Iowa Business License

If you’re planning to start a business in Iowa, you may need one — or several — local, state, and federal business licenses in order to operate legally.

Our step-by-step Iowa Business License guide will help you get started by breaking down everything you need to know to get licensed regardless of your size and/or industry.

Let’s get started!

Do I Need a Business License in Iowa

In Iowa, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

• Business Tax Registration: Every business in Iowa must complete the Iowa Business Tax Permit Registration (Form 78-005). Submitting this form is a crucial step that establishes your tax collection and filing responsibilities within the state. By registering, you’ll secure the necessary credentials to collect sales tax and stay compliant with Iowa’s tax regulations
• Professional and Technical Licenses: In Iowa, contractors need to obtain a contractor license and list a Responsible Managing Employee (RME) with current qualifying certifications. Technicians also require a license to operate under a licensed contractor. All professional licenses and certifications are overseen by the Iowa Division of Labor
• Specialized Permits: Some industries require specialized permits for compliance. For example, asbestos abatement activities mandate a specific business permit and notifications to both Iowa OSHA and the Iowa Department of Natural Resources. Fire and security alarm systems installation, maintenance, and testing require an alarm system license (in accordance with Iowa Code 100C and Administrative Rules Chapter 277.)

However, this is not the only factor influencing the exact combination of Iowa licenses you’ll need — the location of your business within Iowa plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

• Local: Your business may be subject to licenses and regulations at the local level. For example, if your business is based in Cedar Rapids and relates to renting outdoor pavilions, you would need to comply with a range of policies that are set by the City’s Parks & Recreation Department. These include a defined rental season and specific rules about reservations, decorations, and use of amenities
• State: Iowa also has specific requirements at the state level. Companies that engage in the sale of alcoholic beverages, for example, are required to obtain a liquor license from the Iowa Alcoholic Beverages Division
• Federal: If your business operates within certain industries or does specific types of work, you might need a license from the federal government. These include the alcohol, aviation, firearms and explosives, radio and television broadcasting, and transportation industries, among others

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

How to Get a Business License in Iowa

In order to get your business license(s) in Iowa, you will need to complete the following steps:

• Form Your Business
• Obtain an Employer Identification Number (EIN)
• Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Iowa, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Iowa to register as a Limited Liability Company (LLC). Here are a few reasons for why:

• Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
• Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
• Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
• Ease of Formation: With the Iowa Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

• Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
• By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
• By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

• Local Licenses: How you go about applying for your local license(s) will depend on your location. Des Moines, for example, has a Business License Application form that needs to be submitted to the local City Clerk’s office for processing. Generally speaking, applications often require details that relate to your operations, owners, and other relevant business information
• Statewide Licenses: To apply for state-level licenses in Iowa, you will typically need to submit an application to the relevant state department or agency overseeing your industry. For example, businesses related to healthcare may need to file applications with the Iowa Department of Inspections, Appeals and Licensing (DIAL)
• Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: For more information on the types of licenses and permits you may need in Iowa, it’s advisable to consult the Iowa Economic Development Authority’s website.

Step 4: Renewal of Licenses and Permits

Many businesses in Iowa must go through a license renewal process, usually on a yearly basis. 

Having said that, this will be license-specific, and so it’s important to reach out to your local county office and/or state-licensing body proactively in order to understand what your obligations will be.

If you believe that you will struggle finding this information yourself, we recommend hiring a business attorney or working with a third-party service instead. This can be a good choice if you want to ensure that you avoid potential fines and can come at a quite low opportunity cost.

How Much is a Business License in Iowa

Your total business license cost will depend on several factors, such as how many Iowa business licenses you need.

Having said that, you should note that every business in Iowa will need to register with the Secretary of State, meaning that a minimum fee of $50 will need to be paid.

When we explore licensing costs at the local level, costs can vary greatly depending on the type of business in question. Generally speaking, business licenses at the local level can start as low as $50, but can go up significantly depending on the field. For specialized industries like healthcare, construction, or hospitality, you will likely need to obtain additional permits or licenses, which can bring the total cost into the hundreds or even thousands of dollars.