How to Move an LLC to Iowa

There are many reasons why a business owner may want to move an LLC to Iowa. This article discusses the use of domestication, known in some states as LLC conversion, to transfer an LLC to Iowa.

What is Iowa LLC Domestication?

Iowa domestication is a statutory procedure that changes the state law that primarily governs an LLC.¹ An out-of-state LLC that domesticates to Iowa becomes an Iowa LLC organized under the Iowa Revised Uniform Limited Liability Company Act.² A business formed in a different state that completes an Iowa LLC domestication is still the same entity, but its legal home state—its state of organization or domicile—is now Iowa.³

Iowa law authorizes a similar procedure—called a conversion—that changes the form of entity that a business uses.⁴ An Iowa LLC can use the conversion process to change into a partnership, corporation, or another entity form Iowa recognizes. Or, a business that currently uses another entity form can convert into an Iowa LLC.

Some states have one statutory process—typically called conversion—that can change a business’s domicile state or change its form of entity (or sometimes both). Iowa law authorizes two separate procedures—one for each goal. An Iowa LLC domestication formally moves an LLC to another state. An Iowa conversion changes a business entity into a different type of entity.

Why Transfer an LLC to Iowa?

A business owner may have practical reasons or commercial reasons (or both) to move an LLC to a new state. These are some of the common reasons an LLC owner might domesticate the company to Iowa.

• Owner convenience. When business owners move to Iowa, they may want their new state to govern the business. Focusing on one state’s law can simplify compliance, avoid legal ambiguity, and make in-person visits to state offices more convenient.
• Professional hiring and networking. Business owners who live in Iowa will have an easier time hiring local attorneys, accountants, and other professionals to do work for an Iowa LLC. Finding local professionals in Iowa who are knowledgeable about another state’s law may be more difficult. Working with professionals who live in the same area as the owner may also encourage long-term professional relationships and networking opportunities.
• Legal benefits. Domestication to Iowa may advance an LLC owner’s business plans if Iowa law is a better fit for the company’s management model or strategy. For example, Iowa law gives LLC members substantial leeway to customize an operating agreement to their preferred management structure.⁵ Other potential legal benefits of a domestication depend in part on how business-friendly the current state is compared to Iowa.
• Tax savings. An LLC that domesticates to Iowa may be outside of its original state’s taxing authority if the transfer ends the connection—or taxable nexus—between the business and the original state. Reducing the number of states that can tax the business may result in a lower overall tax bill. Iowa also has a low sales tax and offers small-business grants and tax credits for businesses that employ Iowa workers.
• Less annual reporting. An LLC that is domiciled in one state and does business in another usually has to file annual reports in both states. An LLC that domesticates to Iowa may avoid future reporting in the original state if it will no longer do business there. Moreover, Iowa requires only biennial (every two years) reports, and the fee is only $30.00 if an LLC files its report online. So, an LLC that domesticates to Iowa may have fewer reports to file and lower reporting fees.

What are the Benefits of Iowa LLC Domestication?

Iowa’s LLC domestication procedure is the most straightforward and inexpensive option for most out-of-state LLCs that want to move to Iowa. Domestication offers the following advantages over other methods of changing a business’s domicile to a new state.

• The company’s identity is consistent. An out-of-state LLC that domesticates to Iowa is still the same company after the domestication.⁶ It can still use the same Employer Identification Number (EIN) and is still the same entity for tax and administrative purposes. The consistency reduces the required legwork and the chance of confusion after the transfer.
• Ordinary operations can continue. A domesticating LLC can continue its day-to-day operations without interruption. Business offices can remain open, and employment relationships are unaffected. The LLC avoids a revenue loss caused by a temporary closure. The business’s employees remain employed by the same company throughout the process.
• The company can keep the same bank accounts. There is no need for an LLC that domesticates to Iowa to close its bank accounts and open new ones. The Iowa LLC after domestication has all the same assets, liabilities, and rights as before the domestication.⁷ So, financial accounts are unaffected, and asset transfers are not needed.
• Business contracts stay in place. The domestication process has no effect on the LLC’s existing contracts. The company continues its contractual relationships, and existing agreements are still valid and enforceable. The domesticating LLC and other parties to its contracts have the same contractual rights and obligations as they had prior to the domestication.⁸
• Dissolution in the original state is unnecessary. Some approaches to moving a business to a new state require dissolution of the company in its current state. Dissolution is a burdensome, often expensive process, but it is not part of an LLC domestication to Iowa.⁹

What LLCs Can Convert to Iowa LLCs?

