How to Form an Iowa LLC

Last Updated on

Iowa LLC Quick Facts

Iowa LLC Costs

Initial LLC Filing Fee – $50

 

Recurring State Fee – Biennial Report fee

  • Online – $45
  • Mail – $60

LLC Processing Time

It normally takes less than 2 weeks for the LLC to be filed with the state.

Don’t want to form an LLC by yourself?

Let IncFile or IncAuthority guide you through the LLC formation process, so you know everything was done right. Only pay state fees!

Quick Reference

The Limited Liability Company (LLC) is a popular business entity choice structure for many businesses starting in Iowa.  The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in Iowa without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

The LLC filing fee is $50, and processing time typically takes 24 hours when filing online and around one week when filing by mail.

How to Form an LLC in Iowa

Unlike most states, the State of Iowa does not provide a document to form the LLC.  In order to file the LLC with the Secretary of State, you will need to create a Certificate of Organization.  The State provides statutory requirements of what needs to be in the Certificate of Organization in state statutes Chapter 489, Section 201.

Below we have information on what information is needed to create your own Certificate of Organization.

Forming an LLC can be both affordable and is something most people can do themselves. Entity formation companies like IncFile or IncAuthority help guide you through the process and make sure there are no mistakes.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

Step 1: LLC Name

In Iowa, each registered LLC must follow naming guidelines such as having a unique name, nor be confusingly similar to other names.  Here, you can check on available Iowa LLC names before filing.

Next, every LLC must include one of the following words or abbreviations at the end of the business name:

Limited Liability Company
Limited Liability Co.
Ltd. Liability Company
Ltd. Liability Co.
LLC
L.L.C.
LC
L.C.

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

Before finalizing a name, you may also want to see if a domain name is also available to have a matching website address.

Step 2: Initial Registered Office Address

The initial registered office address can be the physical address of the business or the address where the business records are stored.  A P.O. Box may not be used.

Step 3: Registered Agent

To have an LLC in Iowa, a Registered Agent must be identified.  The registered agent can either be a resident of Iowa or a registered agent service.  The agent must have a physical street address in the state to act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc. on behalf of the LLC.

You are not required to pay for a registered agent. Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed.  Hiring a company like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.

Step 4: Effective Date (optional)

If you want to file the LLC but not want it to start until a date in the future, you can add a section stating the LLC’s effective date.  By default, the LLC is effective on the date submitted.  If you prefer to have the LLC officially start at a later date (up to 90 days), enter that date and time in these fields.

Step 5: Signature

Review the information, and the LLC organizer (could be a member, attorney, or individual helping form the LLC) will sign and date the Certificate of Organization.

Step 6: Pay and Send

The next step is to send in the Certificate of Organization.

By Mail: 

Prepare a check or money order made out to “Iowa Secretary of State” and mail to

Secretary of State – Business Services Division
Lucas Building, 1st Floor
321 E. 12th Street
Des Moines, IA 50319

Online:

Scan the completed Certificate of Organization, upload to the Secretary of State website and pay via credit card – https://sos.iowa.gov/file/origination/index.aspx

By Fax:

Download the Credit Card Authorization Form – https://sos.iowa.gov/business/pdf/CCAUTH2.pdf

Then fax the completed Certificate of Organization and Credit Card Authorization Form to the Secretary of State at 515-242-5953.

You don't have to form your LLC by yourself or pay an attorney!

Forming an LLC is a little intimidating, especially when it’s your first time. Professional entity formation services help guide you to make sure it’s done right. Check out our reviews of popular LLC formation services to learn more.
  • Free plan offers a lot of value (state filing fees still apply)
  • Lifetime customer support
  • Free registered agent in the first year
  • Free 1-hour tax consultation
best value
  • Free plan offers a lot of value (state filing fees still apply)
  • Lifetime customer support
  • Free registered agent in the first year
  • Proactive customer service called to discuss next steps
best value
  • No free plan, but pricing is fair and upfront
  • Lifetime customer support
  • Free registered agent in the first year
  • Free business name availability check
easiest

Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare an LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits, losses, and dividends are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Iowa operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number or FEIN) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file federal and state taxes, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you as some forms of taxation, such as the C-corporation are not the best for some people due to double taxation.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s income and expenses from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • In some cases, an Iowa Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state (Certificate of Authority for a foreign LLC).

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Business Tax Permit – To sell products and certain services, registration with the Iowa Department of Revenue will be necessary in order to collect sales tax.

Related: What Business Licenses are Needed in Iowa?

File the Biennial Report

LLCs are required to file a biennial report with the Iowa Secretary of State. The due date of the biennial report is April 1st of each year and updates ownership information and other details.

Related: How to File an Iowa LLC Biennial Report