Obtain a Tax ID (EIN) Number and Register Your Business in Iowa
If you feel ready to start a business in Iowa, there are a few steps you’ll need to follow. No matter what your idea is or whether you have any entrepreneurship experience in the past, you’ll need to make sure that your business is structured properly, and you have the right tax ID numbers to ensure your company is operating legally. Iowa is an unexpected hotbed of economic activity. There are more than 267,000 small businesses in the state, representing 99.3 percent of all Iowa businesses. Together, they employ nearly half of Iowa’s workforce, at a total number of employees more than 646,000. In 2018, those small businesses created nearly 18,000 net new jobs, and contributed more than 2,600 small business exporters.
Steps to Obtaining a Tax ID (EIN) Number and Registering an Iowa Business
- Forming a Business in Iowa
- Federal Tax ID (EIN) Number Obtainment
- Iowa State Tax ID Number
- Localized Licenses and Permits in Iowa
1. Forming a Business in Iowa
Choosing how to form your business is one of the most important early decisions you’ll make for your business. Getting started, there are many factors you’ll want to consider when choosing a business structure. For example, you’ll want to consider the requirements for starting and managing the business in question. Sole proprietorships and partnerships are among the simpler businesses to start, since they’re subject to fewer rules, regulations, restrictions, and annual requirements. Limited liability companies (LLCs) are slightly more complicated, and corporations can get messy. This is mostly because corporations come with a number of extra perks, including the ability to issue public shares to raise funds.
Taxes are another major consideration. Sole proprietorships and partnerships are taxed simply; you’ll owe taxes as an individual on any money you make from the business. LLCs and corporations are treated as separate entities, so they get more complicated. LLCs are generally considered pass-through entities; they won’t be taxed on the income they generate, but individuals in the LLC taking a salary or profits will be taxed on whatever they withdraw from the business. In Iowa, LLCs will be required to file a biennial report, along with paying a fee that ranges from $30 to $45, depending on how you file. Corporations will need to pay taxes on any revenue they generate, resulting in double taxation, since individual owners and shareholders will also need to pay taxes on money they make from the business. In Iowa, the corporate income tax rate is currently 12 percent, though it will be reduced to 9.8 percent in 2021. This makes it the highest corporate tax rate in the nation.
Business owners should also think about liability issues. In sole proprietorships and partnerships, owners will take on all debts personally, and could be held liable for any actions taken on behalf of the business. LLCs provide a bit of liability protection, but corporations provide much more protection. Both these separate legal entities can take on debts independently, and can be held liable (instead of an individual) for actions taken by the company.
2. Federal Tax ID (EIN) Number Obtainment
Your Iowa business will probably need a federal tax ID number. This distinct, 9-digit number serves to uniquely identify your business, kind of like a social security number. It’s given to your business when you register with the federal government, and is sometimes called an employer identification number (EIN). You’ll need this number if you’re going to hire employees, if your business has multiple partners, if you’re going to open a business bank account, or if you’re applying for a loan, a business license, or a permit.
The most efficient way to get your federal tax ID is to make use of our federal tax ID number obtainment services. Through us, you can apply online, which makes the application process as quick and straightforward as possible. Simply answer a few questions about you and your company, and you’ll get your tax ID via email in an hour or less.
3. Iowa State Tax ID Number
Your Iowa business may also need an Iowa state tax ID number. This number registers your business with the state government, rather than the federal government, but also serves as a unique identifier for various applications. You’ll need an Iowa state tax ID number if you’re selling taxable goods and services in the state, if you’re hiring Iowa employees, or if you’re going to owe excise taxes on regulated goods like gasoline, alcohol, or tobacco.
You’ll need a federal tax ID number before you get an Iowa state tax ID number, so make sure to get that first. When you’re ready, use our Iowa state tax ID number obtainment services to apply online. Answer a few quick questions about your business, and you’ll receive your Iowa state tax ID in a matter of 4 to 6 weeks.
4. Localized Licenses and Permits in Iowa
When starting a business in Iowa, you may need specific business licenses, permits, or other kinds of certification. There is no generalized business "license" that you need; instead, you may need one or more of hundreds of licenses and permits that vary based on the size, location, and industry of your business. Because these requirements vary from city to city, there’s no one set of standards for you to follow. Instead, you’ll need to reach out to your local Chamber of Commerce to see which licenses and/or permits apply to you. Be sure to have your federal tax ID number ready if you’re going to submit an application.
Over the past 20 years, the state’s equivalent of gross domestic product (GDP) grew more than 50 percent, outpacing national growth. Some of the biggest contributors to that economic growth were businesses in industries like healthcare, social assistance, accommodation and food services, manufacturing, retail trade, and construction. However, due to the diverse selection of both rural and urban opportunities for development, there is an economic precedent for virtually any startup entrepreneur to choose Iowa as a home base.
With our federal tax ID number and Iowa state tax ID number obtainment services, you can get your tax ID numbers as quickly as possible. Make the process easy on yourself, and get started today!