Do I need a business license?

In Iowa, there IS NOT a general business license. Our team wrote a helpful blog that provides a helpful example to better explain this, but in short, business licensing and business registration are two different things. 

What is business registration?

Business registration is essentially informing the state or your county recorder that you are conducting business under a certain name (not your own) and will fall under a specified legal structure. The legal structure you choose has a lot to do with your overall tax strategy and personal liability exposure you’re willing to 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.

When do I need to register my business?

If you are conducting business with a name other than your true name (first/last), you will need to register your business. For example, your name is John Doe and you operate a sole proprietorship as John Doe’s Voiceover Service, you won’t have to register. If you want to operate your business under the name of “My Voiceover Services”, you likely will need to register your business. Where you register is directly related to what kind of entity you are forming.

How do I register my business?

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 form, 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.

SBDC Quick Tip: While the process of registering your business is fairly easy, it’s important to understand the benefits and limitations of your chosen entity.  Consider seeking the guidance of an attorney!

What is a Limited Liability Company (LLC)?

Limited Liability Companies are defined as a business structure where the owners are referred to as “members”, and receive the protection of a corporation plus the ability to pass through business profits and losses to their personal income tax return. LLCs differ from sole proprietorships (as an example), in that the LLC ensures there is reduced personal liability if in the case that your business faces legal issues in the future.

How to form an LLC

To form a Domestic LLC in Iowa (company is based in Iowa), you would need to file what’s called a Certificate of Organization using the Secretary of State’s Fast Track Filing system. The application costs $50 if you are a domestic company, and $100 if you are a foreign company (outside of Iowa). Before filing as an LLC, make sure you speak with a tax professional or legal professional as they can provide you with more in depth answers than we can provide here.

If you’d like to learn more about some of the most common business registrations in Iowa, check out these blogs we wrote discussing LLCs, Sole Proprietorships, S Corps and C Corps. These blogs should help you understand the topic more, and help you have more targeted questions to ask a tax or legal professional. IASourceLink CANNOT tell you what kind of business entity you should file as. Please note that if you do ask, we will redirect you to legal counsel.

Biennial Reports

If you form a business entity 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. Check out this article to learn how to electronically file your Biennial Report through Fast Track Filing and some information to include that you should keep in mind.

Operating Agreement

An Operating Agreement is a document used to outline an LLC’s (and other corporations and nonprofits) financial and functional decisions including rules, regulations and provisions. It also outlines the members of the corporation and their roles and responsibilities. Operating Agreements are NOT REQUIRED to operate an LLC in Iowa, and are not filed with the Secretary of State. This document is for you and your partner(s) to keep and refer to if issues arise or some sort of restructuring occurs in the future. IASourceLink suggests every partner or member of the business should have a copy of your Operating Agreement, as well as your business’s attorney(s).

How to register as a Sole Proprietorship

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 under $10 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 within our Resource Navigator.