Iowa professional corporations (PCs) are owned and operated by licensed professionals, such as accountants, attorneys, engineers, and doctors, who perform the services required to form a PC. All businesses should consider a formal entity structure, but there are some that would do better as a corporation than other types. See the ZenBusiness entity guide to see what’s right for you. Continue reading to see what it takes to form a PC in the Hawkeye State.
Determine whether an Iowa professional corporation structure is right for you
Is a professional corporation the right choice?
Professionals in Iowa have the option to form a PC or a professional limited liability company (PLLC). Both structures allow licensed professionals to form businesses together. These structures limit the owners’ liability for the malpractice of their professional partners; however, it doesn’t eliminate their liability for personal malpractice.
How will ownership be divided?
In Iowa, only professionals who are licensed to provide the same services in the state can be shareholders in a PC. Stock is owned by shareholders of the PC. You can decide who to include as shareholders and how much stock they will own.
How will the PC be managed?
The Iowa Professional Corporation Act requires all directors and officers to be state-certified to provide the professional services that the corporation offers. Merger opportunities are restricted to conditions that would result in the new company meeting the criteria to continue operating as a PC.
Choose a name for Your Iowa professional corporation
PCs must register their business name with the Iowa Secretary of State for authorization to do business in the state.
All lawful names must contain either “professional corporation” or “PC.” Additionally, the Iowa Professional Licensing Bureau regulates professionals in the state and may have specific name requirements for your industry.
Check with the Secretary of State business name database or use ZenBusiness’s name reservation service to see if your chosen name is available. If the name is in use, but you still want it, Iowa Code 490.401.3 provides options you may want to consider. If the name is available, you can reserve it for 120 days.
Domain name registrations
After determining a corporate name, register it as a domain to establish an online presence. Use your domain name on your websites, emails, and business cards to brand your business. Our domain registration service can help you acquire a domain name that fits your business.
Select an Iowa registered agent
All professional corporations are required to maintain registered agents and give the agent’s physical address to the Secretary of State. Agents are individuals or entities that agree to accept legal notices (e.g., subpoenas) as well as correspondence from the Secretary of State and the court system. A shareholder of a PC can act as an agent if they’re available during normal business hours throughout the year. They must inform the Secretary of State whenever changes occur.
If you don’t have the time or inclination to perform this duty, contact ZenBusiness’s registered agent service to see how we can eliminate the burden of being your own agent.
Complete your Iowa Articles of Incorporation
Now, it’s time to file your Articles of Incorporation with the Secretary of State. There are several ways to submit your documents and pay the incorporation fees:
- Online: Iowa’s Fast Track Filing portal files your documents and accepts Discover, Mastercard, or Visa.
- By Mail: Complete your Articles of Incorporation and mail it to Secretary of State, Business Services Division, Lucas Building, 1st Floor, Des Moines, Iowa 50319.
- Fax: Print your Articles of Incorporation and fax to (515) 242-5953.
- Costs: Domestic Professional Corporation: $50 by check, money order, or credit card.
Establish a corporate record in Iowa
The formation of your PC requires you to maintain and safeguard certain records for authorization and reporting purposes. These records include Articles of Incorporation, bylaws, minutes from board and shareholder meetings, and paper or electronic stock certificates. For help with compliance, consider our worry-free compliance service.
Designate an Iowa professional corporation board of directors
All members of the board of directors must be professionals who are licensed to provide services in Iowa. Unless stated differently in the bylaws, the initial board’s term will end during the first annual meeting, when a new board can be elected.
Create Iowa corporate bylaws
Corporate bylaws outline how the affairs of the PC are managed along with any specific details stated in the Articles of Incorporation. They are approved by the initial board of directors.
Hold your first board meeting
Notify directors, officers, and shareholders of the meeting location along with the date and time 10 to 60 days in advance. The board appoints a chairperson to facilitate the meetings. An initial set of bylaws will be adopted by the board of directors. The authority to modify, repeal, or adopt new bylaws sits with the shareholders unless otherwise stated in the Articles of Incorporation.
Handle Iowa tax obligations
PCs must observe federal, state, and local tax requirements and filing deadlines.
Contact the Internal Revenue Service (IRS) to get your federal Employer Identification Number (EIN). The IRS uses the EIN to recognize your PC as a business and to track tax returns. If you’d like to save time, you can get your EIN directly from ZenBusiness.
State and Local Requirements
The types of professional services you provide partially determines which state and local taxes you have to pay. Review the Iowa Sales and Use Tax Guide and the Iowa Sales Tax Exemption Certificate for information on corporate taxes and exemptions, or consult a qualified professional tax professional.
Obtain Iowa business licenses and permits
The Iowa Professional Licensing Bureau determines the license requirements for your PC. The services you provide are industry specific, so it’s not feasible to list them all. Permits and credentials may also be required at the local and federal level. Information about which qualifications you need may be available online, but there’s no one central place to check to verify that you have every license and permit your PC needs. If you aren’t sure where to start and would like someone to research your licensing needs for you, use our business license report service.
Acquire insurance for your Iowa professional corporation
PCs should look into insurance options to limit their liability in the event of a lawsuit or catastrophic event. Here are a few options to research with a licensed company or agent:
- Employment Insurance: If your corporation has at least one employee, you need workers’ compensation and unemployment insurance.
- General Liability Insurance: This optional insurance helps cover the costs of incidents at your office like property damage or medical expenses for a personal injury.
- Professional Malpractice Insurance: This insurance helps with lawsuits that stem from professional services provided to a client. It’s not required.
Open a business bank account
Your PC will need a corporate bank account to separate business income and expenses. If you don’t have a relationship with a bank, find one that meets your needs. Ask your banker what you’ll need to open an account other than your Articles of Incorporation and EIN.
As you continue to plan your Iowa professional corporation, let ZenBusiness assist you in getting closer to your goal.
Iowa Professional Corporation FAQs
What are the filing fees for an Iowa professional corporation?
The fee to form a domestic PC in Iowa is $50 payable by check, money order, or credit card. To file an Application for Certificate of Authority for a foreign PC, the fee is $100. Filings can be completed online, by mail, by fax, or in person.
Do I need a lawyer to form an Iowa professional corporation?
You can complete the necessary forms to start a PC on your own, but it’s wise to consult a legal professional if you have questions or need help drafting documents.
Does Iowa have other professional entity types?
Yes, you can form a PC or a professional limited liability company (PLLC).
Can professionals from different fields form an Iowa professional corporation together?
Most PCs are field-specific, but you should check with a legal professional on which professional services are acceptable to combine. In Iowa, PCs may offer two or more services for certain reasons when professionally appropriate.