How Much Does a Business License Cost in Iowa?

Iowa residents who are ready to start their own business need to do so legally. Getting off to the right start creates a solid foundation you can build from for years to come. That starts with a business license. The Iowa business license cost can seem confusing, though. What do you need to pay?

How much is an Iowa business license?

Iowa doesn’t have a single business license, but there are several fees you’ll need to pay that can total between $50 and several hundred dollars, depending on the permits your specific business needs.

Iowa could be the ideal place to start your business. From March 2021 to March 2022, nearly 10,000 Iowa businesses opened their doors in a single span of a year. If you want to be one of them, you’ll need to have the following details about how to obtain a business license, what you’ll pay for it, and related costs such as sales tax permits or seller permits.

When starting a business in Iowa, follow these tips and know there’s always help to make the process easier.

Do you need a business license in Iowa?

Iowa does not have a “general business license” requirement. Rather, you may need a business license in Iowa based on the nature of your business or your professional occupation.  In most situations:

• You will need to register your business with your state or county.
• You will then need to collect and remit taxes for your business sales.
• You may also need to apply for industry-specific or product-specific licensing in order to operate.

Each of these may require obtaining permits from various Iowa organizations and offices.

PRO TIP: Don’t confuse a business license and business registration. The two are very different. While Iowa does not have a general business license requirement, you will likely need to register your business with the state in a separate process.

How much does a business license cost in Iowa?

The business license cost depends on which specific components, such as professional licenses or permits, your business needs. You also pay various costs based on whether you operate as a sole proprietor, LLC, or corporation. The overall range of costs typically falls between $50 and $200, although various factors influence this estimate.

Consider the following as a starting point for the costs to start a business in Iowa:

• State business registration: Alerting the state of your business is a starting point. If you form an LLC in the state of Iowa, you can expect the registration cost to be around $50.
• Professional licenses: These differ based on the type of work you are doing. Some industries require a professional license, such as those operating a liquor store or a contracting business in construction. These range by license type, with a range of $50 to $200 being common.
• Specific permits for your industry: Some industries need to request a permit to operate in the city – this changes based on location as well as industry. For example, if you sell products that are in the tobacco industry, you’ll need a permit to do so. Those selling any type of gambling product or service, like lotto tickets, need to request a permit.
• City- and county-permit requirements: Many cities and counties require organizations to obtain a local permit. Cities set these costs. They range from $25 to $200 and tend to apply to most types of businesses.
• Sales tax permits: If you collect sales tax in the state of Iowa, such as when customers purchase a product or service from you, you need to register with the state. However, sales tax permits in Iowa do not have a few themselves.

Some licenses require you to pay to renew the license every year, while others may keep the license in place for a set amount of time. This varies significantly, and that can make knowing when to get a small business license in Iowa more challenging.

PRO TIP: The best way to know if your business requires a city or county-specific permit, license, or other fee for opening your doors is to call the City Clerk’s Office. You may also want to connect with the local zoning department to be sure your business fits into the mold they may have for specific areas.

Types of business licenses in Iowa and their cost

Here’s a look at some details that may apply in your situation. Remember to verify what is specific to the area you are operating in.

City business license

Each city has different requirements. Once you make the decision to start a business in Iowa, contact the local Clerk’s office to inquire about specific requirements in that community.

County business licenses in Iowa

There are limited county-specific business licenses in Iowa. These may cover areas such as agriculture or industrial businesses. However, it is more common for municipalities to put such rules in place.

State-level permits in Iowa

Professionals operating in the state may need to have a license. The Department of Inspections, Appeals & Licensing (DIAL) manages this process. The following are state-level permits required in the state:

• Alarms and fire safety permits
• Amusement rides
• Athletic event permits
• Barbering and cosmetology
• Building and construction
• Fireworks and explosives
• Food and hotels
• Gambling and amusement devices
• Health facilities and programs
• Medical and health field jobs
• Migrant labor camps
• Swimming pools and spas
• Tanning businesses
• Tattoo businesses

The cost for each of these permits varies based on the type and scale of your business, business formation, and municipality rules.

Other professional licensure requirements

State and federal laws may apply to those in the following occupations:

• Accountants
• Appraisal management companies
• Architects
• Engineers and land surveyors
• Interior designers
• Landscape architects
• Real estate appraiser
• Real estate salespersons and brokers
• Sign language interpreters and translators
• Social work licensure
• Speech pathology and audiology

Federal business licenses

Some organizations must meet federal guidelines to operate. You can see more of the specific descriptions and apply for licenses and permits on the Small Business Administration website. The following are some examples of business activities that may require federal-specific permitting:

• Agricultural businesses related to animals, animal products, biologics, and biotechnology, or plants
• Alcoholic beverage businesses of all types
• Aviation businesses
• Firearms, ammunition, and explosives
• Fish and wildlife businesses
• Commercial fisheries
• Maritime transportation
• Mining and drilling
• Nuclear energy
• Ratio and television broadcasting
• Transportation and logistics businesses

Before applying for any of these licenses, make sure your legal foundation is set, whether you’ve registered a corporation or learned how to start an LLC in Iowa to protect your business and comply with state law.

Conclusion

While the business license cost in Iowa does not have to be prohibitive, the process of starting a business in the state can be complex. That’s where Tailor Brands can help you. From helping you form an LLC to registering for permits licenses, we can guide you through each step of establishing and building your business.

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