Business owners have several structures to choose from regarding how they can legally organize their company. One business structure, a limited liability partnership (LLP), is popular because it offers limited liability to the company’s owners, who are also known as partners. Like all different forms of partnerships, an LLP is made up of two or more partners. In an LLP, each partner cannot be held personally liable for either the LLP or the actions of other partners involving the LLP, unless they were the one directly responsible for the LLP ending up in trouble. The partners also have the right to share in all aspects of the management of the LLP, and act on its behalf in business transactions. A company will need to register with the Iowa Secretary of State if it wants to be an LLP in Iowa.
To form an LLP in Iowa, you will need to meet a handful of requirements. First, your general partnership will need to select a new name with either “Registered Limited Liability Partnership,” “RLLP”, “R.L.L.P.”, “L.L.P.”, “LLP”, or “Limited Liability Partnership” at the end. You will also need to get a registered agent that can be served on behalf of the LLP. The registered agent must be either a person living in Iowa or a corporation registered to do business in the state, and they must have a street address that can serve as the LLP’s registered office. Once you have come up with a new name and a registered agent, your LLP will need to file the correct paperwork with the Iowa Secretary of State.
All of the paperwork you will need can be found on the Iowa Secretary of State’s website. You can file the paperwork by either filling out a hard copy and mailing it or by filling out a digital form online. A domestic LLP, which is any LLP that has never registered as an LLP outside of Iowa, needs to file a Statement of Qualification of Limited Liability Partnership. If the LLP has already registered once in another state and now wants to operate in Iowa, it is a foreign LLP, which means that it needs to file a Statement of Foreign Qualification of Foreign Limited Liability Partnership. The two forms request much of the same information, such as:
- The name of the LLP
- The street address of the chief executive office of the LLP
- The street address of any office in Iowa that the LLP may possess if it varies from the address of the chief executive office
- The registered agent’s name
- The address of the registered office where the registered agent may be found
- The date and time that the LLP wishes for the form to be effective if the LLP does not want it to be effective right away
In addition to all of this information, a domestic LLP will also need to provide the original name of the partnership before it elected to become an LLP and have the form signed by at least one of the partners. A Statement of Foreign Qualification of Foreign Limited Liability Partnership needs to be signed by at least two of the LLP’s partners, as well as a court-appointed fiduciary if such a person is in control of the LLP.
Unlike a number of other state, Iowa never requires an LLP to file an annual report or pay an additional fee beyond the initial filing fee. This means that once you have filed the initial set of paperwork with Iowa, you never have to worry about filing another document or pay another fee unless something changes with your LLP, such as changing the LLP’s address or registered agent.
An LLP’s profits are only taxed as part of the partners’ income. Iowa’s personal income tax rate can go all the way up to 8.98%, making it one of the highest tax rates in the country. This means that the partners of an Iowa LLP could end up paying a far higher tax on the LLP’s profits than if the LLP were registered in another state.
Before you set up an LLP, you should speak to an Iowa business lawyer. They can assist you with filling out the paperwork and meeting the other requirements for this type of business.