Bordered by the Mississippi and Missouri River, Iowa is the 26th largest state of USA which offers a wide range of business opportunities in varied prolific sectors. The Hawkeye State, as it is known, is located in the Midwest part of America and gained respect in the 19th century due to the struggle for civil and equal rights, allowing women to have property rights and become lawyers. We have prepared a general guide to company incorporation in Iowa for which all the steps involved can be explained by our USA company formation agents.

How can I form an LLC in Iowa?

With a diversified economy and satisfactory industries, Iowa is a proper destination for doing business. In this sense, entrepreneurs can choose to form a limited liability company which represents the easiest type of business in Iowa, with no maximum number of shareholders. A name verification is mandatory before preparing the Articles of Association and then apply the rule of adding LLC, L.L.C. or limited liability company at the end of the name.

The company registration process starts with submitting the documents with the Business Division of the Secretary of the State of Iowa and providing all the necessary information about the owners, the company’s activities, the date of incorporation, the name of the registered agent and the purpose of the business.

A registered agent for your company in Iowa

Starting a business in USA must comply with the requirements stipulated by the Company Act. Appointing a registered agent in Iowa is a mandatory condition when forming a company. Business owners have two possibilities in this sense: designate a natural person who will deal with the legal papers and who lives in Iowa or delegate a local firm which can act as a registered agent for their company. We mention that our company incorporation specialists in USA can perform the activities of a registered agent for your business in Iowa.

Do I need an operating agreement for my business in Iowa?

Even though it is not imposed, it is suggested to consider creating an operating agreement which must comprise details about the shareholders, their liabilities, the voting rights, the managers and the closure methods when it is the case.

Do I need insurance for my company in Iowa?

It is recommended to choose the general liability insurance for your company in Iowa and get rid of any possible risks might occur. This kind of insurance covers a series of risks, including the following:

Medical payments for injured employees involved in accidents while working for your company;
Property damage insurance – for cases of injuries to persons or real property;
It covers copyright infringement, false arrest or illegal eviction;
The cases involving loses caused by copyright and advertising violation.

In case of malpractice claims, limited liability companies established in Iowa are protected by professional liability insurances. As for the risks and damages which are not covered by the general liability insurance, we mention the intentional acts, injuries to customers from professional services and/or advice. It is recommended to plan your business in Iowa and consider signing an insurance policy. This is the best way to protect your company, especially if you are at the beginning of the road, and such insurance is recommended for architecture firms, assisted living facilities, grocery stores, acting class businesses, barbershops, advertising agencies, accounting firms, beauty salons, bookstores, casting agencies, car dealerships, chiropractor clinics, counseling centers, dental offices, furniture stores, gyms, jewelry stores, cosmetic salons, pet supply stores, pharmacies, publishing companies, recording studios, theatre companies and many more. Feel free to talk to one of our specialists and find out more in this matter. You can also ask for support in establishing a branch in Iowa.

What is a business planning guide?

The business planning guide is essential to all entrepreneurs, whether small, medium or big, looking to establish a business. If you think of company registration in Iowa, it is suggested to write down and evaluate your business idea by following a few simple steps, yet of high importance. For instance, you can look for a financial model, establish some personal goals, plan some marketing strategies and find your points of leverage. It is best to know from the start the clientele you address to and see if there are other look-a-like businesses in the area you want to implement yours. Even though the competition is needed in all sectors of business, you might want to develop first, instead of opening a company and close it due to the lack of customers.

As for the financial model, entrepreneurs will have to write down the business costs and highlight the profits and losses in the firm. Once the budget for your business in Iowa is established, you can think of the future profits, paying attention to potential financial risks.

Taxes in Iowa

Companies in USA and particularly in the state of Iowa must register for tax purposes with the financial authorities. The sales tax which is set at 6%, the use tax, the withholding fee and the local taxes should be considered when forming a company in Iowa. IRS is the fiscal administration in USA and it is represented through local offices where business holders must register for EIN (Employer Identification Number) in order to comply with the tax requests in accordance. As for the corporate income tax in Iowa, this ranges from 6% to 12%, depending on the taxable income of the business. It is good to know that the alternative minimum tax or the AMT can replace the corporate income tax in Iowa, at a rate of 7.2%, applicable in agreement with the federal rules. The taxation of limited liability companies in Iowa is related to the fact that these are seen as pass-through entities and therefore, the business income being distributed to each forming member before the taxation is made.

