How to Register a Business in Iowa

by Jennifer Kiesewetter in August 15th, 2021
brown concrete building during night time

TLDR

  • Known as the top producer of pork, corn, and the Red Delicious apple, Iowa serves as an integral player in the US’s agriculture industry, with the third-largest number of farms in the country. In addition to top producing agriculture, Iowa is also home to 272,555 small businesses, making up 99.3 percent of all Iowa businesses.
  • When you’re ready to register your startup, like other states, Iowa requires you to choose a unique business name, meaning no other Iowa registered businesses have a name similar to your chosen one.
  • If you’re not quite ready to register your startup, but you have a business name in mind, you can reserve your business name with the State of Iowa for 120 days.
  • When you register your startup in Iowa, you'll need to satisfy several requirements to register your business successfully and compliantly. Before registering your startup, it’s a good idea to do some research on the market and potential competitors and create a business plan and a roadmap for moving forward.
  • Before you register your startup in Iowa, in addition to creating a business plan and choosing your business name, you must also determine your startup’s legal entity structure.
  • Next, you need to identify and obtain a registered agent designated to receive court and other vital documents on your behalf. In Iowa, like in other states, 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.”
  • Finally, after completing the above steps, it's time to submit your formation forms to Iowa’s Secretary of State. For new entities, the State of Iowa provides sample forms for your use or review.
  • Depending upon your chosen entity for your startup, you will have filing fees due when registering your business. For example, if you register as an LLC, you’ll pay a fee of $50. If you file as a limited partnership, you’ll pay a fee of $100. If you want to do business in Iowa, but your startup was registered in another state, you may have different filing fees to pay.  
  • Understanding the difference between domestic and foreign startups is critical to know when to conduct business in Iowa. If your startup is registered in the State of Iowa, then you have a domestic business. However, if you’re registered in another state, then you have a foreign business. Therefore, as a foreign startup, before you conduct business in Iowa, you may register with the State of Iowa.

Known as the top producer of pork, corn, and the Red Delicious apple, Iowa serves as an integral player in the US’s agriculture industry, with the third-largest number of farms in the country. In addition to top producing agriculture, Iowa is also home to 272,555 small businesses, making up 99.3 percent of all Iowa businesses. Additionally, small businesses and startups employ 48 percent of all Iowa employees.

Iowa is also home to 31 companies recently named to Inc. Magazine’s 2021 list, representing the 5,000 fastest-growing companies in the US. In fact, 10 startup founders “from around North America descended on Des Moines [the third week of July 2021] to try to grow their businesses.”

If you are considering registering your startup in Iowa, this article will walk through what you need to know.

How to Register a Business Name in Iowa

When you’re ready to register your startup, like other states, Iowa requires you to choose a unique business name, meaning no other Iowa registered businesses have a name similar to your chosen one. To confirm if your startup’s name is distinguishable from any other registered Iowa businesses, you can use the business entities database.

If you’re not quite ready to register your startup, but you have a business name in mind, you can reserve your business name with the State of Iowa for 120 days. To reserve your startup’s name, you should file an Application for Reservation of Name with the Secretary of State’s office. Upon expiration of the first 120 days, you may reserve your name for an additional 120 days.

For a sole proprietorship or partnership in Iowa, you can choose a “trade name” (often referred to as a “doing business as” or DBA), instead of using your personal name. Iowa corporations or limited liability companies (LLCs) do not have to register a trade name.

How to Register a Business in Iowa

When you register your startup in Iowa, you'll need to satisfy several requirements to register your business successfully and compliantly. Before registering your startup, it’s a good idea to do some research on the market and potential competitors and create a business plan and a roadmap for moving forward. The State of Iowa provides various resources helping you when starting a business and creating a business plan.

In drafting your business plan, you’ll want to consider marketing, advertising, sales, location, and ownership, to name a few categories. To help guide you, you can check in with the U.S. Small Business Administration, providing additional guidance for determining the feasibility of starting your business as well as how to create a business plan.

Once you’ve identified some of your business’s operation basics, it is then time to register your start-up. Below, we'll address how to register your business step by step.

Determine Your Business’s Entity Structure

Before you register your startup in Iowa, in addition to creating a business plan and choosing your business name, you must also determine your startup’s legal entity structure. For example, in Iowa, you may choose to register as a(n):

  • Corporation
  • Limited Liability Company (LLC)
  • Limited Partnership (LP)
  • Limited Liability Partnership (LLP)

You may also organize as a sole proprietorship or a general partnership in Iowa; however, you do not need to register these business entities with the state.

