How To Form an LLC In Iowa (IA)?

Looking to learn how to form an LLC in Iowa? You’ve come to the right place.

Most entrepreneurs across the US, including Iowa, run their businesses as a Limited Liability Company (LLC). An LLC provides tax flexibility and legal protection at fewer costs and less administrative complexity.

But how do you form an LLC in Iowa? I’m glad you asked!

We have drafted this step-by-step guide to help you easily start your Iowa LLC. By the end, you’ll have learned everything you need to know to get started!

Choose a Name for Your Iowa LLC

The first mandatory step in forming an LLC in Iowa is choosing a name for your business. We recommend choosing a name your potential customers and clients will find easy to pronounce and remember. Your chosen name should also relate to your Iowa business activities so that customers understand what your business does the moment they hear your name.

It is also essential to choose a business name that complies with the naming guidelines and rules in Iowa, including the following:

• Your Iowa LLC name must have the phrase “LLC,” “L.L.C.,” or “limited liability company” at the end.
• Your chosen LLC name must be unique and distinguishable from other Iowa LLCs.
• Your name should not include phrases that may confuse your business entity with federal government agencies, such as the State Department, Treasury, etc.
• Restricted words like trustee, bank, and university may need additional paperwork and a licensed individual, such as a lawyer, to be part of your Iowa LLC.

It is also good practice to check if your chosen name is available in Iowa and has not already been taken by another business entity. This can be done by doing an LLC name search on the State of Iowa website.

After choosing your preferred LLC name, check to confirm if the name is available as a web domain. This is important, especially if you want to establish an online presence for your business. You may also want to purchase, trademark, and research your chosen LLC name to prevent others from acquiring and using it.

Hire a Registered Agent

The next step is to hire a registered agent. All Iowa LLCs are legally required to nominate a registered agent, which is a person or business entity authorized to do business activities in the state.

Essentially, a registered agent is tasked with receiving and forwarding legal compliance documents, notices of lawsuits, and tax forms on behalf of your LLC.

Your registered agent must meet specific requirements, including being 18+ years old, having a permanent street address (not a P.O. box address), and being available during regular business hours.

While you can appoint yourself or any member of your LLC to act as a registered agent, we recommend hiring one of the following registered agent service providers:

IncFile

Our top recommendation for the best registered agent company in Iowa is IncFile. Its registered agent and compliance services include custom email and SMS alerts, a tailored dashboard, and automatic mail forwarding. It also has a user-friendly and intuitive interface.

IncFile’s registered agent service fee annual is very affordable and transparent. You will only spend $119 annually without hidden contracts or added costs.

In addition to the registered agent services, an IncFile package will offer your other LLC formation services, such as operating agreement, article of organization, etc.

ZenBusiness

Our second recommendation is ZenBusiness. Ranked #1 on Forbes, ZenBusiness has assisted more than 300,000 business entities in remaining compliant over the years. It provides a comprehensive registered agent service approach, including mail notification, a tailored digital dashboard, document scanning, mail forwarding, and fast turnaround times.

In addition, you will love their incredible $5K Grant Program that gives entrepreneurs access to funding to establish and grow their businesses.

The basic ZenBusiness registered agent package costs $199 per year. However, you can upgrade it to include more perks, like annual support reminders.

Northwest

Northwest is another reputable name in the registered agent industry.

A year of Northwest registered agent package will cost you $125. In return, you can access pre-filled state forms, mail forwarding, compliance alerts, document storage, annual report notifications, and scanned documents.

With Northwest’s Privacy by Default feature, you will never have to worry about your private data getting leaked.

You will also get access to the company’s Corporate Guides, which cover almost every facet of building and growing a business.

File Articles of Organization

The next step you must complete when forming your Iowa LLC is registering your business with the Iowa Secretary of State.

Most entrepreneurs prefer registering their Iowa LLC by filing the Article of Organization online with Iowa’s Fast Track Filing System. As well as being the simplest method to file your Article of Organization, your LLC will also be ready within a day. You only need to create an account using your active email address and the name of your Iowa LLC. You will also need a credit card to pay the state filing fee of $50.

Alternatively, you can file your Iowa LLC’s Article of Organization by mail. However, Iowa doesn’t have a standard Article of Organization to file by fax or mail. Therefore, you will be required to draft your own Article of Organization. Fortunately, the process involved is straightforward. You only need to follow a few guidelines and instructions. Then send your accurately filled Article of Organization together with a filing fee of $50 to the following address:

Lucas State Office
321 E 12th St.
Des Moines, IA 50319

Create an Operating Agreement

Unlike an Article of Organization for your Iowa LLC, creating an Operating Agreement is entirely optional. However, drafting one comes with several benefits.

An Operating Agreement for your Iowa LLC is an internal legal document that defines all your LLC’s management intricacies, details about the liability clauses, and the distribution of profits and losses. It also includes the responsibilities and roles of each member and rules for dissolving your LLC or adding and removing members.

Since it essentially outlines your LLC’s operation rules, an Operating Agreement prevents conflicts and disagreements between owners and members.

Creating an Operating Agreement in Iowa is straightforward. You only need to scour the internet for free templates. Alternatively, you can purchase an LLC formation package that includes an operating agreement.

Obtain all Licenses and Permits

Before you can officially and legally begin conducting your business operations in Iowa, you will need to acquire the permits and licenses your entity needs.

