Forming your business entity in Delaware—specifically, a corporation—gives you a lot of flexibility, but you may still need to follow local laws depending on what state you operate in.
Specifically, if you do business in Iowa, you need to register with the state. We’ll walk through the process and simplify it. But first, how can you tell whether you’re legally doing business in Iowa?
When to register as doing business in Iowa
Delaware C corps—and all other corporations formed outside of Iowa—are referred to as “foreign” corporations by the State.
Iowa statutes do not specifically define what is considered doing business in the state. However, Iowa statutes provide that the following activities would not require you to register with the State:
- Defending or settling a lawsuit
- Having a bank account in the state
- Selling through independent contractors
When to register to collect sales tax in Iowa
Every state has rules about when a company is required to pay sales tax. These are called sales tax nexus rules.
You can think of the nexus as a special version of that state’s border; if you perform certain business activities within that border, you fall into the state’s sales tax nexus, and you’re required to register for and collect state sales tax.
Typically, these actions take the form of buying and selling goods and services.
In Iowa, the sales tax nexus rules only apply to sellers who sell physical goods or services to Iowa residents.
Until 2018, selling or buying non-physical goods—like subscriptions to streaming services, SaaS memberships, etc.—did not, generally speaking, qualify you for sales tax nexus. After an important court ruling in 2018, that changed. Now, if you buy or sell non-physical goods or services in a state, you may fall within its sales tax nexus.
Iowa sales tax nexus (physical goods and property)
If you have a physical presence in Iowa, then you need to pay sales tax to the state. You may be physically present in the state if you have any of the following in the state, permanent or temporary:
- Places of business
- Employee or representative
You will need to pay sales tax as long as you have physical presence regardless of any minimum thresholds. You can learn more about physical presence for sales tax purposes through the State’s website.
Iowa sales tax nexus (non-physical good and property)
The new state sales tax laws applying to non-physical (ie. internet) sales allow you to qualify for sales tax nexus even without physical presence or goods. In Iowa, you need to cross a certain threshold to qualify.
You will need to collect and remit sales tax if you collect $100,000 or more in gross revenue from Iowa sales in a previous or current calendar year.
If you would like to take a deep dive, you can check out the State’s website.
As usual, this isn’t legal advice—just a guide. If you’re not 100% clear on whether you fall within Iowa’s sales tax nexus, it’s best to confer with your legal counsel and/or an accountant that has expertise in Iowa’s legal code and tax regulations.
How to register to do business in Iowa
Select a name under which to do business. This doesn’t have to be the name you registered when incorporating in Delaware, but it can be.
Pay the fee. Now you pay the Iowa Secretary of State a $100 filing fee.
Submit your Foreign Profit Corporation Registration Statement.
Wait. Processing typically takes two to four weeks.
Once you’re approved to operate as a qualified foreign business in Wyoming, you’ll need to comply with certain requirements.
Compliance has a qualified business in Iowa
To stay in compliance and continue legally doing business in Iowa, you need to meet two requirements: maintaining a registered agent and filing your biennial report. On top of that, you will also need to pay a corporate income tax.
Registered agent in Iowa
Your registered agent in Iowa is your point of contact with local authorities. If you don’t have a physical address for your company in Iowa, it may be advantageous to find a registered agent to receive state notices on your behalf.
Foreign corporations are required to have a registered office in Iowa. The office cannot be a P.O. box, rather it must be a physical address of your registered agent or a licensed registered agent service.
Your registered agent will forward any important information, such as business mail, to you. There are a number of firms that contract out registered agents. They typically cost $50 – $100 per year.
Biennial reporting in Iowa
Every two years, you must file a statement with the State, updating any changes to the company address or the composition of the Board and officers. You’ll include info like:
- The legal name of your business
- The name and address of your registered agent
- The names and addresses of board members, managers, and officers
The filing fee for the biennial report is $60.
Paying your corporate income tax
A corporate income tax is a tax imposed directly on the income of your corporation. For more information on filing and paying your corporate income taxes, please see the following guidance from Iowa Department of Revenue.
Registering for sales tax in Iowa
If you meet the requirements to collect sales tax in Iowa, you will need to apply for a sales tax permit. Iowa provides two ways for you to register to collect sales and use tax depending on what is best for your company:
- Iowa Department of Revenue provides a Business Tax Registration System which allows you to register for only Iowa sales and use tax collection.
- Streamlined Sales Tax Registration System lets you register for sales tax for multiple states. Iowa is part of this system so you can register to collect Iowa sales and use tax through the Streamlined Sales Tax Registration System.
Hiring and paying employees in Iowa
When you hire a new employee in Iowa, federal and state laws require that you report new hires within 20 days of hire. You can report your new hires online.
Your payroll provider should be able to take care of paycheck withholdings, but it’s up to you to register as an employer with the State and set up an online employer account.
For a comprehensive guide of your responsibilities, Iowa provides the following information.
The easiest way to register your business in Iowa
To register your business in Iowa, you’ve got to keep track of a lot of moving parts. Failing to file the right forms, provide the right information, or stay on top of compliance laws can lead to serious headaches.
Capbase makes it easy. When you incorporate your Delaware corporation on Capbase, we will generate the required information needed to register to do business in Iowa and keep you up to date on any required filings.
The compliance calendar inside your Capbase account will notify you of upcoming fees, reporting, or other requirements, so you can keep your startup in good standing with Iowa state officials. Try Capbase now.
Written by Capbase Staff
Capbase is a team of designers, engineers, and business professionals spread across 6 time zones on 3 continents united by our passion for dogs, coffee, and great software.
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