The Name of Your New LLC
Your new LLC's name must be different from the registered or reserved name of any other business entity on file with the Iowa Secretary of State.
The LLC's name must end with "Limited Company" or "Limited Liability Company," or the abbreviations "L.C." or "L.L.C." "Limited" may be abbreviated as "Ltd." and "Company" may be abbreviated as "Co."
The LLC's name may not include the terms "corporation," "incorporated," or "limited partnership," and it can't have any abbreviations for those terms, either.
You can, however, use a name that's similar to another business' name if the other entity gives written permission for you to use the name; they also have to request to change their own name in order to make it different from yours. Another exception to the "no similar names" rule is if you have a court order establishing your right to use the name.
A $10 fee will let you reserve an available name for your Iowa LLC for up to 120 days.
Articles of Organization
The first official step in achieving official status for your Iowa LLC is filing articles of organization with the Iowa Secretary of State. The articles of organization should include the name of the LLC, the street addresses of the LLC's primary place of business, and the name and address of the LLC's registered agent. The articles must be signed by at least one organizer, a manager, or, if no managers have been chosen, a member.
Organizers may be individuals, corporations, other LLCs, government subdivisions or agencies, trusts (business or otherwise), estates, partnerships, associations, or any other legal entity. The LLC will be considered to be perpetual unless it is otherwise stated in the articles of organization.
The articles of organization can also include other stipulations the members choose to set forth, so long as they are not against the law, even if they are already in the operating agreement.
Your LLC is considered "organized" once an original and a copy of the articles of organization are received by the Secretary of State with the $50 filing fee, and the articles are confirmed as being in accordance with state law.
Registered Agent and Office
An Iowa LLC must have a registered agent designated to receive official state legal and administrative correspondence from the state. An Iowa LLC's registered agent might be an individual state resident whose business office is the same as the registered office, or it may be a business entity that's authorized to conduct business in Iowa.
Operating Agreement
The operating agreement is another very important document for an LLC. It can be amended or repealed as allowed by the agreement itself or applicable law. Just like a corporation's bylaws, having an operating agreement isn't specifically required by the state, but it's a key internal document that officially records and explains how the LLC will conduct its operations.
The operating agreement lists the members, how much each has invested, how profits are to be divided, and how much weight each member has when voting. It may also lay out meeting requirements and similar considerations, but is not required to do so. The operating agreement may also include rules and concepts already laid out in state law.
Unless otherwise stated in the articles of organization or the operating agreement, a unanimous vote of members is required to amend either the articles or the operating agreement.
Membership in the LLC
An LLC has to have at least one member; each member has to be an individual. To become a member, an individual makes a contribution of some sort. Members' contributions can be in cash, property, promissory notes, services previously rendered, or some other obligation to contribute cash, property, or contracts for services to be rendered.
A member of an LLC can resign from it, but only in accordance with the articles of organization or operating agreement. These documents also usually specify a minimum period of time a member can be a member before being allowed to resign. LLCs can pursue remedies for damages to the LLC as a result of a member's resignation.
Ongoing Requirements
All Iowa LLC's have to keep these kinds of records available for inspection at their home office:
- The names and addresses of members, managers, and managing members (if any).
- Articles of organization, along with any amendments.
- Copies of the company's income tax returns (federal, state, and local) for the past three years.
- Copies of current and previous operating agreements and financial statements for the preceding three years.
- The amount of cash or other contributions and the value of any other property or services contributed by each member, or which members have agreed to contribute.
- The events or times that trigger any additional contributions scheduled to be made by each member.
- Any event or events that would cause the LLC to be dissolved and its business wrapped up.
It's also advisable for your LLC to keep minutes of the members' or managers' proceedings and committee meetings.
Dissolution
An LLC is dissolved when any one of the following events occurs:
- Event(s) listed in the articles of organization or operating agreement as requiring dissolution
- The number or percentage of members specified in the operating agreement agree to dissolve the LLC
- Event that makes it unlawful for the LLC to keep operating
- A court order is handed down requiring dissolution
Taxes
An LLC offers tax advantages over a corporation, mostly because an LLC is not required to be a separate tax entity like a corporation. Instead, it can be a "pass-through entity" for tax purposes, so LLC owners show business losses or profits on their personal tax returns, instead of the LLC being taxed as a separate entity and the members' incomes from the LLC being taxed a second time at their individual level.
