Starting a business entity is a rather complicated and time-consuming procedure. Thus, some business owners try to find easier ways of going about it and eliminate the risk of huge losses. Many people operating businesses prefer to form limited liability companies (also known as LLCs) instead of corporations. One of the advantages of such a business structure is the smaller amount of paperwork involved. This review dwells on one of the documentation package items that every entity should fill out and sign—an LLC operating agreement.
It is vital to have this agreement at hand as it helps the company to avoid troubles in the long run. This legally binding contract eliminates disputes between the LLC members and proves the legitimacy of the company.
LLC operating agreements can be created both for single-member entities and companies with multiple owners. The correctly generated document typically comprises essential information about the entity and its members. Specifically, it serves the following purposes:
No matter where you fill out the form, you must follow the same structure and include similar details. However, the registering procedure and fees may vary from state to state. Below are basic sections every LLC operating agreement should have:
If you decide to complete the form for multiple members, consider the ideas coming from every LLC member. All the proprietors should be unanimous about the issues mentioned in the document.
As every business tends to grow and change with time, the document allows you to make amendments. It is as flexible as the nature of your LLC is. If you need to make simple changes, just correct the original version of the document. If there are considerable changes, consult with your attorney to do it correctly. Once the agreement has been amended and revised, make new copies and let your members sign them.
Getting an LLC operating agreement is easy with our advanced form-building software. It can assist you in finding a correct template or generating one on your own.
All the states have their specific laws governing the type of company under discussion. In the state of Iowa, all the matters related to limited liability companies and LLC operating agreements are regulated by Chapter 489, also known as the Iowa Revised Uniform LLC Act, of the state law. The articles are rather extensive. Thus, it will take a good deal of time to read the information you need. The chapter gives definitions to all relevant terms, sheds light on all the peculiarities of an LLC, purposes of LLC operating agreements, lists all the fees one should pay for submitting LLC documents, and contains other useful information.
Following Section 489.110 of the state law, in which LLC functions are stated, an LLC agreement is meant to govern the relationships between the company members, define their role in the LLC operation, state their rights and duties, indicate the type and purpose of the LLC activity. According to this article, such an agreement can limit the shareowners’ liability to the company and protect them from personal losses.
In this article, we will also provide a detailed guide on establishing a limited liability company. We hope you will educate yourself on the issue to avoid confusing situations and find answers to all possible questions.
The process of forming an LLC is logical. All you need to do is to follow consecutive steps to avoid mistakes. Below you will find step-by-step instructions on how to complete the establishment procedure and save as much time as possible.
1. Choose the Company’s Name
First and foremost, you need to select a unique name for your LLC. You should keep in mind that it is impossible to take a name that another entity has already registered. The State of Iowa official website allows you to do research and find out what name is available. You can enter the full name or just a few first letters to get the list of all entities existing under that name (or entities whose names include the part you have inputted). It is also a great idea to seek an available web domain name to avoid problems when designing your business website page. If you feel at a loss and have no good ideas, use a special LLC name generator.
Besides, check out the naming guidelines and ensure that your LLC name fulfills the following requirements:
2. Select a Registered Agent
Typically, all LLCs should designate a registered agent responsible for receiving important mail from the state. There are two options regarding the choice of an agent:
3. File the Articles of Organization
To register an LLC in Iowa, you have to submit a Certificate of Organization to the Secretary of State. You can do it in person or online or send your document by mail. Do not forget to attach a fee receipt (50 US dollars).
You can register two types of LLC:
Mind that the state does not provide an official template for this document. Before you create it on your own, read the requirements outlined in Section 489.201 of the Iowa Statutes.
4. Generate an Iowa LLC Operating Agreement
In Iowa, you are not officially required to create this paper. However, having one at hand will eliminate the risks of losing personal assets and monetary damages in case of business failure. See the paragraphs above to learn more about the advantages of LLC operating agreements and the document structure.
5. Get a Federal Tax ID Number
An FTIN is often referred to as an EIN (which stands for Employer Identification Number). Getting one is mandatory as it helps the IRS identify your entity and collect taxes. Besides, an EIN allows you to open a business banking account, employ workers, and control your federal and state taxes.
If you want your business to be legitimate, choose the easiest option and get the number by applying online on the IRS official website. Another way to obtain one is to send a printed PDF file by mail or fax.