If you want to start and run an Iowa limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Iowa LLCs.
The State of Iowa requires you to file a biennial report for your LLC. You can file the report online at the SOS website or download a pre-filled form from the same site. The report is due in odd-numbered years by March 31. You should receive notification from the Secretary of State before the report is due. The current filing fee is $30 for online filing and $45 for filing by mail.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay income taxes, only their members do. Some states impose a separate tax or fee on LLCs for the privilege of doing business in the state. Iowa, though, is not one of those states.
However, in some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Iowa, like almost every other state, taxes corporation income. Iowa's corporation income tax rate is calculated at a small series of marginal rates applied to net taxable income. The tax is payable to the state's Department of Revenue (DOR). Use the state's corporation income tax return (Form IA-1120) to pay the tax. For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOR website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Iowa employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOR. Begin by registering your business with the DOR either online or on paper (Form 78-005a, Iowa Business Tax Registration). Once you've registered, you'll need to file withholding taxes on a periodic basis (for example quarterly). The DOR prefers that you file online, but Form 44-095 is the paper version for the filing. You'll also need to reconcile your LLC's tax withholding each year. Again, the DOR prefers online filing, but the paper filing is Form 44-007. For more information, including regarding required electronic filings, check the DOR website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through Iowa Workforce Development. You can register for these taxes online at the MyIowaUI website. (Paper registration is not available.) Then, each quarter, go back online to report on wages and pay the UI taxes. For more information, including regarding online filings, check the Workforce Development website.
If your LLC will sell goods to customers in Iowa, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue and then make periodic sales tax payments for goods sold. You can register online or mail in Form 78-005a. After you've registered you'll be sent a sales tax permit. Then, on a periodic basis, you must submit sales tax returns to the DOR. You must do this online through Iowa’s eFile & Pay website. For more information, including online filing requirements, check the DOR website.
If you will be doing business in states other than Iowa, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Iowa, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.