Many business owners choose a limited liability company (LLC) structure because of the advantages that it offers. It protects the personal assets of the owners from liability in case the company incurs debts and other obligations. At the same time, it provides flexibility when it comes to taxation. LLCs can choose pass-through taxation. However, LLCs come with responsibilities. As a business owner, also known as a member, you will have to make sure that your company remains compliant with all state requirements. You also need to file the correct paperwork when you want to make any changes. Some of these require the submission of formal paperwork and payment of corresponding LLC fees. Knowing what LLC fees you can expect will help you in planning the budget of your company.
Starting A Company
One of the first expenses you need to prepare for is the registration with the state. Here are some of the initial costs that LLCs may need to pay for.
- Name Reservation – All LLCs in Iowa need to have a distinguishable name. You have to make sure that no other business entity is currently using the name that you want for your company. You can do this by reserving it with the Secretary of State. Complete the Application for Reservation of Name form and pay the $10 filing fee. With this, your name will be protected for 120 days. This step is optional.
- Certificate Of Organization – Before you can legally do business in Iowa, you will have to register with the Secretary of State by filing a Certificate of Organization. The state charges $50 for the processing of this form. Unlike other states, Iowa does not have a readily available form; you will have to draft one. Make sure it includes the name and address of your LLC as well as the name and address of your registered agent.
- Registered Agent – The state requires all LLCs to appoint a registered agent. It can be an individual or another business entity that will accept all legal papers on behalf of your LLC. It will also serve as the agent for services of process in Iowa. The state allows companies to choose either an individual or a commercial registered agent.
Make sure you follow the guidelines in choosing your Iowa registered agent.
- An individual has to be at least 18 years old and a resident of Iowa.
- A third-party organization has to be authorized to transact in Iowa.
- The registered agent has to be available during normal business hours.
If you want to save money, you can appoint one of the LLC members or a friend. However, choosing an experienced third-party organization like DoMyLLC can be more advantageous for your company. A team of experts has the necessary skills and knowledge to ensure compliance with state requirements, which reduces the chances of falling into bad standing.
- Business Licenses And Permits – Depending on the industry you are in, the type of business you are running, and your company’s location, you may have to pay for federal, state, and local licenses or permits. The costs will depend on the type of license. Make sure you check with state, city, municipal, and county government agencies to see if you have to obtain any.
As a business entity operating in Iowa, you will have to file biennial reports every other year. It is part of the ongoing LLC expenses that you need to include in your company’s budget. The report is due between January 1 and April 1. The filing fee is $60.
Generally, the federal government considers all LLCs as pass-through taxation entities. That means that the members file their income in their personal tax returns.
However, if you choose to be treated like a corporation, your LLC will have to pay corporate income taxes. The state will calculate it at a small series of marginal rates. It is as follows:
- 6% rate for the first $25,000
- 8% rate minus $500 for an income of over $25,000 up to $100,000
- 10% rate minus $2,500 for an income of over $100,000 up to $250,000
- Either 12% rate minus $7,500 or an alternative minimum tax computed based on a formula involving Iowa’s maximum corporate tax rate (with rounding) for an income of over $250,000
If your LLC has employees, you will have to withhold and pay employee income taxes to the Department of Revenue (DOR) periodically. Additionally, you may have to pay state unemployment insurance taxes quarterly. The Iowa Workforce Development handles those taxes. If your Iowa LLC sells goods to clients in Iowa, then you will have to collect and pay sales taxes periodically.
Other LLC Fees
If you want to make changes to your LLC, you will have to fulfill certain requirements. These may come with LLC fees. Here are some circumstances that may result in expenses:
- Obtaining A Fictitious Or DBA Name – If you want to do business using a name that is different from your LLC’s legal name, you will have to file a Resolution to Adapt Fictitious Name form. It comes with a $5 fee.
- Changing Registered Office Or Agent – If you wish to change information related to your registered agent, you have to file a Statement of Change of Registered Office or Agent. The filing is free. Likewise, you have to inform the state if your registered agent resigns by submitting a Resignation of Registered Agent form. It is also free of charge.
- Amendment Of Formation Documents – If you need to make changes to your formation documents, you have to file an Amendment to Certificate of Organization form. The processing of this document costs $50. Here are some of the modifications you can make:
- Add, remove, or change a member or manager
- Change the company business address
- Change the business activities stated in your formation documents
LLC owners have several responsibilities, so it may be hard for you to find time to handle the formation and filing processes in Iowa. If that is the case, contact DoMyLLC. Our team will handle the preparation and filing of the appropriate paperwork.
Business Filing Section