can start your new company with ease!
1. Pick a name for your LLC
Iowa law requires that the name of an LLC be unique and distinguishable from any other business entity in the state. The business name must also include the words "limited liability company," "LLC" or "LLC."
The first step to opening an Iowa LLC is to check the state's online business name database to ensure that your preferred name is not already being used.
Have you decided on the name, but you are not opening the company right now? You have the option to complete the application form for reservation of name and submit it. The required filing fee of 10$.
Once approved by the state, this will reserve your desired name for up to 120 days. The application must include the proposed name of the LLC, the name and address of the applicant.
Even though you are not sure now, you may need a webpage at some point. It is good to buy your domain name now and reserve having one in the future. Check if the URL is available before deciding on a business name.
2. Select a Registered Agent
A registered agent is a firm or a person who keeps track of your LLC's paperwork and poses as a liaison between you and the state government.
An Iowa registered agent must be ready to accept important legal documents on your behalf during regular business hours. Your own registered agent receives mail from all state agencies.
They will update you about any changes in legislation affecting your business.
The mailing address must physically exist. It cannot be a PO box.
This function can be held by an individual or business entity. However, it is not recommended that you be the registered agent for your LLC.
If someone sues your LLC and delivers notice of the lawsuit in front of your customers or clients, it can be somewhat embarrassing. LLC owners usually opt for using a registered agent service in Iowa.
3. File the Certificate of Organization
The certificate of organization is a legal document that establishes your LLC in Iowa. It must be filed with the Iowa Secretary of State Business Services Division and include information such as:
- The LLC's name
- The LLC's address, and
- The address and the name of the LLC's registered agent
Unlike most states, the Iowa Secretary of State does not supply a printable or online certificate form. You will have to create your own or hire a lawyer to do so for you.
You'll need to register a Foreign LLC if you want to expand your existing LLC to the state of Iowa.
4. Receiving the Certificate
The Iowa secretary will issue you a certificate of the organization after the LLC formation forms have been filed and approved. This Iowa LLC certificate will confirm the LLC's formal existence.
Then your LLC will be able to get an Employer Identification Number (EIN), business licenses, and an LLC bank account. You will also be able to apply for a business credit card.
You can register your Iowa LLC online with the Secretary of State by scanning the certificate.
5. Compose an Operating Agreement
An operating agreement for a limited liability company (LLC) is a document that spells out how the company will operate.
Iowa LLC's operating agreement needs to be tailored to your company's specific needs and business plan.
It can also assist you in keeping your limited liability status. It proves that your Iowa LLC is a separate legal organization, thus protecting personal assets and separating them from your business assets.
Some of the items that you should address in your operating agreement include:
- The LLC's members and their ownership percentages
- How profits and losses are to be allotted
- What type of management structure the LLC will have
- The duties and responsibilities of its members
- Any restrictions on who can join the LLC
An LLC operating agreement can be written by you, a lawyer, or through an online template. Without an operating agreement in effect, the court will make decisions based on state law rather than what is best for the LLC and its members.
6. Get an EIN for Your Iowa LLC
An Employer Identification Number (EIN) is a federal tax number. The Internal Revenue Service assigns it to businesses and organizations. It's used to identify your company for legal purposes.
You can open a business bank account, file federal taxes, and hire employees with an EIN.
You can obtain your EIN by filling out an online application on the IRS website or through other means if you prefer not to apply online. The application is free and takes about 15 minutes to complete.
Once you have your EIN, you must include it in your tax paperwork and other business documents.
7. Make Sure You File the Biennial Report
In Iowa, biennial reports are due every other year, and the deadline for filing is April 1st. The biennial report must include any changes to your LLC's information from the moment you filled out the last report. For example, a change in the registered agent or business address.
It is a good idea to keep up with biennial reporting even if there are no changes to report. This is the simplest way to keep your LLC in good standing with the state.
Regardless of when you formed your LLC, you must file the report by April 1st of every odd-numbered year. Start with the first odd-numbered year after registering it with the Iowa Secretary of State.
How Can I Find Out if the Name I Want for My LLC Is Available?
You can do a name search on your state's LLC name reservation website. Most states will let you reserve a name for a set period (120 days). After the reservation expires, if someone else has already registered this Iowa LLC name, you'll have to come up with another option.
If you're not sure whether a particular LLC name is available, you can do a search on the Secretary of State website for that state.
How Much Does It Cost to Start an LLC in Iowa?
Iowa LLCs usually pay around $60 for starting a company.
Certificate of Organization is $50 and $10 for name reservations.
A Certificate of Organization is what establishes your business as an LLC. The filing fee for Iowa LLC is $50.
Name reservations refer to securing your choice of name when starting an LLC. This process costs 10$, whether you're founding a firm as a sole proprietor or with partners in an organization.
The total is $60 if you decide to do all the paperwork yourself to summarize expenses. Hiring a lawyer with business law knowledge may cost you a bit more. For further information, visit the Iowa secretary of state website.
What Happens if I Don’t File the Iowa LLC Biennial Report?
If you don't file a biennial report, the state will dissolve your Iowa LLC. This means that your LLC will no longer be a legal entity, and the state will distribute the Iowa LLC assets to other LLC members. And you will also lose your business licenses. Be sure to check with the Iowa secretary of state webpage to find out what happens in case of dissolution.
Make sure to submit your biennial report on time to keep your company in good standing and allow it to continue operating.
What Tax Structure Should I Use for My LLC in Iowa?
When an LLC business structure is established, the company needs to determine how it will be taxed - this is known as its "Tax Classification." The majority of LLCs choose the default tax status.
On the other hand, some LLCs can lower their federal tax liability by electing the S corporation (S corp) classification.
How Often Should I Pay My Employees?
Wages can be paid at any frequency as long as they are regular. Employers are at liberty to adjust salary schedules to accommodate changes that might arise during the year.
Do I Have to Pay Any Iowa Business Taxes?
If you sell items, collect state sales tax, or have employees, you must register with the Iowa Department of Revenue. There is an option of online filing or on paper (Form 78-005; Iowa Business Tax Permit Registration)
Can I Start a Professional LLC in Iowa?
If you provide a service requiring you to get an Iowa state business license before practicing, you are a professional service.
If you're an architect, attorney, dentist, or CPA, you'll need to form a professional limited liability corporation (PLLC).
If you want to start an LLC in Iowa, consider all your options before deciding. You can also ask for legal advice from ZenBusiness.
A lawyer will be able to give you some advice about operating agreements.
He will also help you file for a certificate of organization with a government agency. You may also want to hire registered agent services instead of taking that role yourself.
We hope this article has provided you with useful business advice. You are now ready to join other small business owners.