Not every out-of-state LLC can successfully domesticate to Iowa. The LLC’s current state must allow LLC domestications, and the company must satisfy Iowa’s requirements for its type of business.

An LLC can domesticate to a new state only if domestication is authorized by both states—the LLC’s current state and the state where it is transferring. Iowa law authorizes LLC domestications, but not all other states do. An out-of-state LLC that wants to domesticate to Iowa must be currently organized in a state that has a law that allows an LLC to change its state of domicile.¹⁰ The current state may call the process domestication, or it may call it conversion. But if the state has no legal process for transferring an LLC to a new state, the LLC cannot domesticate to Iowa.

Some states limit the types of business in which an LLC can engage. Iowa’s LLC law generally authorizes LLCs to engage in any type of business that is lawful in Iowa.¹¹ However, Iowa laws that govern a specific industry may have other requirements or limitations. An out-of-state LLC needs to ensure that it satisfies (or can satisfy) all Iowa requirements that apply to its type of business before starting a domestication.

Iowa PLLC Domestication

Iowa recognizes a special category of LLCs called professional limited liability companies (or PLLCs). A PLLC is a company that practices a profession that can only be performed in Iowa by someone who has a license, certification, or other authorization from a state agency.¹² Examples of professions in which an Iowa PLLC can engage include accounting, architecture, dentistry, law, medicine, and social work.¹³

Iowa law places extra requirements on PLLCs that do not apply to non-professional LLCs. For example, an Iowa PLLC must:

• Provide its services only through licensed professionals;
• Practice only one specific profession or a combination that licensed professionals can lawfully practice together;
• Declare in its certificate of organization the profession that the PLLC will practice; and
• Include in its name professional limited liability company, professional limited company, or an acceptable abbreviation.¹⁴

An out-of-state LLC that provides services that require a license in Iowa can domesticate to Iowa only if the company can lawfully practice its profession in Iowa. Before beginning a domestication, the company should ensure that its members and employees have the necessary licenses and that the company meets all legal requirements for Iowa PLLCs.

How Much Does Iowa LLC Domestication Cost?

The total cost for an LLC domestication to Iowa will include the filing fees charged by state agencies, the labor costs charged by a service provider who handles the domestication, and the fee charged by a commercial registered agent (if the LLC hires one).

Filing Fees

State agencies charge filing fees for processing the LLC’s domestication documents. The Iowa Secretary of State’s filing fees for an LLC domestication are $55.00—which consists of $5.00 for the articles of domestication and $50.00 for the certificate of organization.¹⁵ The current state’s secretary of state (or equivalent office) will also charge a filing fee for the domestication document filed there.

By comparison, Iowa charges a $100.00 fee to an out-of-state LLC that applies for authority to do business in Iowa as a foreign LLC. Thus, an Iowa LLC domestication often involves lower filing fees than filing an application for a certificate of authority.

Labor Costs

The service provider that an LLC hires to manage the domestication process will charge for its work on the project. Different providers charge varying amounts, and the fee may be an hourly rate or a flat fee—depending on the provider. A service provider’s work on an LLC domestication includes time spent gathering information, preparing the domestication documents, communicating with the LLC’s members or managers, and communicating with state agencies including time spent filing the domestication documents.

Registered Agent Fees

Iowa law requires LLCs to have a registered office and a registered agent on file with the Iowa Secretary of State.¹⁶ An LLC’s registered agent has the power to accept service of process and important government communications for the company. The registered agent can be an individual Iowa resident or a corporation or LLC that can do business in Iowa. In either case, the agent must list a physical address in Iowa that is the agent’s business office and that also serves as the LLC’s registered office.