Unless you choose for your LLC to be taxed as a corporation, the IRS treats single-member LLCs as sole proprietorships for tax purposes. This means the LLC itself does not pay taxes and does not have to file a tax return. The IRS treats multi-owned LLCs as partnerships for tax purposes, unless you choose for your LLC to be taxed as a corporation.
The LLC tax rate for Iowa varies based on Iowa taxable net income.
Choosing a Corporation Name
Your Iowa corporation's name must be noticeably different from any other registered Iowa business entity, as well as any reserved names on file with the Iowa Secretary of State, with only a few exceptions. It also is not allowed to use language that states or implies that the corporation is organized for a purpose not allowed by state law or the corporation's articles of incorporation.
The name also may not state or imply that the corporation is organized for some purpose other than that stated in its articles of incorporation.
Your new corporation's name has to include the words "Corporation," "Incorporated," "Company," or "Limited," or abbreviations thereof
You can reserve a name not already taken by another entity for up to 120 days for $10.
Articles of Incorporation
Iowa state law requires that new corporations file articles of incorporation with the Iowa Secretary of State, which also requires a $50 filing fee. These articles must meet the requirements of the Iowa Business Corporation Act.
The State of Iowa allows corporations to be formed for any lawful business activity-the business purpose of the new corporation is not required to be included in the articles.
At least one person (usually an initial director or officer) must sign the articles as incorporator. The incorporator's primary duty is to deliver the articles of incorporation to the Iowa Secretary of State.
The articles must also specify the classes, distinguishing designation, relative rights, and number of shares of each class of stock that the corporation is authorized to issue. The articles must authorize two things: one or more classes of shares that together have unlimited voting rights; and one or more classes of shares, which may be the same class or classes as those with voting rights, that together may receive the net assets of the corporation upon dissolution.
It's also allowable to include other optional provisions into the articles of incorporation for those who want to formalize additional criteria, such as special shareholder qualifications, time limits on the corporation's existence, limits on directors' liability in specific circumstances, and so on.
Registered Agent and Office
The articles of incorporation should also include the name and address of your corporation's initial registered agent-the person you designate to receive official correspondence (legal or administrative) on behalf of your corporation. The registered agent must be either an individual who lives in Iowa and whose business office is the same as the registered office, or a corporation with a business office that is the same as the registered office.
Bylaws
All corporations are required to keep a copy of their bylaws at their main executive office, but they are not required to file those bylaws with the state. At the new corporation's initial meeting, the board of directors should adopt corporate bylaws, and then keep them updated as time goes on. Bylaws are a critically important document describing the corporation's basic managerial and legal operating principles regarding such issues as:
- Shareholders' and directors' meetings
- The authority, number, and tenure of directors in the board of directors
- Voting procedures
- The duties, responsibilities, and tenure of officers
- How stock is issued
- How and when annual financial information is provided to shareholders
Officers of the new corporation can either be listed in the bylaws or elected by the board in compliance with those bylaws.
Directors and Officers
The corporation's business is managed by its board of directors. The board must consist of one or more members as specified by the bylaws or by action of the shareholders. Directors are generally elected at each annual shareholder meeting to hold office until the next annual meeting.
Corporate officers can either be listed in the bylaws or elected by the board in compliance with the bylaws. A corporation must have a chairman of the board or a president (or both), a secretary, a chief financial officer, and whatever other officers are listed in the bylaws or determined by the board.
The president, or, if there is no president, the chairman of the board, is the general manager and chief executive officer of the Iowa corporation, unless otherwise stipulated in the articles or bylaws. Any number of offices may be held by the same person unless the articles or bylaws state otherwise.
Required Reports
Iowa corporations must file a report with the Iowa Secretary of State's office every even-number calendar year. The first report must be delivered between January 1 and April 1 of the first even-numbered year following the calendar year of incorporation, or by another date that the Iowa Secretary of State's office may designate. Each biennial report must contain information regarding the two-year period immediately before the calendar year in which the report is filed, including the following information:
- The corporation's name and its state or country of incorporation.
- The address of the corporation's registered office and the name of its registered agent at that in-state office.
- The address of the corporation's principal office.
- The names and addresses of the president, secretary, treasurer, and at least one member of the board of directors.
Taxes
The corporate tax rate for Iowa varies based on taxable net income.
