Forming a limited liability companyan (LLC) in Iowa is affordable and can also be simple, if you are aware of the specific details required by the State of Iowa.
Interested parties must register with the Secretary of State by filing the necessary forms, paying the necessary fees and meeting all naming and formation requirements.
The following are the requirements for forming an Iowa LLC:
Registration. LLCs are required to file their Certificate of Organization with the Secretary of State. The documents may be submitted electronically online or by mail. There is no official form released and required by the Secretary of State for a Certificate of Organization. All applications must be submitted with the necessary filing fee.
Forms and fees. LLC registrants are required to submit the Certificate of Organization to the Secretary of State. There is a $50 filing fee that is about $50 that must be paid upon submission of the documents. Fees can change, check with the Secretary of State for the most current fees.
Timeline. In general, the processing time for documents takes between two to three business days, depending on the volume of applications and submissions.
Naming requirements. To better ensure that your preferred name is approved, choose a name that is distinguishable from other LLCs and remember to include specific required words. You may opt to have a preferred name checked for availability before filing your LLC formation documents.
Formation requirements. To form an LLC, a registrant must first file a Certificate of Organization with the Secretary of State. All submissions must be accompanied by the appropriate filing fee.
Next, an LLC with more than one member is strongly advised to have a limited liability operating agreement among its members. This operating agreement contains the terms entered into by the members of the LLC and governs such critical items as the roles of each member, voting rights, who manages the LLC, how members are admitted or removed, dissolution of the LLC and procedures for amending the LLC operating agreement itself.
Please note that LLCs offering a specific professional service are obligated to contact the necessary licensing boards as mandated by state law.
Starting an LLC in Iowa
It is strongly advised that you become acquainted with what an LLC is and whether or not it is a viable business structure for your company before you begin the application process. In brief, an LLC is a business structure that is privy to tax efficiencies, has flexible organization and provides limited liability for its members. There is no maximum number of members, which is considered one of the biggest benefits of an LLC, and members may include individuals, corporations, other LLCs and foreign entities. An LLC is also known as a ”hybrid” business structure in the sense that it brings together elements of a corporation and limited liability partnerships.
Begin the registration process with the Secretary of State by using the following checklist:
1. Decide on a name for your business. Almost any name can be used as long as it ends with “Limited Liability Company” or any variation of its abbreviation—e.g., L.L.C., LLC or Ltd. Co.
Names may be reserved up to 120 days. You may file a name reservation application using the form on the Secretary of State’s website, which must be submitted along with a filing fee that is about $10. In the application, be sure to include the name to be reserved and the applicant’s name, address and dated signature.
A preferred name may be checked for availability on the Secretary of State’s website.
2. Assign an agent for service of process (also referred to as the resident agent). Registered agents are individuals or corporations authorized to do business in the state and that have permanent addresses in Iowa. Registered agents accept legal documents on behalf of the LLC and make sure its members are notified.
3. Get an Employer Identification Number (EIN) from the IRS. If there are two or more members in your LLC, your company will need to obtain an EIN from the IRS, for tax purposes.
4. Create an operating agreement. Although LLCs in Iowa are not required to have a limited liability company operating agreement, it is wise to have one in place with other members should your LLC have more than one member. The State of Iowa recognizes limited liability company operating agreements as governing documents.
5. Familiarize yourself with the LLC’s continuing legal obligations, specifically biennial reports. These reports are submitted every other year to the Secretary of State. It is practice that the Secretary of State will notify the registered agent by mail when the reports are due. A report may be filed online or by mail and must be submitted with the required filing fee, that is about $45.
Other continuing legal obligations may be applicable and vary by state.
Filing an LLC and Fees
Following are the forms and fees that are required when starting an LLC in Iowa:
1. Forms. Those looking to form an LLC in Iowa must file a Certificate of Organization with the Secretary of State, which must be submitted with the required filing fee.
2. Fees. The filing fee for a Certificate of Organization is about $50. Check with the Secretary of State for the most current fees.
3. Limited liability company operating agreement. Although the LLC operating agreement is not filed with the Secretary of State, it is a good idea to have one in place for LLCs with more than one member. This should be kept on file by the registered agent.
4. Taxes. LLCs in Iowa are treated as corporations, limited liability partnerships or single-member LLCs and are subject to federal income tax classifications. Depending on the type of taxation you opt to have for your LLC, the tax responsibilities are as follows:
a. An LLC treated as a limited liability partnership. These LLCs are required to file Form 1065 (U.S. Return of Partnership Income) and to show equal distribution of profits, losses and credit on a Schedule K-1 with the IRS.
b. An LLC treated as a C corporation for federal tax purposes. These LLCs are required to file Form 8832 (Entity Classification Election) and must opt to be taxed as a corporation. Next, they must file Form 1120 (U.S. Corporation Income Tax Return) with the IRS.
c. An LLC treated as an S corporation. These LLCs are required to file Form 1120S (U.S. Corporation Income Tax Return) accompanied by a report from each owner expressing the equal distribution of profits, losses and credit with the IRS.
d. An LLC treated as a sole proprietorship. These LLCs must report all business income and expenses via the sole proprietor’s personal income tax returns, Schedule C (Form 1040, Profit or Loss from Business) with the IRS.
You should always make sure to acquaint yourself with the state laws regarding taxation. Your LLC may be subject to other taxes depending on the kind of services your LLC may offer.
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.