State laws have created a business entity that combines characteristics of partnerships and corporations. Accordingly, Iowa, like all 50 states, recognizes such business entities. This entity is referred to as a limited liability company (LLC). The form required to set up an LLC in Iowa depends on what type of LLC the members (owners) of the LLC choose to create.
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LLC organizers wishing to create an LLC under the laws of Iowa must file a certificate of organization with the Iowa Secretary of State. The certificate of organization must include the LLC’s name and the registered agent’s name and address. In addition, at least one organizer must sign the certificate of organization and pay a $50 filing fee (as of 2010). The registered agent is a designated person or company with an Iowa address to whom the LLC delegates power to accept important notices and legal mail on the LLC’s behalf. The LLC’s name must meet two requirements set out in the Iowa Code. First, the LLC must have a name that is “distinguishable” from all other businesses registered in Iowa with the Secretary of State. Second, the company’s name must include the words “limited liability company,” “limited company,” or the abbreviations “LLC” or “LC”.
Iowa requires that professional service professionals who wish to form an LLC must instead create a professional limited liability company (PLLC). Typically, doctors, attorneys and accountants who wish to open a practice form a PLLC. PLLCs must meet the same filing requirements as an LLC, including the filing fee and the certificate of organization. In addition, PLLC organizers must describe the PLLC's purpose in the certificate of organization, which entails stating that the members intend to engage in one specific profession, such as law or medicine. The members of the PLLC must meet the requirements set forth by professional licensing boards in the state of Iowa. For instance, attorney members of a prospective Iowa LLC must be licensed to practice law and in good standing with the Iowa State Bar Association.
An LLC that has been organized under the laws of a state other than Iowa but wants to transact business in Iowa is considered a foreign LLC. Foreign LLCs must file a certificate of authority with the Iowa Secretary of State to lawfully transact business in Iowa. The filing fee for the certificate of authority is $100 as of 2010. It requires the same information required in the certificate of organization.
Operating agreements set forth the rights and responsibilities of LLC members. Typical operating agreements may include decision-making procedures, profit and loss sharing among members, and a definition of the contributions of each member. Iowa law does not require LLC organizers to draft and execute an operating agreement, but many do so to help mitigate potential conflict.