Iowa has over 243,900 small businesses, making up 93% of Iowa businesses. If you plan on starting a small business in Iowa, you should be prepared for the licensing required for certain industries and professions. Without the right license, you cannot legally operate in the state. This guide will help you determine if you need a license and which agency would issue it.
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Does Iowa Require a Business License?
There is no general business license required by Iowa, meaning that not every business must have a business license. However, some businesses are required to obtain a license depending on what they do and the industry they are in. One of the most common licenses required is a sales and use tax permit. The sales and use tax permit allows you to collect and pay the 6% state sales tax to the Department of Revenue.
Many professions also require a business license. The Iowa Professional Licensing Bureau manages the requirements for a multitude of professionals, including accountants, architects, real estate brokers and appraisal management companies.
If you sell certain products such as alcoholic beverages or tobacco products, you will need a special license to do so. And those who handle hazardous waste will need a special license because it is a highly regulated industry. If you are unsure whether you need a license, you should consult with a local Small Business Administration (SBA) business expert to evaluate your business and determine what is required.
When Do You Need a Business License in Iowa?
If your business is required to obtain a business permit or license, you’ll need to get this squared away prior to starting your business operations. If a license is needed, you cannot legally solicit or sell products and services without it.
When it comes to a sales tax permit, the state requires a permit for any business that sells tangible personal property or taxable services. The sales tax permit allows the business to collect and pay the 6% sales tax.
Types of Business Licenses
As you can see, there are a lot of possible business licenses that may apply to a given business. While the sales and use tax permit is one of the most common, other types of licenses include:
- Professional licenses: A number of Iowa public agencies require certain professions to obtain licenses. These agencies include the Iowa Insurance Division, the Department of Commerce, the Department of Public Health and the Professional Licensing Bureau. These licenses usually have prerequisites including classroom hours and passing an exam.
- Liquor license: The Iowa Alcoholic Beverages Division (ABD) requires manufacturers, distributors and retailers of alcoholic beverages to obtain a liquor license.
- Tobacco license: The Department of Revenue requires those who distribute and sell cigarettes to obtain a license for the activity from their county or city clerk.
- Food license: Businesses selling or processing food must obtain a food permit from the Department of Inspection and Appeals.
- Household hazardous materials permit: Iowa requires those who sell hazardous materials to obtain a business tax permit from the Department of Revenue and then request a permit via the registration.
- County and city licenses: Iowa counties and cities may require licenses and permits for various types of industries, most notably construction-related business.
- Federal licenses: A variety of industries must obtain federal licenses to operate legally. Check with the SBA for more information.
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Steps to Getting Your Iowa Business License
Most businesses will need a sales and use tax permit. Here are the steps to file the form if you do not complete the online registration:
- Download the Iowa Business Tax Permit Registration form 78-005.
- Complete the form, entering all pertinent information, including entity type, owner contact information and details about your Iowa presence.
- Sign and date the form.
- Mail the form to:
- ATTN Registration Services
Iowa Department of Revenue
- P.O. Box 10470
Des Moines, IA 50306-0470
- ATTN Registration Services
- Or fax the form to 515-281-3906.
How Much Does a Business License Cost in Iowa?
There is no fee to obtain a sales and use tax permit in Iowa. Other licenses and permits may require fees. For example, to obtain a tobacco license, you will pay a fee between $12.50 and $100 depending on the location and month it is issued. Liquor licenses may cost up to $2,028, while a hazardous materials permit starts at $25 for a retailer.
Do your research before you start an Iowa business to make sure that you know which types of permits and licenses are required for your business. You don’t want to run into legal trouble down the road for operating a business without the right licensing. For more information, check out our article on how to start a business.