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Iowa Business License Basics

By: Startup 101
Last Updated: November 15, 2024

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Transforming your vision into a legitimate business in Iowa starts with proper registration. While the path to officially setting up a company may seem complex, the steps from choosing a business structure to acquiring the necessary permits is a process that thousands of businesses have successfully navigated.

To help you navigate the process, our guide breaks down the Iowa business registration requirements into clear, actionable steps. We’ll provide a detailed roadmap of the actions you need to take and introduce you to the specific government bodies you’ll encounter along the way.

Related: Starting A Business In Iowa Checklist

Step 1: Choose a Business Structure

The first step in registering a business in Iowa is to select a business structure (also called a business entity). A business structure is how the business is legally set up to operate, and this choice determines how your business will be organized, taxed, and protected from liability.

The four main types of business structures in Iowa are sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC). Each type has pros and cons, and the best choice depends on the business owner’s specific needs and circumstances. When selecting the right entity for your business, it’s essential to consider factors such as liability protection, tax implications, and management structure.

Related: Comparison of Business Structures

Starting with the sole proprietorship, which is the most basic form of business entity, the owner and the business are considered the same legally. This means the owner has full control over the business but is also personally liable for all business debts and legal claims. This setup requires minimal paperwork since the structure isn’t registered with the state, though it may not be suitable for businesses with liability concerns.

Related: How to Form a Sole Proprietorship in Iowa

general partnership is similar to a sole proprietorship but involves two or more people sharing business ownership, profits, and liabilities. While it is relatively easy to establish, each partner is personally liable for the partnership’s debts and obligations, which may expose them to significant financial risk.

corporation is a separate legal entity from its owners (shareholders), which provides them with limited liability protection. Corporations require more formalities and paperwork than all other structures. This process includes tasks like filing the Articles of Incorporation with the Iowa Secretary of State, holding regular board meetings, appointing an Iowa registered agent, maintaining corporate records, and more.

Related: How to form a Corporation in Iowa

Last, a Limited Liability Company (LLC) is a business structure that combines the limited liability protection of a corporation with fewer formalities.

While establishing an LLC is more complex than a sole proprietorship or general partnership, it is often the preferred choice for small businesses due to fewer administrative requirements than the corporation, liability protection, and greater tax options.

Related: How to form an LLC in Iowa

Step 2: Select a Business Name

Choosing and registering a business name is a step for many businesses in Iowa. The requirements for name registration can vary depending on your business structure.

In Iowa, sole proprietorships and partnerships often need to register a trade name, also called a “Doing Business As” (DBA) name, if they’re operating under a name different from the owner’s legal name. The registration process includes filing with the County Recorder’s Office in the county where your business is located.

Corporations and Limited Liability Companies (LLCs) typically don’t need to register for a separate trade name. When filing the formation documents (Articles of Incorporation for corporations or Articles of Organization for LLCs), these entities register their business name with the Iowa Secretary of State. Before filing, doing an Iowa Business Entity Search through the Iowa Secretary of State’s database can confirm if the desired name is available.

Step 3: Federal Employer Identification Number

A Federal Employer Identification Number (FEIN) is a unique nine-digit identifier issued by the Internal Revenue Service (IRS) for businesses. Think of it as a Social Security number for your company. This number is primarily used for tax filing and reporting purposes.

You’re required to obtain a FEIN if:

  • Your business has employees
  • Your business operates as a corporation, partnership, or multi-member LLC

Sole proprietorships or single-member LLCs with no employees can use the owner’s Social Security number. However, some will choose to get an FEIN for privacy reasons.

The fastest method is to apply through the IRS website. The process is free and takes just a few minutes. Upon completion, you’ll receive your EIN immediately.

