Business Structures and Registration
When choosing the type of legal structure for your business, you'll need to consider factors such as how you will pay your taxes and how much personal liability exposure you will risk. In Iowa, just like in most states, there are many options to choose from. Some examples include but are not limited to, sole proprietorships, domestic and foreign limited liability companies, partnerships, and nonprofits.
If you want to start a sole proprietorship in Iowa, you will register with your county recorder's office. If you want to register as another type of business entity (example: Domestic LLC), you will register with the Iowa Secretary of State's office
. If you aren't sure what kind of entity you want to file as, or are curious what the differences are, the Iowa Small Business Development Center
has put together this informative document
that discusses the differences in detail.
According to the Small Business Administration
, a sole proprietorship is an unincorporated business that is run by one individual who has no distinction between the business and the owner. So, what does this mean? It means that the business owner is entitled to all profits and is responsible for all of the business's debts, losses and liabilities. Essentially whatever profit you make will be added to your personal annual income, and any debt or liabilities you take on are directly tied to you and not the business (because you are the business).
To register your business as a sole proprietorship, you will need to file what's called a Trade Name Form with your county recorder's office. This typically costs around $7 to file and should remain in effect until either you file to end the business or the recorder's office revokes your filed form. To save you some time, we have found the recorder's website for every Iowa county and have listed them below. Just follow the link to find office hours, fees and procedures for your respective recorder's office.
Limited Liability Company (LLC)
and Foreign Limited Liability Companies
both register with the Iowa Secretary of State's office. It costs $50 to file your application if you are domestic (Iowa company) and $100 if you are foreign (non Iowa company). This type of entity has different protections as it relates to debts/liabilities made by the members of the LLC, and may affect how you report income / losses on your taxes. Before filing as an LLC, make sure you speak with a tax or legal professional as they can provide you with more in depth answers than we can provide here. IASourceLink cannot tell you what kind of business entity you should file as. Please note that if you do ask, we will not respond.
Regardless of the entity you file at the state level, you will have to file a Biennial Report
every other year to keep the business registered and in good standing with the state. Make sure to mark your calendars in advance so you don't forget. Failure to file this form could result in the state revoking your registration. You can learn more about LLC's on the IRS website
. For a step-by-step guide to file as an LLC, check out the section below:
Step-by-Step LLC Instructions
Starting an LLC in Iowa should not be hard, so we created this step-by-step guide for entrepreneurs just like you! Please read through this guide to understand the process of obtaining an LLC in Iowa. To determine if this is the best route for you to go, please contact a tax or legal professional. View Iowa Code 489.201 for starting an LLC.
When starting your business as a Limited Liability Company, you will need to register with the Iowa Secretary of State. To do so, go to the Fast Track Filing system and create an account. You will have to confirm your account with a follow up email sent to your inbox. From there, you will login to your home page where you will see various links and pages.
Under 'Business Entity Forms and Fees', you can learn what each document will cost you in order to file. For filing an LLC, it should cost around $50. For your purposes, just get started under the 'File Business Entity Document' page.
Once there, click the 'Form an Iowa limited liability company' link. This is where you will need to fill out your information, and include a PDF version of your Certificate of Organization. To make getting started easier, download this Iowa LLC Certificate of Organization Template and edit to make it your own.
The information you will fill out in the Fast Track Filing system includes what type of LLC you are forming, the name of your corporation, when the company is to officially incorporate/end, your information as the registered agent, office location, and your electronic signature. Once this has been submitted, paid for, and approved, you will have an official Iowa LLC!
So you have your LLC... what now?
Biennial Reports: To maintain your LLC, the state requires you to file a biennial report every odd year. Currently the biennial fee for LLC's is $45.
If you have any questions about Biennial Reports, contact Business Services at the Iowa Secretary of State's office. You can call them at 515-281-5204 or email them at email@example.com.
Operating Agreement: If you have a business partner, it is a good idea to have an operating agreement. These can keep everyone on the same page as to what their roles are within the organization, and how the daily on-goings will occur. If you have a business partner now, or even in the future, download this Operating-Agreement Template and edit accordingly. This does not need to be shared with the state - just with your partner(s) and legal team.
Need help understanding how to use the Fast Track Filing system? Use this video for a complete overview!
FAQs about Business Structures in Iowa
Q: Do I have to have an ‘LLC’ in my company name if I am creating an LLC?
YES. You must include LLC as a part of your name when filing for your LLC. However, if you don’t want LLC or Corp in your name when interacting with the public, you would need to file a fictitious name resolution.
Q: How can I check and see if another company is using the name I want to use for my company?
The Secretary of State has a searchable database of listed corporations within the state.
Q: Should I reserve a name for my business organization?
A domestic or foreign business organization may reserve a business name for later use. A name may be reserved by completing and delivering to the Secretary of State an Application for Reservation of Name. If the name is available, it will be reserved for 120 days and upon expiration may be reserved for another 120 day period. During the reserved period, the name may also be transferred by completing and delivering to the Secretary of State a Notice for Transfer of Corporate Name.
A trade name filing must be made by any person (sole proprietorship) or partnership engaged in business under a name different from their own true surname. A trade name essentially informs the public "who" they are doing business with but registering does not create any proprietary rights in the name. Corporations or limited liability companies organized in this state or authorized to do business in this state do not file for a trade name. All other trade names are filed with the county recorder in the county where the business is located.
Q: What is the difference between a domestic and a foreign business organization?
Almost every business organization recognized in Iowa is categorized as either domestic or foreign. A domestic business organization is organized under and subject to the laws of Iowa. A foreign business organization in Iowa is one which is organized under a law other than Iowa.
Q: If I operate a foreign business organization, what constitutes doing business in the state of Iowa?
When a business organization transacts business beyond the borders of its original state of organization, it may find itself subject to the laws and regulations of the state in which it is transacting business. Before transacting business in Iowa, a foreign business organization must determine if authority from the Secretary of State is required.
Transacting business in Iowa is not defined by the Iowa Code. Instead, each situation is assessed on a case-by-case basis. If you are unsure as to whether you should obtain authority from the Secretary of State, you should contact your legal counsel for advice.
Q: What is a registered agent? How does a registered agent differ from a registered office?
A registered agent is an individual (or a corporation depending on the business organization) designated by the entity to accept service of process if a lawsuit is filed against the entity. The registered agent may be an Iowa resident, an Iowa profit or nonprofit corporation, or a foreign profit or nonprofit corporation qualified to do business in Iowa. Most business organizations that transact business in the state of Iowa are required to have a registered agent for service of process. In certain instances as provided by law, the Iowa Secretary of State acts as an agent for service of process. View a list of Iowa Code provisions where the Secretary of State acts as agent for service of process.
Most business organizations that transact business in the state of Iowa are also required to maintain a registered office. The registered office address must be a street address, and not merely a post office box. Also, the registered agent's business office address must be the same as the registered office address.
A business organization may change its registered office or agent at any time by completing this form.
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