Benefits of a Corporation
Forming a corporation limits your liability for the corporation’s financial obligations, which means that the corporation’s creditors cannot pursue your personal assets to pay corporate debts. Forming a corporation can also protect you personally from liability if an employee is accused of doing something illegal. There may also be other benefits of incorporating, such as tax savings.
Requirements for Incorporating in Iowa
Preparing Your Articles of Incorporation
An Iowa corporation’s existence begins when you file articles of incorporation with the Secretary of State, at which time you must also pay a filing fee. At a minimum, the articles must include the following:
- Name of the corporation
- Stock structure
- Registered agent and registered office
- Names and addresses of incorporators
A corporation can have different types of stock, called classes or series. These types of stocks can have different advantages, for example one can offer voting rights while another may not. For the portion of the articles pertaining to stock structure, you must include the following information:
- The articles of incorporation must list each class of shares or series within a class, as well as the number of shares in each class or series that the corporation is authorized to issue.
- If there is more than one class or series of shares, the articles must provide a distinguishing designation for each class or series. Before shares are issued in any class or series, the articles must state the preferences, limitations and rights of that class or series.
Naming Your Corporation
Before filing articles of incorporation, you should check to see if the corporation name you want is available. You can do this by searching the Iowa Secretary of State’s records online. You can reserve a corporate name for 120 days by submitting an application to the Secretary of State.
Your corporation’s name must meet the following requirements:
- It must contain the words “corporation,” “incorporated,” “company” or “limited,” or the abbreviations “corp.,” “inc.,” “co.” or “ltd.”
- Your corporation’s name must be distinguishable from the names of other business entities on file or reserved with the Secretary of State.
An incorporator is responsible for signing the articles of incorporation and filing them with the Secretary of State. Incorporators’ names and addresses must be listed in the articles of incorporation.
When specifying incorporators, you must adhere to the following requirements:
- Your corporation must have at least one incorporator.
- An incorporator must be a person.
- If the articles of incorporation do not name initial directors, the incorporators must hold an organizational meeting to elect directors. Incorporators may also approve bylaws and appoint officers. After that, the incorporators have no further role.
The management of a corporation is entrusted to its directors, who also set corporate policies. Directors are obligated to act in the best interests of the corporation and its shareholders.
Iowa law does not place any restrictions on who can serve as a director. However, the articles of incorporation or bylaws can establish eligibility requirements for directors.
A corporation in Iowa must have at least one director, but there is no upper limit on the number of directors a corporation can have. The bylaws or articles of incorporation should establish the number of directors.
Specifying a Registered Agent
A registered agent is a person or entity that a corporation designates to receive legal documents and other official correspondence on its behalf. A registered office is the registered agent’s business address.
When specifying a registered agent for your Iowa corporation, you must meet the following requirements:
- The articles of incorporation must list the name of the registered agent and the street address of the registered office. The address cannot be a post office box.
- A registered agent may be an individual who is an Iowa resident or a corporation formed or authorized to do business in Iowa. The registered office address must be a street address in Iowa and must be the agent’s business office. A corporation may use its own business address as the registered office.
Stating a Corporate Purpose
All corporations formed in Iowa have the purpose of engaging in any lawful business. You do not need to state any additional purpose in the articles of incorporation.
Determining Incorporation Bylaws
Bylaws describe your corporation’s structure, rules and procedures. Bylaws may include any provision for managing the business and regulating the affairs of the corporation. Typically, bylaws contain such provisions as the number of directors and the manner in which shareholders’ meetings are held and voting is conducted.
Bylaws are kept at the corporation’s principal place of business and do not need to be filed with the Secretary of State.
The requirements for bylaws are as follows:
- The directors or incorporators must adopt bylaws.
- Bylaws cannot be inconsistent with the law or the articles of incorporation.
Costs of Incorporating in Iowa
The Iowa Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.
This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.