The first thing that comes to mind when you are thinking of setting up a startup company Iowa is – how will the business perform here? There are several small and medium size startups and established businesses performing quite well in a variety of industries in Iowa. Some of the industries that have seen stable growth include health care and social assistance, accommodation and food services including travel and tourism related services, professional, scientific, and technical services, and manufacturing.
Business Growth Incentive for New Businesses
One of the biggest sector or industry in Iowa, which has seen a high number of startup companies being registered, is the advanced manufacturing industry. A Bureau of Economic Analysis (BEA) 2016 report revealed that advanced manufacturing has made a contribution of $28.062 billion towards the growing and thriving business economy of the state. Now, let’s take a quick look at why Iowa is the right destination for establishing a business:
Advantage#1: The benefits of Incorporation or LLC formation
Corporation
- Independent Life: One of the salient advantages of an S Corporation in Iowa is that it enjoys an independent life. This simply means that the business entity will continue operation undisturbed even if it faced the death of one of its stockholders or incapacity of one or more stockholders.
- Corporate Tax Credits: According to a report by Iowa Department of Revenue, corporations received $66 million in corporate tax credits in 2017. If you register a new business in Iowa as a C or S Corporation, you will be able to benefit from several tax credit programs including the New Jobs Tax Credit program.
- Pass through taxation: If you register a new company in Iowa as an S corporation then the corporation or firm will not pay any income tax. Instead, the income or loss of the corporation will be passed on to the stockholders.
LLC
- Flow through Taxation: When you register a new company in Iowa as an LLC, it can benefit from the process of flow through taxation that will ensure there are no double taxations.
- Limited Liability: As an owner of an Iowa LLC, you will be able to enjoy limited liability protection quite similar to what a corporation enjoys.
- Flexible Profit Distribution: An Iowa LLC has the benefit of being able to select different ways of distribution of profits unlike in a partnership where the distribution is 50-50.
Advantage#2: Incentive Programs for Iowa Businesses
Once you register a new business in Iowa, you will be able to qualify for different types of business incentives as a part of the state’s economic development program. Some of these programs have been initiated by Iowa Department of Revenue and Iowa Economic Development Authority. Let’s take a quick look at some of the top programs that will benefit your business:
- Economic Development Set Aside (EDSA): The EDSA program has been created to provide financial assistance to small and medium sized businesses as well as industries. The aim of this incentive program is to enable businesses in creating or retaining job opportunities in Iowa. As a startup company Iowa, if you qualify then the maximum financial assistance you can receive is $1 million.
- Business Tax Incentives: The state of Iowa has created several types of business tax incentives targeted at enabling small and medium sized businesses to achieve higher growth without losing revenue generated in taxes. Some of the top tax incentive programs in Iowa include new jobs tax credit, high quality jobs program, redevelopment tax credit program, targeted jobs withholding tax credit pilot program, computers and industrial machinery and equipment tax credit, and research activities tax credit among others.
Apart from these, Iowa Economic Development Authority also provides several programs like Entrepreneur and Innovation Support and International Trade Assistance. You can qualify for these programs only after you register a new company in Iowa.
Are there any Disadvantages of Incorporating in Iowa?
Iowa, as a state offers a lot of opportunities to businesses that are willing to register or relocate here. This is a state with a growing economy but there are a few disadvantages like formation of a corporation may take longer, foreign businesses will be required to provide certificate of existence, and LLC’s have a limited life. Apart from these, there is much to look forward to especially in terms of advantages that will help push your business towards a new future!
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