Iowa LLC Formation: Everything You Need to Know
Iowa LLC formation is the series of steps it takes to create a limited liability company in Iowa.4 min read
Iowa LLC formation is the series of steps it takes to create a limited liability company in Iowa. An LLC is a type of business entity that is known for its tax advantages, flexible structure, and the limited liability it provides owners. Forming such an entity is both affordable and simple.
How to Form an LLC in Iowa
- Choose a name. This should be unique, not a duplicate of any existing LLC name. It must have some variant of “limited liability company” in it and it can only use restricted words (like “bank” or “university”) with proper clearance and never use forbidden words (like “FBI” or “Secret Service”). You can check to see if the name you want is available at the State of Iowa’s LCC name search website. You can reserve a name for 120 days if you file an application of reservation.
- Choose a registered agent. This receives legal filings for you if legal action is brought against your LLC. An Iowa resident or company with an address in the state can be a registered agent. You can also be your own registered agent or choose someone from your LLC.
- File Your Articles of Organization. This is the official LLC filing form for Iowa, although Iowa itself does not provide the form. Instead, you must draft your own or have a lawyer do it. The document may then be submitted by mail or online, and there is a $50 filing fee either way. The document will usually take two to three days to be filed once submitted.
- Form an operating agreement. This document lists the owners of the LLC and their ownership stake, along with how the LLC is managed taxed, and how its profits are divided. It is not a required document in Iowa, but it is a recommended one, even for single-member LLCs. Because this document is considered an internal document, it does not need to be mailed to any government agency.
- Obtain an Employer Identification Number (EIN). This is a number used to identify businesses by the IRS. It is used for filing federal or state taxes, and banks often require it to open business checking accounts. Single-member LLCs that have employees or are taxed as corporations and all multi-member LLCs are required to get one. The IRS provides them free of charge by mail or online.
Steps after Forming an LLC in Iowa
After you have officially formed your LLC in Iowa, your work is not done, however. Further steps to get your business up and running include the following:
- Separate material assets. Opening a separate business bank account and credit card helps separate your personal and business assets, which can help the former maintain limited liability. These accounts should be opened in the name of your LLC, not your name. To open one you will need an EIN Letter from the IRS, a copy of your Certificate of Organization, and your passport or driver’s license.
- Register for the Iowa State Tax. Once your LLC is approved by the Iowa Secretary of State, you will have to register your LLC with the Iowa Department of Revenue. You will also need to register your company to be assessed local taxes from your community or county. If your LLC has employees, you will be required to register for the unemployment insurance tax and state income tax withholding. If you sell services or goods in the state, the Iowa sales taxes will likely need to be registered for.
- Get your books in order. Having an accounting system that is well managed will help you both keep track of your expenses, income, and bills and make filing your taxes easier. Good tax software can help a great deal with this. Look for software that matches your transactions to your bills, purchase orders, and invoices, syncs with your bank, and can be operated from you phone.
- Get permits and licenses. Iowa LLCs must be in compliance with all local, state, and federal regulations. What licenses or permits you will need will depend on your industry and your business’s location. The U.S. Small Business Administration (SBA) guide can help you with obtaining federal ones, Iowa's Business License Information Center can help you with state ones, and your local Chamber of Commerce can help you with local ones. Fees will vary depending on license.
- Get workers insurance. Most businesses are required to obtain workers' compensation insurance. General liability insurance is also recommended, but not usually required.
- Meet employee hiring compliance laws. If you have employees, you must make sure they can legally work in the country, that they are reported as “new hires” to the state, that workers’ compensation insurance is provided for them, that income tax is withheld, that compliance posters are posted in easily seen locations, and that they are paid in compliance with state laws.
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