Iowa does not require LLCs to obtain a general business license at the state level. However, depending on your LLC’s municipality or county, you may need to get other business licenses. The Iowa Business License and Permit Information Center can help you know what business permits and licenses your Iowa LLC requires.

You must obtain a professional business license if your LLC is in a specific industry.

For example, if you are involved in the manufacturing of finished goods that require permits for material and machinery, you will need a federal permit to handle certain types of materials. You will also need to check with your Iowa county, municipal, state, or local governments to understand your LLC’s category and see if there are any required permits and licenses.

Acquire Federal and State Tax IDs

Acquiring a Federal and State Tax ID (also known as an Employer Identification Number) is a mandatory step for most LLCs in Iowa.

Similar to a Social Security Number (SSN), a Federal and State Tax ID is a nine-digit number used by IRS to identify business entities for tax purposes.

If your LLC is taxed separately or has at least one employee, you must acquire a Federal and State Tax ID. The application process is fast, straightforward, and free of charge. Simply visit the Internal Revenue Service (IRS) website, make the application, and you will have your Federal and State Tax ID in no time.

Even if your LLC does not require a Federal and State Tax ID, we recommend obtaining one, as it will allow you to do the following:

• Open a business bank and credit account
• File tax returns
• Get a business loan
• Prevent identity theft

Open Business Bank and Credit Accounts

Opening a business bank and credit account for your Iowa LLC is not mandatory. However, having one can help you significantly separate your business finances from personal ones.

There are several benefits that come with opening a business bank and credit account for your LLC in Iowa. For instance, you will have an easier time keeping track of your LLC’s finances and taxation. Your income and expenses will also be much more organized.

The fees and requirements for opening a business bank and credit account in Iowa vary from one bank to the other. At the very minimum, you will need a small deposit amount, a copy of your LLC’s Article of Organization, an operating agreement, and a Federal and State Tax ID.

You may consider one of the following financial institutions for your Iowa LLC’s business bank and credit account:

• Fidelity Bank
• First Bank
• Iowa State Bank

Purchase Iowa Business Insurance

Once your Iowa business entity is up and running, it is vital to have proper business insurance coverage in place. Some policies will be required by the state if you have one or more employees. Others will be needed by landlords.

Additionally, some business insurance policies are optional but are widely recommended because of their protective nature.

Some of the business insurance policies purchased by most LLC owners in Iowa include the following:

• General liability insurance: This type of insurance is often needed to rent a warehouse or office space. It offers protection against claims of property damage and personal injury.
• Professional liability insurance: It protects your LLC against any negligent or inaccurate work and professional errors.
• Workers’ compensation insurance: Lowa requires every LLC with one or more employees to purchase a workers’s compensation insurance policy. It protects your employees against on-the-job injuries and illnesses.

You can get a competitive quote for all your business insurance needs by visiting a web comparison site like Insureon.

Buy an LLC Formation Package to Speed Up the Process

Forming a Limited Liability Company in Iowa can seem time-consuming and tedious to some. Fortunately, you can purchase an LLC formation package to do all the work for you.

Many companies in Iowa offer LLC formation services, and some even do it for free as long as you pay the state filing fee.

One of our LLC formation company recommendations is LegalZoom. This company provides comprehensive LLC formation packages that include the Starter package (free + state filing fee), Pro package ($249 + state filing fee), and Premium package ($299 + state filing fee). Each package has all the tools and features required to streamline and speed up the LLC formation process.

Another great choice is ZenBusiness. Their Basic LLC formation package is free, as you only need to pay the Article of Organization filing fee. With this package, you can expect your LLC to be ready in 2-3 weeks.

The ZenBusiness Pro package costs only $199 plus a state filing fee, and your LLC will be up and running in six business days. If you want your LLC formed in 2 working days, then the ZenBusiness Premium package ($299) is the right package to purchase.

FAQs About Forming an LLC in Iowa

How Long Will It Take to Form My Iowa LLC?

Forming an LLC in Iowa will take four weeks if you file the Article of Organization by mail. If you file your Article of Organization online, you can expect your Ioa LLC to be up and running within a day.

How Much Does It Cost to Set Up an LLC in Iowa?

Forming an LLC (filing an Article of Organization) in Iowa costs $50. You may also need to pay additional fees for expedited processing or hiring a registered agent.

Can I Act as my Own Registered Agent in Iowa?

Yes. You can act as your Iowa LLC’s registered agent if you meet the requirements. For instance, you must be available to work during regular working hours, have a permanent street address in Iowa (not a P.O. box), and be at least 18 years of age.

Can I Form a Single-Member LLC in Iowa?

Yes. The Iowa laws allow you to form a single-member LLC. You only need to comply with the guidelines and requirements of forming a single-member LLC in Iowa and follow the steps mentioned in this guide.

Conclusion

Forming an LLC in Iowa is an excellent decision if you are an entrepreneur who wants to benefit from flexibility around management, asset protection, and better rules around taxation.

We hope this article has helped you understand how to form your LLC in Iowa. However, if you find the process challenging and time-consuming, we recommend purchasing an LLC formation package from top companies like ZenBusiness, LegalZoom, and Northwest.

Also see:

• Iowa (IA) Secretary of State (SOS) LLC & Business Search
• Iowa (IA) Registered Agent Services
• How To Find Iowa Bookkeepers