How to File an LLC in Iowa

As an entrepreneur, it’s common to have big dreams and ideas, but knowing where to start can be challenging. One of the most important first steps in forming a small business is deciding the type of business to operate and where to incorporate it.

In Iowa, one popular option is to file for a Limited Liability Company (LLC). LLCs are a popular choice among small business owners because they provide personal asset protection and pass-through taxation benefits. However, LLCs are only one of the options to gain some of these benefits. Other formation options to consider include S Corps and C Corps.

Key Takeaways:

• In Iowa, there are specific requirements for filing an LLC and ongoing compliance requirements that you must meet after you file.

• According to the Small Business Administration, there were over 270,000 small businesses in Iowa as of 2019.

• Forming an LLC in Iowa can result in significant tax savings thanks to pass-through taxation, where profits and losses are passed through to the members and reported on their personal income tax returns.

When researching where to file your new LLC, consider the specific laws and regulations of the state you choose. In Iowa, for example, there are specific requirements for filing an LLC and ongoing compliance requirements that you must meet after you file.

According to the Small Business Administration, there were over 270,000 small businesses in Iowa as of 2019.[1] With so many like-minded entrepreneurs, Iowa could be a brilliant place to form an LLC for your growing business.

This step-by-step guide will take a closer look at the process of filing an LLC in Iowa. Keep reading to learn more about the necessary actions to quickly and easily incorporate an LLC in Iowa.

What Is an LLC Formation?

An LLC, or limited liability company, is a popular business structure that provides personal asset protection for its owners—also known as members—while at the same time offering tax benefits similar to a partnership. 

Forming an LLC in Iowa can offer flexibility regarding federal taxes. Members can be taxed as a partnership, S Corp, or C Corp. This can result in significant tax savings thanks to pass-through taxation, where profits and losses are passed through to the members and reported on their personal income tax returns.

At the state level, LLCs in Iowa must pay sales tax and annual state fees, but they are not subject to corporate income taxes. 

To form an LLC in Iowa, entrepreneurs must file the necessary paperwork with the Iowa Secretary of State and pay an annual filing fee. Once you incorporate the LLC, members must adhere to ongoing compliance and reporting requirements to remain in good standing with the state.

Step-by-Step Guide to Starting Your Iowa LLC

There were over 33,000 new businesses registered with Iowa’s Secretary of State’s Office between July 1, 2020, and June 30, 2021—a strong indicator that entrepreneurs are excited about the opportunities available in Iowa.[2]

Below, we’ll take a closer look at each filing requirement, so you’ll know exactly what to expect when getting started. From filing your articles of incorporation to maintaining compliance, we’ve got you covered!

Please note, however, that these steps are specific to Iowa, and while the process is similar across states, the detailed requirements and fees can vary. 

Step 1: Choose a Business Name for Your LLC

The first and most important step to forming your LLC is choosing a proper and original business name. Selecting a name that has yet to be used by another business in Iowa is essential. It should be memorable and meet the naming requirements of the Iowa Secretary of State.

To check if your desired name is available in Iowa, starting with a name search is a good idea. The Iowa Secretary of State provides a business name search tool on their website, which allows you to search for existing LLCs and other corporations that have previously been reserved or filed with the state of Iowa. 

You can also use our fast and simple Free Business Name Search here. Select your desired location and type in your LLC name to get started. You will receive results with existing Iowa LLC names in just seconds.

In Iowa, you can reserve your desired LLC name before officially forming the LLC. You can submit a Name Reservation application to the Iowa Secretary of State’s office.[3] The application can be submitted online, by mail, or in person. The reservation fee is $10, which reserves the name for 120 days. 

Reserving your name helps ensure that your desired LLC name is available before going through the official formation process—allowing you to focus on completing the rest of the formation paperwork without worrying about your name getting taken by a competing business.

When thinking about options for your Iowa LLC name, here are some crucial requirements to keep in mind:

• Your Iowa LLC name must include the words “Limited Liability Company” or the abbreviation “LLC” somewhere in the name.

• Your business’s name must be distinguishable from existing business names on file with the Iowa Secretary of State.

• Certain words, such as “Bank,” “University,” or “Insurance,” will require additional documentation before approval and could cause your application to get denied.

Registering a Domain for Your Iowa LLC Name 

When choosing your LLC name, consider purchasing a corresponding website domain simultaneously. This will ensure that your business has a robust online presence from the start and will help customers to find your new business and products online. Hundreds of domain registry sites will allow you to check for available domains for free, including GoDaddy and NameCheap.

Trademarking Your Iowa LLC Name 

Another essential step when choosing your LLC name is to trademark it. This will help prevent other businesses from using your name and better protect your brand from potential imposters. Trademarking your name can be completed through the United States Patent and Trademark Office (USPTO).[4] The USPTO website also provides free trademark name searches to verify name availability. 

