Start Your Own Business in Iowa: Seven Steps You Need to Take

From licenses and permits to taxes and insurance, learn what you need to do to start a business in Iowa.



Here’s an overview of the key steps you’ll need to take to start your own business in Iowa.

Step 1. Decide on a Legal Structure

The most common legal structures for a small business are:

  • sole proprietorship
  • partnership
  • limited liability company (LLC), and
  • corporation

There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check  Choose Your Business Structure  on Nolo’s website for more information on how to choose the best ownership structure for your business.

Step 2. Choose a Name

For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Iowa Secretary of State (SOS). You can check for available names by doing a  business entities search  on the SOS website. You can reserve an available name for 120 days by filing anApplication for Reservation of Name. You can also renew a name reservation before it expires. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See  How to Form an LLC in Iowa  and  How to Form a Corporation in Iowa  for more information.

Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must file a trade name form with the county recorder in the county where your business is located. Check the website for the relevant county for forms and additional information.

If you plan on doing business online, you may want to register your business name as a domain name. See  Choose and Register a Domain Name  for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See  How to Do a Trademark Search  for more information.

Step 3. Create Your Business Entity

  • Sole proprietorship:  To establish a sole proprietorship in Iowa, you don’t need to file any organizational documents with the state. For more information, see  How to Establish a Sole Proprietorship in Iowa.
  • Partnership:  To create a general partnership in Iowa, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see  How to Form a Partnership in Iowa.  To form a  limited liability partnership  (often used by professionals), you must file a Statement of Qualification with the Iowa SOS. For more information, see  How to Form a Limited Liability Partnership in Iowa.
  • LLCs:  To create an LLC in Iowa, you must file a  Certificate of Organization  with the Iowa SOS. You can file the Certificate  online. You will also need to appoint a  registered agent  in Iowa for service of process. In addition, while not required by law, you also should prepare an  operating agreement  to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see  How to Form an LLC in Iowa  and  How to Form a Professional LLC in Iowa  (for professionals).
  • Corporations:  To create a corporation in Iowa, you must file  Articles of Incorporation  with the Iowa SOS. You can file the Articles  online. You will also need to appoint a  registered agent  in Iowa for service of process. Although not legally required, you also should prepare  bylaws  to establish your corporation’s internal operating rules. Bylaws are not filed with the state.  S Corporations  must also file IRS Form 2553,Election by a Small Business Corporation,  with the IRS. For more information, see  How to Form a Corporation in Iowa.

Step 4. Licenses and Permits

Tax Registration.  If you will be selling goods in Iowa, you must register with the Department of Revenue (DOR) to collect sales tax. If your business will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax, as well as other business taxes, either  online  or on paper using  Form 78-005,  Iowa Business Tax Permit Registration  Form.

EIN.  If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.

Regulatory licenses and permits.  These cover areas such as:

  • the environment
  • health and safety, and
  • building and construction.

Ultimately, however, there is a vast number of regulatory licenses and permits. For help figuring out which regulatory licenses and permits may apply to your particular business, check the  Licensing section  of the IASourceLink website. (IASourceLink is part of the  Iowa Economic Development Authority.) For information about local licenses and permits, check the websites for any cities or counties where you will do business.

Professional and occupational licenses.  These cover people who work in various fields. The Iowa  Professional Licensing Bureau  oversees the regulatory boards and licensing for about a half dozen professions. Other professional and occupational licenses are handled by other state agencies. For example, the Iowa Department of Public Health’s  Bureau of Professional Licensure  handles licensing for roughly 20 health-related professions, such as Chiropractic, Dietetics, Optometry, and Podiatry.

Step 5. Business Location and Zoning

You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking  municode.com.

Step 6. Taxes and Reporting

Iowa taxes every kind of business. See  Iowa State Business Income Tax  for more information on state business taxes in Iowa.

Sole proprietorships.  Pay state taxes on business income as part of their personal state income tax returns (Form IA 1040).

Partnerships.  Partners pay state taxes on partnership income on personal tax returns. In addition, Iowa partnerships must file  Form IA 1065,  Partnership Return of Income.

LLCs.  Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Iowa LLCs also are required to file a  biennial report  with the Iowa SOS. See  Iowa LLC Annual Filing Requirements  for more information.

Corporations.  Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Iowa  corporation taxes. And, finally, corporations must file a  biennial report  with the Iowa SOS.

If you have employees, you must also deal with state  employer taxes.

And, apart from Iowa taxes, there are always federal income and employer taxes. Check IRS Publications 334,  Tax Guide for Small Business, and 583,  Taxpayers Starting a Business, available at irs.gov.

Step 7. Insurance

Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check  Obtaining Business Insurance  for more information.

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