How to Start An LLC in Iowa
To start an LLC in Iowa you must file a Certificate of Organization with the Iowa Business Services Division, pay a $50 filing fee, and get an EIN from the IRS.
The complete steps to forming an Iowa LLC are as follows:
- File an Iowa Certificate of Organization
- Pay the Business Services Division $50
- Wait for your approved copy of your Certificate of Organization
- Get a Federal EIN tax ID for the LLC
- Create an Iowa LLC Operating Agreement
- Take these documents to the bank and get an Iowa LLC bank account
How to file an Iowa LLC Certificate of Organization
To form an Iowa LLC, you file a Certificate of Organization by following these steps:
- Choose a name for your new LLC
- Decide if you want to hire a registered agent service to minimize public disclosures
- Choose whether your LLC will be managed by members or managers
- File online or by fax (515-242-5953) and pay with a credit card, or mail to the Secretary of State (Business Services Division, Lucas Bldg 1st Floor, 321 E 12th St, Des Moines, IA 50319) with a check or money order payable to “Secretary of State”
HOW LONG DOES IT TAKE TO START AN IOWA LLC?
Fast and Easy (1 day): Hire Northwest, answer a few quick questions, sit back and let our Corporate Guides file everything online correctly the first time.
Fast and Not-So-Easy (1 day): Write your own Certificate of Organization and file online yourself.
Archaic: Ignore Iowa’s new online Fast Track Filing system and file by mail, which can take anywhere from a few days to a few weeks. Maybe you’ll finally have time to make the trek out to see the future birthplace of Captain Kirk in Riverside. (Come on, it’s not just a place for the tourists to boldly go.)
WHAT IS THE COST OF AN IOWA LLC?
The state filing fee for your Certificate of Organization is $50. Hire Northwest, and your total out-the-door cost is $275, including the state filing fee and a full year of registered agent service.
How much does an LLC in Iowa cost each year?
Every other year, Iowa LLCs are required to file a Biennial Report which costs $45 online or $60 for paper filings.
What is an Iowa LLC Biennial Report?
The Iowa LLC Biennial Report is a form you file every other year to ensure the state has all your most current contact and ownership information. If you forget to file, you aren’t hit with any late fees—but if your report remains unfiled, the state can dissolve your LLC. It’s nice that you don’t have to file every year, but that makes it all the easier to forget.
We can help you out there—when you sign up for our service at Northwest, we’ll send you reminders to file. You can even hire us to file your reports for you, so you don’t have to think about them at all.
What are the Iowa LLC taxes?
There are currently 9 brackets for Iowa personal net income tax rates:
0.36%: $0 to $1,572
0.72%: $1.573 to $3,145
2.43%: $3,146 to $6,291
4.50%: $6,292 to $14,156
6.12%: $14,157 to $23,594
6.48%: $23,595 to $31,459
6.8%: $31,460 to $47,189
7.92%: $47,190 to $70,784
These brackets will undergo some changes over the next few years. In May 2018, Iowa passed a massive tax reform law that will be implemented in phases over the next few years. The personal net income tax rate will decrease a bit, eventually topping out at 8.53%.
Sales tax in Iowa is between 6 and 7%. The state sales tax is 6%, but cities and counties can add up to 1%, for a maximum possible sales tax of 7%.
IS AN IOWA LLC REGISTERED AGENT REQUIRED?
Yes, you need an Iowa registered agent. One of the very few absolutely required pieces of information you need for your Certificate of Organization is your registered agent’s name and address. The downside of this is that all the information you include in your Certificate becomes part of the permanent public record. If you put your own address, you run the risk of weirdos on your doorstep and junk filling up your mailbox.
Hire us and let us put our address instead. We’ll deal with the spam and solicitors, and we’ll be ready and waiting for any service of process—so you don’t have to be. No Iowan wants to be stuck behind a desk 9 to 5, Monday to Friday. How would you bike RAGBRAI? When you hire Northwest, we’re available, so you’re free to run your business. Or go to that book signing. Or tailgating. The point is that it’ll be your time to do what you want with.
DO I NEED A TAX ID NUMBER (EIN) FOR AN IOWA LLC?
