Iowa LLC : Everything You Need to Know
An Iowa LLC is a limited liability company that provides the owner(s) with protection for their personal assets if a suit is ever brought against the company.3 min read
2. Steps to Form an LLC in Iowa
3. Best Practices for Choosing a Name for Your LLC
4. What Is an Operating Agreement?
What Is an Iowa LLC?
An Iowa LLC is a limited liability company that provides the owner(s) with protection for their personal assets if a suit is ever brought against the company. Personal assets that fall under this protection include items or property you own, such as:
- Personal banking accounts
You can create an LLC in the state to operate a business. Another reason to form an LLC is to buy or hold assets, such as:
- Real estate
An LLC has no cap on the number of members it can have, which is one of the greatest advantages of this business structure. Members of an LLC may include:
- Other LLCs
- Foreign entities
LLCs may be known as “hybrid” businesses because they have the elements of a limited liability partnership as well as a corporation.
Steps to Form an LLC in Iowa
- Select a name you wish to use for your company.
- Choose a person or entity as your registered agent.
- File a Certificate of Organization with the state.
- Create an Operating Agreement.
- Get a Federal Tax Identification Number, also known as an EIN.
Best Practices for Choosing a Name for Your LLC
Before you can create your LLC, you'll have to check the availability of your desired name in Iowa. The name you choose has to be unique in comparison to existing business names in the state. Your name can't be “confusingly similar” to existing names.
A proper designator must be included at the end of the name. Some examples include:
- LLC (the most common)
- Limited Liability Company
- Limited Liability Co.
You should try to secure a domain name for your LLC as soon as possible once your name is approved.
You won't be allowed to use certain words in your LLC name, including attorney, bank, or University. Using these words requires additional paperwork, and you might need to have a licensed individual, such as a lawyer or doctor, to be part of the company. You're also prohibited from using words that would make people believe your LLC is a federal or state agency, such as:
- Secret Service
You can reserve a name for up to 120 days. If you wish to do so, visit the Iowa Secretary of State website and file a reservation application. Include the name you want to reserve as well as your name and address. Sign and date it. Submit it along with a $10 filing fee.
What Is an Operating Agreement?
An Operating Agreement lists the LLC owners, also called members, along with the percentage each owns in the business. The number of members for an LLC can range from one with 100 percent ownership to multiple individuals who split the ownership in a way they agree upon. There are no guidelines as to how you have to split ownership in a multi-member Iowa LLC.
The Operating Agreement details information about the company such as:
- How to manage the LLC
- How it's taxed
- How to split profits
Even if your LLC only has one member, also known as a “single-member LLC,” you should still have an Operating Agreement. This helps protect your personal assets if you're ever sued.
You don't have to mail your Operating Agreement to the state or other agency. You can keep it with your business records and just make sure other members (if any) get a copy. While you're not required to have an operating agreement for an Iowa LLC, it's still good practice to have one. The agreement is a legal document that details your LLC's operating procedures.
It also contains the terms entered into by the members, and it outlines important details such as:
- Each member's role in the LLC
- Managing parties for the LLC
- Voting rights
- Procedures for member admittance or removal
- Dissolution of the LLC
- Procedures for amending the Operating Agreement
Whether you're a one-person operation or you're part of a larger business with multiple members, following the rules and state guidelines for creating an LLC in Iowa ensures you get the company off to a good start.
If you need help or more information for an LLC in Iowa or another state, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.