Expand Your Naming Possibilities by Filing for a DBA in Iowa

Further expanding your name possibilities by filing a Doing Business As (DBA) in Iowa is a great way to add a new name to your LLC without creating a new legal entity. This can be useful for businesses with different branches or services under one LLC. By registering a DBA, you can operate under another name while maintaining the same legal protection and benefits of your LLC. 

In Iowa, a DBA is called “registering a fictitious name.” You must file this with the Secretary of State. A fee of $5 is required to file your desired fictitious name. Many of the same naming requirements exist, including the requirements for the name to be unique. 

It’s important to note that a DBA is not a separate legal entity, and any liabilities or contracts entered into under the DBA name will still be the responsibility of the LLC.

Step 2: Fill Out the Iowa Certificate of Organization

Once you have chosen and reserved your business name, the next step in forming your Iowa LLC is to file the Certificate of Organization with the Iowa Secretary of State. This document, also known as the Articles of Organization, is a legal document that officially incorporates your LLC, establishing it as a separate entity under state law.[5] Filing with the Iowa Secretary of State costs $50.

You must include the following items in the Certificate of Organization:

• The name of the LLC, which must comply with state naming regulations

• The address and the name of your registered agent 

If your LLC is a foreign LLC doing business in Iowa, you must also file a Certificate of Authority and the Certificate of Organization.[6]

When filling out the Iowa Certificate of Organization, ensure that all the information provided is accurate and in line with state regulations. Giving clear and precise information will help ensure a smooth and successful filing process. 

In Iowa, all LLCs must file a biennial—every other year—report every odd-numbered year by March 31. You can submit this report online through the Secretary of State’s website or mail it in. The filing fee for online submissions is $30, and for mailing in the form, is $45. Before the due date, you should receive a notification from the Secretary of State.

Step 3: Hire an Iowa Registered Agent

Having a trusted registered agent for your Iowa LLC is vital to stay compliant with state law and regulations. A registered agent in Iowa is responsible for receiving legal and business-related documents on behalf of your LLC, such as service of process in case of lawsuits and other legal documents required by the state.

When choosing a registered agent, they must have an actual and physical street address in Iowa. P.O. boxes are not acceptable as an Iowa registered agent. The registered agent’s address will also serve as the registered office for your LLC.

All registered agents should be available during regular business hours, partly because they can only accept service of process papers during standard business operating hours. If your registered agent is not available during these times, it can result in your LLC being non-compliant with state law.

You can choose to be your own registered agent. However, it’s vital to remember that hiring a registered agent service may be more beneficial if you are not always available at your registered office during business hours. They will ensure that all legal documents are received and handled promptly to ensure your LLC remains in good standing with the state.

Swyft Filings offers a Registered Agent service trusted by small business professionals in every state. Our service includes dedicated digital tools, such as an online dashboard, which provides secure and reliable access to your official documents. Additionally, our team is available 24/7 to assist you with any questions or concerns. 

Step 4: Create an LLC Operating Agreement

While Iowa does not require your LLC to have or submit an Operating Agreement, it is highly recommended to have one in place. An LLC Operating Agreement outlines the terms and conditions of your Iowa LLC, including the rights and responsibilities of the business owners. It can help set the foundation for your business operations when done correctly.

An LLC Operating Agreement is significant for multi-member LLCs as it lays out the rules and procedures for managing the business, including how you will divide profits and losses, decision-making processes, and dispute resolution procedures. 

Single-member LLCs may not need an LLC Operating Agreement. However, having one is still recommended as it can provide protection and clarification in future legal disputes.

In Iowa, an LLC Operating Agreement can be either manager-managed or member-managed, depending on the preferences of the LLC owners. A manager-managed LLC operating agreement will give a designated manager the authority to make decisions on behalf of the LLC. In contrast, a member-managed LLC operating agreement gives all members an equal say in decision-making.

Swyft Filings offers a customizable LLC Operating Agreement service to make creating your Iowa LLC Operating Agreement as seamless as possible. 

Step 5: File for an Employer Identification Number

While not required to form your LLC in Iowa, obtaining your LLC’s Employer Identification Number (EIN) is still crucial for properly setting up your small business for success. It is a nine-digit number assigned to your business by the Internal Revenue Service (IRS) for tax purposes.[7]

Obtaining an EIN is simple and can be done online using the IRS website. Having your EIN on hand when opening a business bank account, applying for business licenses, or registering for sales tax is essential.

An EIN is also necessary for filing federal and state taxes for your LLC. As a business entity, your LLC must file federal tax returns, even if it does not have any employees. Even if you have a single-member LLC, you must still obtain an EIN.

Let Us Handle Your LLC Paperwork

Starting an LLC in Iowa is a big step for any small business owner or entrepreneur. Handling all the paperwork alone can be overwhelming, with many important documents to file and deadlines to meet. That’s where Swyft Filings comes in. We care for all your LLC filing needs, making the process fast, easy, and affordable.

