If you are thinking about starting a corporation in Iowa, here is a checklist of steps you might consider before starting your business:

1. Find out the availability of your corporate name. You can do a quick search on the Iowa Secretary of State’s Web site to see whether your name is available. If the name is available you may want to reserve the name through the Secretary of State but you are not required to do so before incorporating. You may also want to consider whether any company outside Iowa has your corporate name. You can conduct a free search on the U.S. Patent and Trademark Web site. It is also a good idea to check whether someone has your proposed Internet domain name. In Iowa, your corporate name must have "incorporated", "corporation", "limited", or some abbreviation of such term.

2. Pick a Place to Incorporate. I am sometimes asked whether an Iowa company should incorporate in another state such as Delaware or Nevada. In general, an Iowa small business is probably better off incorporating here in Iowa. The filing fees are low and the ongoing fees for registering the business in Iowa are among the lowest in the country. (Only $30.00 every two years if you file your biennial report online).

3. Choose the Shareholders and Directors. Who will be the shareholders in the company? These are the owners of the company. Most of the businesses I represent have only a handful of owners. Determine how much capital you will need. Do you have enough capital or access to capital in order to start the business on your own? If not you may need to consider other investors.

In most cases the shareholders of the small business are also the directors. Do you want outside directors? There may be good reasons to have outside directors but think this over carefully before you elect to do so.

3. Create your Articles of Incorporation. The articles of incorporation act as a charter to start your new business in Iowa. The filing fee with the Secretary of State is currently $50.00. It may be a good idea to have an Iowa business attorney prepare your Articles of Incorporation and other corporate documents.

4. Prepare corporate bylaws. The bylaws set out the operating standards and procedures the business corporation will follow.

5.Create meeting minutes, resolutions and agreements. It is a good idea to document the initial meeting minutes of the company including the meetings of the shareholders and directors. At this time, you will elect the officers of the company including the president, vice-president, secretary and treasurer. You will also issue stock certificates at this stage. If you have multiple shareholders you will also likely need a shareholder agreement.

6. Obtain your employer identification number (EIN). Your corporation will need to obtain an employer identification number from the IRS. This can be done through a convenient online application process.

7. Elect "S" corporation status. (This is optional). You should speak with your accountant to determine whether it is appropriate to treat your corporation as an "S" corporation or a "C" corporation. Most small business corporations choose to be "S" corporations. An S corporation lets you enjoy the limited liability of a corporate shareholder but pay income taxes on the same basis as a sole proprietor or a partner. The "S" corporation is a pass through entity where the owners report the profits on their personal tax returns. In a "C" corporation the company itself is taxed on business profits and the owners are taxed on the money they draw out of the business. This could lead to double taxation. However, an experienced accountant can help you minimize your tax and in certain situations a "C" corporation may be more advantageous. So the key is to follow the advice of your accountant.

If you elect "S" corporation status you must file a special form with the IRS (Form 2553) upon starting your corporation.

8. Open a bank account. You will typically need the EIN and a banking resolution in order to do this.

9. Obtain any licenses and permits. You will need to check the federal, state and local regulations to determine whether you need and licenses or permits to operate your business.

10. Follow the corporate formalties of running a business. In Iowa, this includes registering your business every two years with the Secretary of State’s office. You also need to do corporate minutes at least on an annual basis including the election of officers and directors. Sign all documentation using your title as a corporate officer. You will also want to minimize or avoid situations where limited liability is not an absolute.

For more information on forming an Iowa corporation please visit the Sullivan & Ward, P.C. Web site for my small business formation package.