Moreover, you might want to consider the multistate businesses and Nexus, meaning that if your business is not only in Iowa, but also in other American states, you should pay the taxes in those states. Your accountant in Iowa can tell you more about the taxes you need to pay for your company established here.

Accounting services for your company in Iowa

Because companies register financial activities, it is mandatory to track and record all the operations with the help of a local accounting firm. Bookkeeping, payroll, annual tax filings and tax minimization methods are among the necessary accounting matters for your firm in Iowa. You can also ask our advisors about the taxation of companies in Iowa.

Licenses and permits in Iowa

If you want to open a company in USA and especially in Iowa’s construction or food sectors, special licenses and permits are necessary. The application in this sense starts with the Chamber of Commerce and the Licensing Division. Please bear in mind that particular fees must be paid when making the application for the needed licenses or permits in Iowa.

Hiring staff in Iowa

• Companies interested in hiring workers are suggested to consider the support offered by recruitment companies in Iowa and then to comply with the required conditions. The legal obligations are:
• registering the employees in Iowa;
• paying the withholding income taxes;
• ensuring the financial obligations of employees of your company.

The economy in Iowa

A prolific state like Iowa has an economy in accordance. The main engines of the state are: the advanced manufacturing field, agriculture, IT, energy among many others. Des Moines is the capital of Iowa and it is the largest city in the state. Davenport, Ames, Waterloo, Iowa City and Dubuque are major cities which can be selected by investors interested in having their activities in the state of Iowa. Here are some facts and figures about the business in Iowa:

• there are approximately 268,000 of small businesses registered today in Iowa;
• most of the foreign and local investors decide on construction companies – around 34,000 are established in Iowa;
• the retail and trade companies in Iowa sum up around 30,000;
• there are more than 30,000 family farms in Iowa, and the attention in this direction continues to grow.

The business direction in Iowa will pretty much depend on the personal targets you want to attain, and on the sector in which you want to generate profits. Finance and insurance, construction, retail trade, arts and entertainment, real estate, leasing and rental, agriculture, forestry, mining, oil and gas extraction, research and development, telecommunication, and other significant fields are chosen by small, medium and large entrepreneurs in Iowa. If you believe it is time to start a business in USA, including Iowa, feel free to ask for support and advice from our team.

If you have decided to start a business in Iowa, it is suggested to ask for information about the taxes imposed for companies in this state. The tax regime in Iowa has been recently revised and concerns both corporations and individuals living in this state. Even if the tax legislation is about to change, one must observe the applicable tax regime for this year. For a proper understanding of the taxation structure in Iowa, we invite you to talk to one of our specialists in company formation in USA who can also help you set up a business in this state or in any American state.

Is there a privilege tax in Iowa?

No, the entrepreneurs in the state of Iowa are not subject to a privilege tax. Also, the state does not impose a franchise tax, but it is suggested to consider the other taxes enforced on businesses in Iowa.

Income tax for corporations in Iowa

The corporate income tax for Iowa corporations is set at marginal rates that range from 6% to 12%. An alternative minimum tax (AMT) can replace the income tax for companies in Iowa and the tax structure in this state is subject to several changes this year. The following table shows how the corporate income tax is imposed, depending on the taxable incomes of a company:

Taxable Income Tax Rate
Between 0$ and $25,000: 6%
Between $25,000 and $100,000: 8% minus $500
Between $100,000 and $250,00: 10% minus $2,500
More than $250,000: 12% minus $7,500

What is the sales tax rate in Iowa?

The sales tax in Iowa is set at 6% and it is applicable for goods and services for sale purposes in this state. Municipalities in Iowa can impose their own sales tax, but not exceeding 1%. We remind that you can read our general guide to company incorporation in Iowa and find out information about how you can set up a business in this state.

Tax exemptions in Iowa

Labor unions, religious institutions, social clubs, charities and scientific organizations in Iowa are not subject to taxation in this state because of their non-profit status. However, the Iowa Department of Revenue solicits the filing of certain documents to prove that the institution makes no profits. A non-profit tax-exempt number is issued by the local IRS (Internal Revenue Service) to such entities in Iowa.