If you have employees or have to file certain federal excise taxes (like Alcohol/Tobacco/Firearms returns), you must get an EIN. Even if you’re not obligated to get one, having an EIN is pretty useful. Banks will usually ask for your EIN when you go to open a business bank account. It’s the same with vendors when you go to establish credit. Local tax filings often require your EIN as well. For most situations, you can use your personal social security number instead—although that puts your personal information at greater risk. EINs are free from the IRS, so why not get one just in case? Can’t bear to fill out even one more piece of paperwork? Hire us to apply for an EIN for you.
DOES AN IOWA LLC NEED A BUSINESS LICENSE?
The state of Iowa doesn’t have a general business license—but some Iowa cities have their own licensing requirements. Most cities require licenses for a handful of specific business activities, but a few cities have general business licenses as well. For instance, Bettendorf requires a general business license before engaging in any business in the city.
IOWA LLC VERSUS IOWA CORPORATION:
It’s $50 to form an Iowa LLC and $50 to form an Iowa corporation. It’s $45 for both LLCs and corporations to file Biennial Reports ($60 by mail). So, the costs are pretty much the same. There’s not really a major advantage for taxes either. Many people assume corporations pay more taxes. Sometimes they do, but not always. There’s a lot of flexibility because LLCs and corporations aren’t stuck with their default tax type—they can make different tax elections. For example, both LLCs and corporations can choose to be taxed as S corporations.
With no significant cost savings, how do you know which business type is better for you? It mostly depends on how you want your business to operate. LLCs are simpler. Members can self-manage without directors or officers, so LLCs are a common choice for small businesses and new business owners. Considering a corporation in Iowa? Here’s information on Iowa incorporation.
DOES AN IOWA LLC NEED AN OPERATING AGREEMENT?
Yes and no. There isn’t a statute requiring you to have one, and operating agreements aren’t something you file with the state. Instead they’re internal documents—but very important internal documents.
Your operating agreement shows how your LLC works, who owns it, how decisions are made, and what happens if you decide to shut it all down. Investors, partners, members, banks and creditors will all want to see your operating agreement. You’ll likely need one just to open a business bank account. Starting a business may be the biggest financial risk of your life—and your operating agreement is not the place to cut corners.
Not sure where to begin or even what to include? At Northwest, we’ve got you covered. When you hire us to form your Iowa LLC, we include a free operating agreement specific to your management style. We also give you free resolutions, (including initial resolutions). We’re pretty proud of our forms—so much so that we were the first website to hand out free LLC forms, from operating agreements to membership certificates. And unlike many of the imitators that followed our example, we don’t put out junk—we’ve spent years updating and refining our documents. More than a million LLCs have used our free LLCs forms.
IOWA LLC CERTIFICATE OF ORGANIZATION REQUIREMENTS:
Iowa doesn’t have a standard form you can download for your Certificate of Organization. Instead, you can create your own Certificate. (Or use a template. Or just let Northwest write it for you.)
At minimum, you’ll need to include your LLC’s name, registered agent, registered agent address, organizer and signature. Many LLCs also state whether they’re member or manager-managed. Your Biennial Report later on will request a principal office address as well, so it’s common to include that in your Certificate too.
- Company Name: Your name must include “Limited Liability Company,” “Limited Company,” or an abbreviation like “LLC.”
- Principal Office: Your principal office address must be a street address, not a PO Box. When you hire Northwest, you can keep it simple by using our address—it’s much less annoying than having to remember and update multiple addresses.
- Registered Agent: You can appoint an individual or a business. We recommend Northwest.
- Registered Office: This is the address where your registered agent is going to be available. Our address goes here when you hire us.
- LLC Management: Your LLC can be managed either by its members or its managers. Most small LLCs are member-managed, but it’s all about decision-making power. If you’d rather turn over day-to-day decisions to a manager, you can choose a “manager-managed” LLC.
- Iowa LLC Organizer: An organizer is the person who puts together your Certificate, signs it, and submits it to the Secretary of State. Your organizer doesn’t have to be a member or manager. Hire Northwest, and we’ll be your organizer.