Starting a Business in Iowa

Iowa can be a great place to run a business, especially for small to medium sized companies. Even though it has the highest corporate tax rate in the country, this usually does not affect small businesses and startups that adversely. Iowa has a young and highly educated workforce and an important intangible of just how friendly the people are there. There are various tax credits, business tax incentives, funds and other business programs available. After searching how to start a business in Iowa there are some other factors to consider. You can look up your Iowa sales tax rate to file your sales tax return or make adjustments to it. Finding the correct information is very important if you are trying to check on your Iowa Business Tax Permit Registration. Checking on a form 78-005 or for an Iowa resale exemption certificate is usually a separate process and can be done at a later time.

The Iowa Department of Revenue issues tax notices for businesses and individuals alike. This is done through their internal protocols. The Iowa Secretary of State governs the formation procedures for different types of businesses. Once you have established a company with the Iowa Secretary of State, you can register your business name. Depending on the type of entity structure you will either receive Articles of Incorporation or Articles of Organization. After your documents are ready, you can apply online for an Iowa Sales Tax Permit. If you have not already obtained an EIN, you will need to do so if your entity type is anything but a sole proprietor. The last important compliance issue you will have to handle is getting the Business Licenses you need to conduct business.

There have been some major changes in legislation in recent years pertaining to the collection of sales tax. You may need to register for an SST streamlined sales tax permit if you sell to customers outside your home state. If you do, then you will have what is referred to as economic nexus. One of the main types of nexus is referred to as affiliate nexus. Once you complete all the other required tasks, you can pursue the various programs available to help your business move ahead. Here are some of the business incentive programs available to help you expand your Iowa operations:

  • Iowa has a Research and Development Tax Credit given to a business for any R & D investments that it undertakes. A business must first meet its tax obligations as well as certain federal level requirements, after which the reimbursement can be taken in cash. Credits can be taken as percentage of qualified research contract expenses, employee wages related to research activities, and certain equipment and supplies.
  • Iowa’s flagship Job opportunity incentive is known as the High Quality Jobs Program. This program offers loans, forgivable loans, tax credits and other exemptions. A company must meet certain wage and other minimum employment requirements. Service and retail businesses are excluded from this program. Benefits can be used to update and improve a facility.
  • Iowa has a withholding tax credit program called the Targeted Jobs Withholding Tax Credit. This tax credit intends to promote growth for a business that is able to create additional jobs. For every dollar of withholding provided by the business the city will match that dollar with a maximum of 3% of gross wages paid by the business. This withholding can be taken for a period of up to 10 years. Another job tax credit program is the Iowa New Jobs Tax Credit. This program entices a business to offer extended job training to improve their teams. The credits can be taken for up to 10 years.
  • The Iowa Demonstration Fund Program is designed for companies that have high technology that is ready to take to market. Loans are given up to $100,000 and are meant to drive growth by attracting private sector investment.
  • Iowa has an exemption program available to companies that have a qualified data center. A qualified data center is any company that invests a minimum of $200,000,000 in the first 6 years and opens a new data center that is at least 5,000 square feet. Iowa Sales Tax Exemptions are given at a 100% rate for the building structure, cooling systems, to any data center equipment and to other energy related equipment that is used in daily operations. Any data center that doesn’t meet the minimum requirements is still eligible for 50% abatement. It should be stated that a seller’s permit will be required in order to receive exemptions.