Your chosen business entity determines the next steps in registering your startup. To learn more about the state’s permissible entity types, you can visit Iowa’s Secretary of State’s webpage.

Identify Your Registered Agent

Next, you need to identify and obtain a registered agent designated to receive court and other vital documents on your behalf. In Iowa, like in other states, 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.”

In Iowa, the registered agent may be an individual, a domestic or non-profit corporation, or a foreign or non-profit corporation registered to do business in Iowa. In addition, in certain instances, the Iowa Secretary of State may serve as a registered agent.

A registered agent must have a street address (where they can be served legal papers), and not simply a PO Box. Startup founders can also change their registered agent by submitting a Statement of Change of Registered Office and/or Registered Agent with the State of Iowa.

Submit Your Formation Forms

Finally, after completing the above steps, it's time to submit your formation forms to Iowa’s Secretary of State. For new entities, the State of Iowa provides sample forms for your use or review.

For example, suppose you choose a limited liability company structure for your startup. In that case, you can use the state's official forms to complete your certificate of organization with Iowa’s Secretary of State to create your startup. You may file online or through US Mail. The filing fee is $50.

After submitting your registration forms, you need to learn about any required state or local licenses, such as a business license.

How Much Does It Cost to Register a Business in Iowa?

Depending upon your chosen entity for your startup, you will have filing fees due when registering your business. For example, if you register as an LLC, you’ll pay a fee of $50. If you file as a limited partnership, you’ll pay a fee of $100. If you want to do business in Iowa, but your startup was registered in another state, you may have different filing fees to pay.  

Also, depending upon your entity, you may be liable for business taxes. To determine if you owe Iowa taxes and how much you may owe, it’s best to engage an accountant familiar with Iowa tax laws to advise you.

What if I Want to Do Business in Iowa but I Registered My Startup in Another State?

Understanding the difference between domestic and foreign startups is critical to know when to conduct business in Iowa. If your startup is registered in the State of Iowa, then you have a domestic business. However, if you’re registered in another state, then you have a foreign business.

As a foreign startup, before you conduct business in Iowa, you may register with the State of Iowa. Unlike other states, transacting business in Iowa as a foreign entity is not defined in the state laws. Instead, Iowa states that the need for registration is based on a case-by-case basis.

However, you can get some guidance from statutes on foreign limited liability companies, foreign limited liability partnerships, foreign partnerships, and foreign profit corporations. However, if you cannot determine whether you should register your foreign startup, you should contact an attorney familiar with Iowa laws, helping you decide on your next steps.

The Benefits of Registering a Business in Iowa

Here are some benefits of registering your startup in Iowa:

  • “The reduction or elimination of Iowa corporate income tax through the New Jobs Tax Credit;
  • Single factor apportionment means that Iowa’s tax is based solely on the percentage of sales within Iowa;
  • 50% of federal taxes are deductible from Iowa’s corporate income tax.”
  • There is no tax assesses on industrial machinery and equipment.
  • The workers’ compensation costs in Iowa are “approximately 11% less than the national average.”
  • Iowa’s cost of living is about 10% lower than other states.
  • Iowa boasts one of the lowest crime rates in the US.
  • Iowa also boasts the highest wind power usage of any state, with 57 percent of Iowa’s electricity generated by wind turbines in 2020.

The Limitations Associated with Registering a Business in Iowa

Here are some limitations of registering your startup in Iowa:

  • Iowa has a progressive state income tax system, meaning that the more money you make, the more tax you’ll owe. Income tax rates run from 0.33 percent to 8.53 percent, with the highest rate of income over $75,420.
  • These personal income tax rates place Iowa as the 9th highest in the country, right behind Vermont and New York.
  • If you’re looking for the city-life, Iowa may not be for you. But, even moving to Cedar Rapids or Des Moines will give you that small-town feel.
  • Additionally, you may worry about a tornado or two if you move to Iowa, with parts of Iowa representing the north part of Tornado Alley.

We can help!

At AbstractOps, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most—your business. If you're looking for help registering your Iowa startup, we can get your documentation ready, overall shepherding this process to ensure it's done right. Drop us a note at hello@abstractops.com.

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Note: Our content is for general information purposes only. AbstractOps does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.

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