Although an LLC member or manager can be an Iowa LLC’s registered agent, LLCs sometimes hire commercial registered agents—which charge a fee for serving as a business’s registered agent and office. Hiring a commercial registered agent lets a company avoid publishing a member’s or manager’s information and formalizes the LLC’s process for receiving important documents. A domesticating LLC that chooses to hire a commercial registered agent in Iowa will incur the agent’s fee—which is usually around $50.00 to $100.00, charged annually.

How Long Does Iowa LLC Domestication Take?

The Iowa LLC domestication process is typically shorter than other ways of moving a business to a new state. The overall turnaround time from beginning to end depends on how long each party takes to complete each step:

• The time for members or managers to provide the necessary information to the service provider;
• The time for the service provider to prepare the draft domestication documents;
• The members’ or managers’ time to review and sign the domestication documents or request revisions;
• The service provider’s or other responsible party’s time to submit the domestication documents to the Iowa Secretary of State and the current state’s equivalent office; and
• The Iowa Secretary of State’s and equivalent office’s time to process and approve the domestication documents.

The Iowa Secretary of State has expedited-filing options for businesses that need quick approval. The cost is $50.00 for 2-day processing or $15.00 for 5-day processing.¹⁷

What Laws Govern Iowa LLC Domestication?

An LLC conducting a domestication to Iowa must consider both Iowa law and the current state’s law. An LLC must also comply with its certificate of organization (or equivalent organizational document in the current state) and operating agreement if they have provisions that affect the domestication.

This article’s primary focus is Iowa’s rules for domestication of out-of-state LLCs into Iowa. The current state will have its own rules for LLCs domesticating out of the state—which the LLC must also follow. The current state specifically sets the standard under which the LLC must approve the domestication and determines the requirements for domestication documents filed in that state.¹⁸

Whenever both states address part of the domestication process, the LLC must take care to satisfy both states’ requirements. For example, Iowa lists items that must be in a domesticating LLC’s written plan of domestication, and the current state will probably have a similar list.¹⁹ An LLC’s plan of domestication must contain every item that either list includes.

What is the Iowa LLC Domestication Process?

The Iowa LLC domestication process consists of two components: document preparation and administrative tasks.

Document Preparation

Competent drafting of domestication documents is a vital aspect of a successful domestication to Iowa. The domestication documents listed below must satisfy all applicable requirements of both Iowa law and the current state’s law.

• Plan of Domestication. A Plan of Domestication that is designed to comply with the requirements of both Iowa law and the law of the state that the LLC is moving from.
• Iowa Articles of Domestication. The Iowa Articles of Domestication with all information and any related documents needed for filing with the Iowa Secretary of State’s Business Services Office.
• Domestication Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, certificate of conversion, or a similar term.²⁰
• Iowa Certificate of Organization. The Iowa Certificate of Organization for filing with the Iowa Secretary of State’s Business Services Office.
• Iowa Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as an Iowa LLC, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
• Resolution Authorizing Domestication. A resolution approving the transaction and adopting the Iowa organizational documents as the LLC’s governing documents.

Administrative Tasks

An LLC that has carefully prepared its domestication documents completes the domestication process by completing several administrative tasks.

• Conduct preliminary name search. Check the official records of the Iowa Secretary of State’s Business Services Office to determine whether the LLC’s name is available in Iowa. (If the name is unavailable, a slight name change may be required to complete the domestication.)
• Obtain signatures on the Articles of Domestication. The Articles of Domestication must be signed by the required parties. The Iowa Secretary of State’s Business Services Office allows the Articles of Domestication to be e-signed.
• Obtain signatures on the Certificate of Organization. The Certificate of Organization must be signed by the required parties. The Iowa Secretary of State’s Business Services Office allows the Certificate of Organization to be e-signed.
• File the Articles of Domestication. File the Articles of Domestication with the Iowa Secretary of State’s Business Services Office. The Business Services Office allows the Articles of Domestication to be e-filed.
• File the Certificate of Organization. File the Certificate of Organization with the Iowa Secretary of State’s Business Services Office. The Business Services Office allows the Certificate of Organization to be e-filed.
• File domestication documents with prior state. File the domestication documents with the Secretary of State or equivalent agency for the state that the LLC is moving from.

