How to Start an LLC in Indiana
- Why Start a Business in Indiana?
- Why Should I Start an LLC in Indiana?
- How to Start an LLC in Indiana
- Step 1 – Choose a Name
- Step 2 – Reserve your Business Name
- Step 3 – Find a Registered Agent
- Step 4 – Articles of Organization
- Step 5 – Operating Agreement
- Step 6 – EIN
- How Much is it to Start an LLC in Indiana?
- What Are Taxes Like in Indiana?
- Final Word: How to Start an LLC in Indiana
Starting an LLC in Indiana can be a great way for you to build a successful career as an entrepreneur. However, starting an LLC business can be very complex. In this article, we detail why you should start an LLC and how to start an LLC in Indiana.
Why Start a Business in Indiana?
There are numerous reasons why Indiana is one of the best states for business in the USA. Those starting a business in the state can expect a higher chance of success, because of the environment that is around them and the available opportunities. For example, Indiana is one of the best states based on their GDP, a key economic marker.
The state is known to have a strong economic and financial investment climate, allowing better access to capital than in other states. The state also has access to national and international markets, which allow brands to reach a far larger audience than is otherwise possible.
Those in Indiana are also known to offer entrepreneurs lower startup and operational costs. Therefore, brands can build a better business, without having to sell more. Therefore, it is easier for them to build a much better and bigger business.
Finally, the state has numerous incentives to help businesses to start in the state. Therefore, it can be easier for businesses to get going in the state than in other states. It’s also a fantastic state for those who have existing businesses in other states but want to start up a branch in the state as an LLC.
Why Should I Start an LLC in Indiana?
Indiana, like all the other states in the country, supports the LLC business model. These are business structures that offer several advantages over other business models, especially for those people who want to operate as a sole proprietor.
For one, business assets are separated from personal assets. Therefore, should the business get into debt and the creditors want to seize assets, your home, car, and other possessions cannot be taken to pay off the debts.
Another benefit is that it adds a different layer of protection for your business name. An LLC has to be registered and you can also register a DBA name (doing business as a name). As these are registered with the state, the name is protected from being used by other companies. If another person does try to use the name, you can take legal action against them.
Another benefit is operational. LLCs are known to have easier access to financing, credit, and suppliers. You can open a business bank account and suppliers will give you better credit terms. In addition, investors are more likely to provide cash injections.
Another advantage is that the tax burden for the owner is more flexible. You can be charged as an individual. Or you can opt to be charged as a corporation. It is best to speak to an accountant to determine what tax system is best for your personal finances.
And if you need to compare, here is a table of how Indiana compares with some of the nearby states.
|State||LLC Filing Fee||LLC Annual/Biennial Fee||Corporate Tax Rate||Nominal GDP per capita|
|Indiana||$95||$30 (every 2 years)||4.90%||$61,760|
|Illinois||$150||$75 (every year)||9.50%||$74,052|
|Ohio||$99||$0 (no fee and no information report)||0%*||$62,517|
|Michigan||$50||$25 (every year)||6.00%||$56,554|
|US Average||$130.38||$89.34 (every year)||5.60%||$64,773.08|
How to Start an LLC in Indiana
Here are the steps that you need to follow if you would like to start an LLC in Indiana.
Step 1 – Choose a Name
The first thing that you need to do is to find a name. The name for an LLC does have some stipulations. For example, you need to make sure that the name includes a Limited Liability Company or LLC in the name.
The name you choose must also be completely different from other businesses, whether they are LLCs or not, within the state. It doesn’t matter if it is the same as a brand in another state, as long as they aren’t registered in Indiana. However, it is really important that you consider whether this is a wise choice. You might want to open operations in another state, or you might need to choose a unique name.
To check for a name, you need to complete a business name search. You can do this on the Secretary of State's website. You should also check social media and Google to ensure there are no other brands that are using the name that isn’t registered.
Step 2 – Reserve your Business Name
You must take some time and reserve your name. Completing the documents for the LLC and getting them filed so your name is protected is a long process. During that time, someone might try to use your name. This can make things complicated.
Therefore, reserve your business name. There is a time limit for reserving your business name, but it is months away, and more than enough time for your LLC documents to be completed. The cost for reserving the name is $20. If you do run out of time, you can reserve the name again, but it will cost an additional $20.
Step 3 – Find a Registered Agent
A registered agent is an individual or entity that can act as your contact within the state. This can be a person who works in your business or it could be a third party. Some third parties, like IncFile and ZenBusiness are also able to help you with the whole process.
Having a third party can be very beneficial as they can help with reporting timeframes, sending reminders, and helping you to complete all paperwork on time.
If you go for someone in the business, they must be over 18 years old, have a residential address within the state, and can also accept papers on your LLC’s behalf.
Step 4 – Articles of Organization
Now that you’ve got those elements in place, you can start to register your LLC. To do this, you need to file your Articles of Organization with the Indiana Secretary of State Business Services. The articles should include the following:
- LLC name and address
- The registered agent’s details
- Manager-managed or member-managed
- The signature of the organizer
Step 5 – Operating Agreement
The next step is to ensure that you have an operating agreement. This is not a mandatory document, but it can be a very useful document. It contains all the information on who has the final word in decisions and the policies/processes for the business.
Therefore, if there is a disagreement, then the document can sort out what to do.
Step 6 – EIN
Once your LLC documents have been completed, you should get your Employer Identification Number (EIN). This is essential if you’re thinking of any employees or if there is more than one person in the LLC. Getting an EIN is simple, all you need to do is go to the IRS website and request one. It is free to get.
Once you’ve got an EIN, then you can apply for a business bank account.
How Much is it to Start an LLC in Indiana?
There are going to be costs when you start an LLC in Indiana. Though they aren’t as high as you would expect. For example, the reservation of a name is $20. And you will need to pay a filing fee of $100.
If you choose to provide a report by mail, you will be charged an additional $50. If you do this only via email, the charge is $32. And the other benefit is that your time to completion will be lower.
If you hire an agent, there will be additional costs to complete this.
Therefore, the minimum it will cost to complete the process is $152. Though it could cost $170 or more depending on whether you outsource the registered agent.
What Are Taxes Like in Indiana?
If you’re starting an LLC in Indiana, then you will be happy to know that there are federal income taxes to pay in the state. Only the LLC’s members will need to pay federal income tax. As a business owner, you are liable to pay state income tax, which is based on the money that you earn as the owner of the business. The employees will also have to pay state income tax.
Currently, the state income tax is fixed at 3.23%. However some counties in the state have higher additional taxes, therefore, you could end up paying an income tax of between 3.73 and 6.13%.
Those businesses that sell physical products/services may have to collect retail sales tax. The current 7%
Final Word: How to Start an LLC in Indiana
Indiana is one of the best places to start a business in the US. Starting as an LLC offers you benefits and perks that you can’t get in other states and that is why many brands incorporate within the state. Above are the steps on how to start an LLC in Indiana. The process is not particularly challenging or long.