How To Start An LLC In Indiana 2023 (Full Guide & Resources)
Limited liability companies (LLCs) are a popular business structure for the majority of businesses in Indiana. An Indiana limited liability company offers personal liability protection and can help you to save plenty of money in taxes. With this review, you will discover how you can form an Indiana LLC without employing the services of an attorney.
The main steps involved in the formation of an Indiana LLC include filing Indiana Articles of Organization with the Secretary of State Business Services Division in Indiana, filing operating agreements, and paying the state filing fees. Articles of Organization are the legal papers that form your Indiana LLC officially. Usually, it will cost you around $95 to $100 to form an LLC, and you can choose to either apply via mail or online with business formation companies such as ZenBusiness or Northwest Registered Agent.
Read on to find out more about starting an LLC in Indiana and what you need to do once you’ve formed the LLC.
Why Should You Start An LLC in Indiana?
Unlike in sole proprietorships or general partnerships where small business owners are held personally liable for any lawsuits against the company, an LLC is designed to be a separate legal entity; thus, protecting the personal assets of the business owners from those lawsuits.
Besides protection from liability, an LLC can offer myriads of other advantages as compared to corporations, sole proprietorships, and general partnerships due to the numerous tax options, management flexibility, and ease of administration.
Read More: Best LLC Services 2023
5 Basic Steps to Start a Limited Liability Company LLC in Indiana 2023
The Indiana LLC formation process is a relatively easy one. With only five steps, you’ll be on your way to forming your successful business. Here are the five steps on how to start an LLC in Indiana:
Choose a Business Name for Your Limited Liability Company LLC
The first step involved in creating an Indiana LLC is ensuring that the business name you intend to use is available. LLC names in Indiana and other states in the US have to be distinct from the names of other entities. Here, you should use Indiana’s business entity database to check your LLC’s name availability before filing.
Besides business name availability, you should also confirm that a domain name is available. The name you choose should contain one of these designators at the end of the make – LLC, L.L.C., or Limited Liability Company. You can either use a comma before the designator and after the company name, for instance, Riverside Cleaners, LLC or Riverside Cleaners LLC.
Notably, if you have an LLC name that you intend to use but are not yet ready to create an LLC at the time, you can file a Name Reservation application with the Indiana Secretary of State business services division. The Name Reservation application costs $20 and can hold your LLC name for not more than 120 days.
Choose Your Indiana Registered Agent
Each Indiana LLC is obligated to have a registered agent. Registered agents act as the main point of contact as it receives legal papers, subpoenas, summons, tax notices, and the like on behalf of your LLC. Registered agents need to fulfill the following requirements:
- They must have an Indiana physical address (PO Box aren’t acceptable)
- Must be Indiana residents for not less than 18 years or be a recognized commercial registered agent company
- They must be generally available during normal business hours and at the provided address to receive process services
Any individual or business entity that fulfills these requirements can also act as a registered agent. However, when you choose to do so, your name and address will be made available on public records, which in turn leads to a loss of privacy. This is of significance to many entrepreneurs, especially those who are still employed or those who conduct business from home. When you appoint a registered agent, it helps to minimize unwanted mailings and phone calls.
Read More: Best Indiana Registered Agents 2023
File Your Indiana LLC Articles of Organization
The documents used to officially form an Indiana LLC are referred to as the Articles of Organization. To file Indiana LLC articles of organization, you can either download LLC Articles of Organization or file them online with Indiana INBiz.
If you have any inquiries and would like to get in touch with the Indiana Secretary of State Business Services Division, here are their details:
302 West Washington Street
Indianapolis, IN 46204
Turnaround time: 1 day (via online filing) and 5-7 days (via mail)
Estimated price: $100
If you’re intending to expand your existing limited liability company in Indiana, you must complete the foreign LLC form. A company is called a domestic LLC or just LLC if it’s doing business in the state that it was formed in. A foreign LLC has to be created if an existing company intends to expand its business in a different state.
Read More: Best LLC Formation Services in Indiana 2023
Create an LLC Operating Agreement for Your Entity
An LLC operating agreement is the legal document that governs an LLC’s framework. This operating agreement covers things such as ownership rights, the responsibility of the members, how losses and profits will be shared, and so on.
