Iowa Startup

Officially registering your Iowa startup business is an important step in the entrepreneurial process—but first, you'll need to determine what type of business you'd like to form with that registration. brings you a breakdown of some of the more common business types for your review.

Iowa Trade Name

Known as trade names in Iowa, unincorporated DBAs, such as sole proprietorships or general partnerships, are not registered at the state level; instead, they will be filed with the office of the County Recorder of the county in which the business is located.

It is important to note that registering an Iowa trade name does not enable you to used the trade name state-wide. In fact, trade names are to be used only in the county in which they were filed. If you'd like to open an office in a neighboring county, you should file your Iowa trade name in the neighboring county as well.

Incorporate in Iowa

Incorporating in Iowa is a way to legally separate the business and the owners, providing limited liability protection and preventing the courts from seizing any assets of those individual owners (provided the business follows all corporate formalities). A corporation raises capital by selling stock to shareholders; those shareholders have an ownership percentage in the corporation that corresponds to the ratio of shares owned to total amount of authorized shares.

There are two main types of for-profit corporations you can form in Iowa: a C corporation, or an S corporation.

C Corporation

A C corporation is is the default type of corporation. It provides a flexible ownership structure (no limit on the amount or citizenship of shareholders) but is double-taxed; the corporation is taxed on its income, an individual shareholders are taxed on their company profits as well.

S Corporation

An S corporation is more limited in structure—shareholders are required to be US citizens or resident aliens, and there may not be over 100 of them—but an S corporation is known as a "flow-through" or "pass-through" entity; the corporation's income is taxes only when it is distributed to the shareholders, and each shareholder reports it as individual income tax.

In either case, a corporation is formed by submitting Articles of Incorporation to the Corporations Division; an S corporation would subsequently send an S Corporation Election Form to the IRS requesting to be taxed as such.

Iowa LLC (Limited Liability Company)

An LLC, like a corporation, provides limited liability to its owners, protecting their personal assets from being seized in the event that the business is sued or defaults on a debt or loan. And, like an S corporation, it can elect to be treated as a pass-through entity, allowing profits to be taxed only as shareholder distributions.

But unlike the shareholder structure of a corporation, an Iowa LLC has flexibility with respect to the amount of profits any one owner will receive.

But an LLC is structured slightly differently as far as ownership. Rather than shares, owners contribute capital for an ownership percentage. The difference lies in the fact that an LLC Operating Agreement provides for contingencies where an owner might make more or less in profit than the percentage he or she originally contributed.

For example, a 25% shareholder of a corporation will receive 25% of the distributed profits—no more and no less.

But, in an LLC, another payment structure can be agreed on and adopted into the Operating Agreement. A 25% owner who does most of the day-to-day operating of the business might receive 75% of the profits (or whatever is agreed on and adopted), while a 75% ownership contributor who has a very hands-off role in the company might accept a 25% share of the profits.

As with all important business decisions, it is important to discuss your choice of business structure with your lawyer or tax advisor, as all businesses are different.

Iowa Foreign Business Organization

Any Iowa foreign business organization is required to register as a foreign corporation in the state prior to transacting business there.

The Iowa Code does not specifically define "transacting business"; additionally, some business transactions do not constitute "transacting business" with respect to the foreign business organization filing requirement. If you're unsure whether your situation requires a foreign corporation filing, it's important that you discuss the matter with your lawyer or accountant prior to transacting busiess in Iowa so that you can avoid any fines for noncompliance.

Iowa Fictitious Name

In Iowa, a fictitious name is a type of DBA that is used when a corporation or LLC—a business registered with the Secretary of State—wishes to do business under another name, but does not wish to change the name of their business entirely.

A fictitious name registration is available for any business entity registered at the state level, whether it is a domestic or foreign entity.

Iowa Nonprofit Corporation

Not all businesses operate for the financial benefit of the individual owners; an Iowa nonprofit corporation is a perfect vehicle for benefiting individuals and communities in the state.

Many nonprofit corporations formed for specific purposes, such as scientific, educational, or charitable purposes, go on to apply for 501c3 status with the IRS, allowing them to take advantage of certain financial benefits provided under Section 501c3 of the Internal Revenue Code; however, note that until such an application is accepted by the IRS, you remain simply an Iowa nonprofit corporation.