How to Apply for a FEIN

Step 4: Occupational Licensing

In Iowa, many professions require specific licenses or certifications before individuals can legally offer their services. Some common professions requiring licenses in Iowa include:

Health and Wellness:

  • Dietitians
  • Massage Therapists
  • Chiropractors
  • Cosmetologists and Barbers

Technical and Trade:

  • Alarm System Installers
  • Electricians
  • Plumbers
  • HVAC Technicians

Food and Beverage:

  • Brewpub Operators
  • Commercial Kitchen Managers
  • Food Safety Managers

Specialized Industries:

  • Fur Dealers
  • Real Estate Agents and Brokers
  • Insurance Agents
  • Accountants

The Iowa Professional Licensing Bureau (IPLB) is the primary resource for many professional licenses in Iowa. Their website provides detailed information on requirements, fees, and application processes for various professions.

In addition to the professions licensed under the IPLB, some other agencies license professions in Iowa. One of these is the Iowa Department of Public Health and Human Services, which manages licensing for many health-related professions.

Before starting your business, thoroughly research your profession’s licensing requirements. It’s important to note that in addition to state licensing, some professions may have additional requirements at the county or city level as well.

Step 5: Iowa Business Tax Permit

The Iowa Business Tax Permit is a requirement for businesses selling taxable goods or services within the state. Any business engaged in selling taxable goods or services in Iowa must obtain this permit. This includes:

  • Retail stores
  • Online sellers with nexus in Iowa
  • Service providers offering taxable services
  • Wholesalers (for record-keeping purposes, even if they don’t collect sales tax)

How to Get an Iowa Business Tax Permit

Step 6: Sales Tax Exemption Certificate

After registering for the Business Tax Permit, many businesses will want an Iowa Sales Tax Exemption Certificate. This certificate allows businesses to purchase inventory or materials intended for resale without paying sales tax. This typically includes:

  • Retailers purchasing inventory for resale
  • Manufacturers buying raw materials for products they’ll sell
  • Wholesalers acquiring goods to sell to retailers
  • Service providers purchasing materials that will be directly used in their taxable services

Unlike many states, you don’t need to apply for a separate certificate from the state. Your Iowa Business Tax Permit number serves as your exemption certificate number.

Step 7: Local Business Licenses

While Iowa doesn’t require a general state-wide business license, many municipalities have their own licensing requirements. The specific requirements, costs, and processes vary depending on your location and the nature of your business. Some examples include:

Des Moines: The state capital requires licenses for several specific business types. These include:

  • Alcohol sellers
  • Mobile vendors (such as food trucks)
  • Pawn shops
  • Massage therapy businesses
  • Taxicabs and limousines

Cedar Rapids: Iowa’s second-largest city mandates registration for certain businesses with the City Clerk’s office, including:

  • Bowling alleys
  • Businesses selling alcohol
  • Skating rinks
  • Mobile food vendors
  • Salvage yards

Davenport: The Davenport Revenue Division oversees business licensing for operations within city limits. Businesses requiring licenses include:

  • Alarm system providers
  • Food trucks
  • Retail merchants
  • Peddlers and solicitors

Sioux City: Certain businesses must register with the City Clerk in Sioux City, including:

  • Body piercing establishments
  • Pawnbrokers
  • Transient merchants
  • Taxicab companies

It’s important to check with your local city clerk’s office or economic development department for the most up-to-date information on business licensing and permit requirements in your area.

Step 8: Local Building & Zoning Permits

Regardless of your location in Iowa, you’ll likely need to obtain building and zoning permits if you’re constructing, renovating, or changing the use of a physical business location. These permits ensure your business complies with local building codes and zoning regulations.

Key points about building and zoning permits:

  • Zoning Compliance: Ensure your intended business use is allowed in your chosen location.
  • Building Permits: Required for new construction, major renovations, or changes to electrical, plumbing, or HVAC systems.
  • Occupancy Permits: These are often required before you can open a business in a new or renovated space.
  • Signage Permits: Many cities regulate the size, placement, and lighting of business signs.

Navigating local business licensing requirements is an important step in preparing a building for business use. Be sure to research your local building department’s zoning and construction requirements.

Take the guesswork out of figuring out what licenses and permits are required to start your business with license research packages from Bizee and LegalZoom.

For only $99, you can save a lot of time and know your business complies with local, state, and federal requirements.


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