The Indiana state doesn’t obligate LLCs to have an Indiana LLC operating agreement, but they are still worth considering. Falling to have an operating agreement is disadvantageous to a business due to the following reasons:
- The personal liability protection of the members could be diminished
- Entity may be subjected to state regulations that could be detrimental should a lawsuit be filed
- The LLC members may not be fully aware of their responsibilities, which could result in costly conflicts in the future
Obtaining an EIN
The Employer Identification Number (EIN), which is also referred to as the Federal Employer Identification Number (FEIN), is a special 9-figure tax identification number that is assigned to a company by the Internal Revenue Service (IRS).
Just like a social security number does for individuals, an EIN is used to identify companies for tax reasons. It is usually used to open a business bank account, file federal and state taxes, hire employees, register business licenses and permits, and much more.
Applying for an EIN via the IRS is completely free. The number is made instantly available when you apply directly via the IRS website. However, you can opt to apply via mailing IRS Form SS-4, telephone, or fax.
You Have Created an Indiana LLC – Now, What Next?
Elect The Form of Federal Income Taxation for Your LLC
Tax flexibility is one of the most significant benefits offered by a limited liability company. When you apply for the EIN, you will have the option to decide how you’d like your business to be taxed for federal income tax reasons.
Although there are limitations, Indiana LLCs can be classified for federal income tax reasons as a sole proprietorship, general partnership, S-corporation, or C-corporation. These terms refer to how an LLC is taxed, and not its legal structure.
Typically, LLCs are taxed through a process known as pass-through taxation. This means that the losses or profits of the company will flow through its members.
By default, a single-member LLC is taxed as sole proprietorships, but the members can choose to change the taxation structure to an S or C corporation. On the other hand, multi-member LLCs are taxed as general partnerships, although the members have the option to change the taxation to S or C corporations.
Generally, the difference between being taxed as a sole proprietorship or general partnership and being taxed as a corporation is that the losses and profits are passed to the income tax returns of the members depending on their ownership ratio. Therefore, the LLC owners will have to pay self-employment taxes on all the profits from the business.
Alternatively, if members elect to be taxed as corporations instead of single-member LLC, they can choose to pay themselves a reasonable salary and pay payroll taxes. The remaining profits are then distributed among the members without being subjected to payroll taxes; thus, leading to significant tax savings.
Before you choose how you’d like your business to be taxed, you want to consult a professional account and assess the options that suit your business best.
Create an LLC Bank Account and Get a Business Credit Card
It is essential that you open a business bank account for your LLC for liability protection because the account separates business assets from the personal assets of the members. Numerous documents are required to open a bank account for your LLC, such as:
- A banking resolution, which is a document that is used to authorize business members to open a bank account for the LLC and gain access to the company’s credit history
- Copies of the original LLC formation documents from Indiana state to prove the establishment of the LLC
- Driver’s licenses of all the business members
- In some instances, you may need the Indiana certificate of good standing to prove that your entity is active and has a good standing with the Indiana state
Apply for The Necessary Business Permits and Licenses
Depending on the location of your company and the business it is involved in, you may have to apply for several business permits and licenses before you start your business operations. Some of the common licenses include:
- Business license – Indiana state doesn’t require general business licenses; but you need one to operate in the majority of states in the US.
- Professional licensing – Some professions and occupations like interior designers, home inspectors, plumbers and manicurists in Indiana require this license. Although it’s not a business license, you still need it to operate.
- Registered retail merchant certificate – Businesses that sell certain products and services have to register for the registered retail merchant certificate from the Indiana Department of Revenue. This certificate allows the company to collect Indiana sales tax.
- Unemployment insurance registration – If you intend to hire staff workers in Indiana, you must register through the Department of Workforce Development.
File Your Biennial Business Entity Report
According to Indiana law, limited liability companies are obligated to file their biennial business entity report with the Indiana Secretary of State. This report has to be filed by Indiana LLCs every year during the anniversary month when the business entity was created. For instance, if your LLC was created on March 23rd, 2022, it means that the next report has to be filed on March 23rd, 2024. The filing fee is $50 for a mailed-in biennial business entity report and $32 for online filing.
