With this guide on how to form an LLC in Iowa, we’ll take a look at the necessary steps and the details that go into them. It’s worth noting that the goal isn’t just to create an Iowa LLC, but also to handle some formalities that make operation easier.
An Iowa LLC is a way to legally structure your business so that your personal assets remain protected in case the business is sued. You may use the LLC for business or other purposes. As an example, an Iowa LLC can hold assets like real estate, vehicles, etc.
Here’s how you can create your LLC in Iowa.
1. Naming The Iowa LLC
The name of an Iowa LLC should be unique and recognizably different from other business entities registered with the Iowa Secretary of State. That means not only does the name have to be unique, but it also shouldn’t be similar to other registered businesses/entities either.
A way to get a quick overview of naming possibilities is to use the Business Entities Search on the website of the Iowa Secretary of State.
Name Designators For Iowa LLCs
LLCs in Iowa must end their name with a proper designator. The following designators are available for use:
- Limited Liability Company
- Ltd. Liability Company
- Ltd. Liability Co.
- Limited Liability Co.
LLC is the most commonly used designator, though you may use others if you so choose.
Application For Reservation Of Name (Optional)
You may choose to reserve a name for your LLC without actually registering the LLC. Once approved, the name reservation is valid for 120 days.
To do this, you’ll have to file an Application For Reservation Of Name with the Secretary of State. If you prefer to file via postal mail, the form is available on the Business Forms and Fees section (section 489.109) of the Secretary of State website. You can also file the form online using the Business Entity Filings service. The cost (filing fee) is $10.
2. Appoint A Registered Agent For Iowa LLC
A Registered Agent is a person or entity that receives service of process on behalf of your Iowa LLC. This means that the registered agent will receive legal documents like lawsuits, summons, etc. on behalf of the company.
Every LLC in the state must maintain a registered agent. The agent must have a physical street address in the state. PO Box addresses or similar services are not acceptable.
So, the Registered Agent can be:
- Any adult, legal resident of Iowa.
- Any business entity in the state that is allowed to do business and has an office in Iowa.
Many people choose to go with the second option, by means of picking Commercial Registered Agents. The professional use of their service can make things easier and more convenient. Some commercial agents might also offer services in helping to set up your Iowa LLC.
3. Filing The Certificate of Organization For Forming An LLC In Iowa
Forming an LLC in Iowa requires filing the Certificate of Organization with the Secretary of State. Most states offer a form that includes the minimum requirements for filing the Certificate of Organization (also called Articles of Organization in many states). Iowa, however, doesn’t provide any form.
That means you’ll have to draft your own Certificate of Organization. You could do it yourself, or have a lawyer draw one up for you. It’s also possible to download draft certificates uploaded on the internet by various users. Whatever route you take, the Certificate of Organization Iowa must comply with the requirements of law under section 489.201.
The filing fee for the certificate is $50, irrespective of the mode of filing. The Iowa LLC Certificate of Organization can be filed:
- Via postal mail
- Via fax
To file online, you can use the state’s Fast Track Filing system. If you don’t already have an account, you’ll have to create a free account before you use this system. It’s well worth the effort because you can use the system to file other documents and Iowa LLC biennial reports.
When filing via mail, you can include the filing fee as a check or money order made payable to the Iowa Secretary of State. The mailing address is:
Secretary of State
Lucas Building, 1st Floor
321 E. 12th Street
Des Moines, IA 50319
If you prefer to file via fax, use the number 515-242-5952. Payments for this method can be made using credit cards. You’ll have to include the state’s credit card authorization form and send it with the Certificate of Organization filing.
Processing and approval time for the Certificate of Organization is 7-14 business days, irrespective of the mode of filing.
Once the Certificate of Organization is approved, the state will send your registered agent a receipt, acknowledgment letter, and a stamped and approved copy of your Certificate of Organization.
4. Iowa LLC Operating Agreement
As with most states, Iowa doesn’t require an LLC Operating Agreement. However, the agreement remains highly advisable and you should get it for your Iowa LLC.
Operating Agreements are internal documents of the LLC and don’t need to be filed with any government agency. However, their presence indicates that the LLC is being run correctly and professionally.
For multi-member LLCs, the Operating Agreement can cover several aspects, including the distribution of ownership, approach to taxation, hiring policies, dispute resolution, and a lot more. Basically, this can be a very detailed document explaining various facets of your Iowa LLC.
While it is extremely important for multi-member LLCs, single-member LLCs too should have an Operating Agreement.
5. Applying For A Federal Tax ID (EIN)
The Employer Identification Number (EIN) is a nine-digit federal tax ID issued by the IRS. There is no filing fee and the overall process is quick. Apply for the EIN only after your Iowa LLC Certificate of Organization has been approved by the Secretary of State.
Filing online is the fastest way to get an EIN. Generally, the EIN will be available as soon as you submit the application.
If you don’t have an SSN, or if the LLC is owned by another business entity, filing online may not be possible. In these cases, file Form SS-4. This form can be filed via mail or fax.
6. Iowa LLC Biennial Reports
Every LLC in Iowa must file biennial reports. As the name suggests, the report is due every two years. However, they must be filed in odd-numbered years. The report can be filed between January 1 and April 1 of the first odd-numbered year after the formation of the LLC.
For example, an LLC formed in May 2020 must file its first report in 2021. Similarly, an Iowa LLC formed in August 2019 must file its first report in 2021.
Failure to file the report by April 1 each year it is due will result in the state seeing the offending LLC as ‘delinquent’. If the report isn’t filed by August 8, the state will administratively dissolve the LLC.
Iowa LLC can be filed online or via mail. Filing online can be done through the Fast Track Filing System. Though it generally requires an account, the system allows filing biennial reports without having to sign up.
Filing online costs $45.
Alternatively, you can file the biennial report via mail. However, this too requires downloading the report online. You can use the Fast Track Filing System, but rather than completing the filing, you can select the “File by Paper” option to “Yes”.
The mailing address is:
Secretary of State
Lucas Building, 1st Floor
321 E. 12th Street
Des Moines, IA 50319
Filing via postal mail costs $60.
7. Business Licenses, Permits, And Taxation
The requirement for business licenses and permits is generally determined by the local regulations of the county/city of your business. Another factor that comes into play is the specific industry of your Iowa LLC.
Usually, it is better to contact the city/county to see what requirements are necessary for the operation of your LLC.
Local, state, and federal taxes are applicable as well. Knowing how to start with local and state requirements is important. Once your Iowa LLC is approved, you should register with the Iowa Department of Revenue. Municipal, city, and township taxes should be considered as well.
On the federal level, Iowa LLCs are pass-through entities. This means the profits of the LLC are reported as part of your personal returns filed with the IRS. However, the tax structuring of your LLC plays an important role in filing taxes and the forms required.
It’s usually a good idea to hire a professional to handle these requirements on behalf of your Iowa LLC.