What is the Legal Effect of Iowa LLC Conversion?

An Iowa LLC domestication changes an out-of-state LLC’s legal domicile to Iowa with minimal impact on the business’s ordinary operations. Iowa law lists the following legal effects—which promote business continuity throughout the domestication process:

• Entity identity. The Iowa LLC after domestication is for all purposes the same company that existed before the domestication.²¹ The out-of-state LLC’s administrative history stays with the Iowa LLC after the domestication, and the company keeps the same Employer Identification Number.
• Legal authority. Iowa law—not the original state’s law—governs the LLC when the domestication becomes effective.²² The company’s plan of domestication and its new Iowa governing documents take effect and bind the company.²³
• LLC property. The Iowa LLC after domestication owns all the same property that the out-of-state LLC owned before the domestication.²⁴ There is no need to sign deeds or transfer assets because the same entity owns the property.
• LLC liabilities. The Iowa LLC owes all debts, obligations, and other liabilities that the out-of-state LLC owed before the domestication.²⁵ Creditor rights and liens are not affected by a domestication.
• Business contracts. An Iowa LLC domestication does not interfere with the LLC’s business contracts. The Iowa LLC is still a party to its agreements from before the domestication, and it has the same contractual rights, duties, and obligations as it had in the original state.²⁶
• Legal matters. Any legal or administrative cases or proceedings in which the out-of-state LLC is involved move forward as though the domestication did not occur.²⁷ The Iowa LLC’s name—if it changed in the domestication—is substituted for the out-of-state LLC’s name in any proceedings.
• Ownership interests. When the domestication process is completed, ownership interests in the out-of-state LLC are converted under the terms described in the plan of domestication.²⁸ In most cases, interests in the out-of-state LLC become interests in the Iowa LLC—though the members can choose to convert ownership interests into money, property, or other consideration

1. Iowa Code § 489.1010(1).
2. Iowa Code §§ 489.101, et. seq.
3. Iowa Code § 489.1013(1)(a). Iowa’s LLC domestication law also allows an Iowa LLC to domesticate into another state.
4. Iowa Code § 489.1006(1).
5. Iowa Code § 489.110.
6. Iowa Code § 489.1013(1)(a).
7. Iowa Code § 489.1013(1)(b).
8. Iowa Code §§ 489.1013(1)(c)-(e).
9. Iowa Code § 489.1013(1)(g).
10. Iowa Code § 489.1010(1).
11. Iowa Code § 489.104.
12. Iowa Code § 489.1101(3).
13. Iowa Code § 489.1101(4).
14. Iowa Code §§ 489.1102 – 489.1105.
15. Iowa Code § 489.117.
16. Iowa Code § 489.113.
17. Iowa Code § 9-115.
18. Iowa Code § 489.1012(e).
19. Iowa Code § 489.1011.
20. Fourteen states use the term articles of domestication to refer to the document that must be filed with the state to approve the domestication: Iowa, Massachusetts, Minnesota, Nebraska, New Hampshire, New Jersey, North Dakota, South Dakota, Utah, Vermont, Virginia, Wisconsin, Wyoming, and Indiana. The corresponding document may be called a statement of domestication (Alaska, Arizona, Connecticut, Idaho, Illinois, Mississippi, and Pennsylvania); articles of conversion (Florida, Nevada, North Carolina, Oregon, and Washington) or certificate of conversion (California, Delaware, Georgia, Michigan, Ohio, and Texas). It may also be called a statement of conversion (Colorado, Maine), certificate of domestication (Kansas), request for conversion (Louisiana), or statement/plan of domestication (District of Columbia).
21. Iowa Code § 489.1013(1)(a).
22. Iowa Code § 489.1010(1).
23. Iowa Code § 489.1013(1)(f).
24. Iowa Code § 489.1013(1)(b).
25. Iowa Code § 489.1013(1)(c).
26. Iowa Code §§ 489.1013(1)(c) and (e).
27. Iowa Code § 489.1013(1)(d).
28. Iowa Code § 489.1011(c).