The Top 2 LLC Services In Indiana
|Name||ZenBusiness||Northwest Registered Agent|
|Full review||Read full review||Read full review|
|Link||Check Price||Check Price|
When you use ZenBusiness, you don’t have to worry about filing company documents. The company provides its users with a wide array of LLC services, with the objective of ensuring your business entity is correctly established and the right paperwork has been completed and delivered to the right government branch. This LLC’s formation service does charge its customers for their services, but they charge lower prices than most of its key competitors. It also provides registered agent service free of charge for one full year.
Northwest Registered Agent
The process of forming a new business requires lots of state-obligated paperwork, which can be a daunting task to many small business owners. Luckily, Northwest provides business formation services that can aid you in finding the appropriate documentation, complete filling it out, and filing it in due time with the appropriate government agency (in this case, it’s the Indiana Secretary of State). They also provide customers with business advice delivered straight from the experts.
Besides assisting you in setting up your LLC, Northwest offers several additional services, including its own registered agent services and templates for designing an operating agreement, that new business owners will find quite handy.
The major advantages of creating a limited liability company are tax flexibility and limited liability protection. The process of forming an LLC in the state of Indiana is quite easy and convenient, especially if you do it online. All you have to do is follow the steps mentioned above and you’ll be set to form your LLC.
You should take several aspects into consideration before you decide to create an Indiana LLC. First, make sure you consult your accountant to decide which tax option suits your business best. In addition, take a look at the requirements to form an LLC in Indiana so that you can avail all the required documents on time to form your LLC.
Frequently Asked Questions (FAQs)
LLC’s duration in Indiana usually takes about one day to two weeks depending on the method you used to create the company. If you opt to create an LLC via mail, the process could take as long as two weeks. However, it takes a significantly shorter time if you decide to form your entity by engaging the services of an online business formation service.
It usually costs a $95 state filing fee as well as $100 if you prefer to mail in LLC Articles of Organization.
Yes, they do. When you own an LLC in Indiana, you will be obligated to file a Biennial Report every year. Biennial Report fees cost $50 for mailed reports and $32 for online filing.
No, you don’t have to if you meet the requirements of a registered agent in Indiana – be not less than 18 years old, be a resident of the state and be available during normal business hours to receive important documents.
many people tend to think that LLCs and business licenses are identical, but they are not. LLCs are business entities, which is the manner in which a business is organized to carry out business activities. On the other hand, business licenses are legal approval from a government agency to operate legally.
A foreign LLC is an LLC that physically operates outside the original state that it was established in. To physically operate means to have a presence, like employees and offices. An LLC has to apply for a foreign LLC in every state that it intends to operate in.
Companies that need state licensing, like attorneys, accountants, acupuncturists, physical therapists, podiatrists, and the like have to be filed as professional limited liability companies rather than LLC. The process of filing PLLCs is quite identical to that of an LLC.
No, it’s not mandatory. Your LLC name can act as the brand name of your business and you can use it to accept payments as well. However, if you intend to carry out business under a different business name, you should register a DBA.
Using a registered agent service can prove to be a cost-efficient way of managing government filings for your entity. As readers purchase services discussed, you can tell if a service is worth it by assessing the users of that service. For many business entities, the benefits of using this service far outweigh the annual costs involved.
No, it’s not a must to file the operating agreement in Indiana and many other states. An operating agreement is an internal document that is kept for future reference. But many states do mandate LLCs to have operating agreements in place.
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ARTICLES of ORGANIZATION DOMESTIC LIMITED LIABILITY COMPANY. Accessed February 27, 2023. https://forms.in.gov/download.aspx?id=5674
IRS. Limited Liability Company LLC | Internal Revenue Service. Irs.gov. Published 2019. Accessed February 27, 2023. https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc
Division BS. Business Services Division. Business Services Division. Published January 12, 2021. Accessed February 27, 2023. https://www.in.gov/sos/business/
Limited Liability Company Operating Agreement. www.sec.gov. Accessed February 27, 2023. https://www.sec.gov/Archives/edgar/data/1345691/000119312512119426/d230618dex1012.htm
INBiz – Indiana’s One Stop Source for Your Business. inbiz.in.gov. Accessed February 27, 2023. https://inbiz.in.gov/BOS/Home/Index
DWD. Business Services. DWD. Published July 8, 2022. Accessed February 27, 2023. https://www.in.gov/dwd/business-services/