We understand the challenges of starting a business, so we are dedicated to making the process as smooth as possible. Our team of LLC experts is available 24/7 to answer questions and provide guidance throughout the process.

Don’t let paperwork hold you back from starting your dream business. Let us handle your Iowa LLC paperwork and focus on what matters most to you, like growing your business! 

FAQs

How much does it cost to set up an LLC in Iowa?

Costs for setting up an LLC in Iowa can vary depending on a few factors. However, some ordinary expenses to consider may include:

• Filing fee for the Certificate of Organization: $50

• Name reservation fee (if desired): $35

• Registered agent fee (if using a service): prices vary

• Biennial report fee: $30 for online filing, $45 for filing by mail

• Operating Agreement creation fee (if using a service): prices vary

• Trademark application fee: prices vary

It’s important to note that these are just estimates, and the actual costs may vary. Additionally, there may be other fees for obtaining any necessary licenses or permits for your specific business. It’s always best to check with the Iowa Secretary of State for the most current and accurate information regarding particular costs that could affect the type and size of business you plan on operating in Iowa.

How is an LLC taxed in Iowa?

In Iowa, LLCs are considered pass-through entities for tax purposes, meaning the business itself does not pay income tax on its profits. The company’s profits and losses can be “passed through” to the individual LLC members, who report it on their personal income tax returns.

The LLC may be required to file an annual return with the state. The fees for this form may vary depending on your LLC’s net yearly income.

It is important to note that some LLCs may also be required to pay an annual franchise tax and file an annual report. Also, LLCs with employees may need to register for Iowa withholding and unemployment taxes.

For a complete picture of what taxes your Iowa LLC may be responsible for, consult a tax attorney or accountant licensed to practice in the state of Iowa.

What are the benefits of an Iowa LLC?

An Iowa LLC offers several benefits for small business owners, including:

• Limited liability: LLC owners are not personally liable for the company’s debts or liabilities.

• Pass-through taxation: An LLC is not taxed as a separate entity. Instead, the profits and losses “pass-through” to the individual members, who report it on their personal tax returns.

• Flexibility: An LLC can be managed by its members or appointed managers. This allows for flexibility in management structure and decision-making.

• Separation of assets: An LLC can help separate personal and business assets, offering protection in case of legal action against the company.

• Credibility: Forming an LLC can give your business credibility and professionalism in the eyes of customers, suppliers, and contractors you work with.

Starting your business in Iowa has other benefits, too. According to the Iowas Economic Development Council, Iowa has a wealth of qualified workers, which could be vital during the current economic climate. The state’s total employment level increased to 1,675,500 in March from 1,671,100 in February.[8]

How do you dissolve an LLC in Iowa?

If you need to dissolve an LLC in Iowa, you can file Articles of Dissolution with the Iowa Secretary of State.[9] This document must be signed by all members of the LLC and will need to include the effective date of dissolution. 

Before filing for dissolution, the LLC should ensure that you’ve paid all debts and liabilities and fulfilled all tax obligations on behalf of the organization. It is important to notify any creditors and inform them of the dissolution. 

The filing fee for the Articles of Dissolution is $35. Filing and processing time typically takes a couple of business days. Consult with an attorney to ensure that all steps get handled correctly.

Bibliography:

1. Small Business Administration. “2019 Small Business Profiles Iowa.” https://advocacy.sba.gov/wp-content/uploads/2019/04/2019-Small-Business-Profiles-IA.pdf Accessed January 20, 2023.

2. Iowa Secretary of State. “Secretary of State Paul Pate Announces Filing Fees for Businesses and Corporations Will be Waived Through December 31, 2021.” https://sos.iowa.gov/news/2021_07_12.html. Accessed January 20, 2023.

3. Iowa Secretary of State. “Filing Instructions for Forms 635-0051 and 635-0052.” https://sos.iowa.gov/business/pdf/635_0051.pdf. Accessed January 20, 2023.

4. United States Patent and Trademark Office. “Home.” https://www.uspto.gov/. Accessed January 20, 2023.

5. Iowa State Government. “489.201 Limited Liability Company - Filing of articles of organization.” https://www.legis.iowa.gov/DOCS/ACO/IC/LINC/Section.489.201.pdf. Accessed January 20, 2023.

6. Iowa Secretary of State. “Filing Instructions for Form 635-0010.” https://sos.iowa.gov/business/pdf/635_0010.pdf. Accessed January 20, 2023.

7. Internal Revenue Service. “Apply for an Employer Identification Number (EIN) Online.” https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online. Accessed January 20, 2023.

8. Iowa Economic Development Authority. "State of the Iowa Workforce.” Accessed May 8, 2023

9. Iowa State Government. “499.47 Foreign LLC - Registration.” https://www.legis.iowa.gov/DOCS/ACO/IC/LINC/Section.499.47.pdf. Accessed January 20, 2023.