Everything you need to know to start your business in Indiana
Which business structure do you choose for your startup? With so many choices available it can be a very daunting to not only decide on a structure, but also learn how to implement it effectively.
In this post we will give you step-by-step instructions for establishing each business structure in Indiana.
Startup ecosystem in Indiana
Before launching a business in any location, it's important to have an understanding of its startup ecosystem. Let's have a look at some important startup statistics in Indiana
Planning your business in Indiana
Once you've done some
market research to validate the demand for your business idea, the next step is to create a business plan.
Your business plan is the roadmap of your startup. It can also be your ticket to securing precious startup funding.
A business plan typically includes the following sections:
Thankfully, we've written an in-depth guide to crafting a winning
business plan.
Structuring and registering your business in Indiana
There are 6 main business structures, and all are applicable to both brick and mortar businesses and e-commerce businesses:
Limited Liability Company (LLC)
General procedures for all business types in Indiana
Regardless of which business structure you choose, you'll need to complete a few key steps:
Get your EIN
Sole Proprietors and Partnerships that
don't plan on hiring employees don't need an Employer Identification Number (EIN), but it's still wise to get one in case you do bring on employees in the future.
All other business structures must get an EIN in order to register their business.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Register a business name with the state of Indiana
If you want to trade under a business name different from your own full name, you need to register an
Assumed Business Name with the Indiana Secretary of State.
This registration can either be filed online or by mail to the Secretary of State:
Secretary of State Business Services Division
302 West Washington Street, Room E018
Indianapolis, IN 46204
Get your licenses and zoning permits
In Indiana, some businesses require a professional license to legally operate in the state. To find out if your business requires a license, search for it on the
Indiana Professional Licensing Agency website.
The location of your business may also restrict business activities. This may especially be the case if you plan to run a home-based business. Contact your
local Indiana county's office to find out whether you need to apply for a zoning permit.
Open business banking accounts
This isn't necessarily a requirement, but highly recommended to keep business transactions separate from personal transactions.
Submit New Hire Reports
File a business entity report
An
entity report is a biennial report filed to ensure records of your business are up to date. It's mandatory to file these reports.
Tax details for all businesses in Indiana
All businesses in Indiana must register with the
Indiana Department of Revenue in order to file their State Tax documents and register for state taxes.
You can find up-to-date
tax information for all business structures on the Indiana Department of Revenue website as well on the
IRS website.
Domestic vs Foreign business in Indiana
To make sure you're accessing the correct forms, it's important to understand the distinction between a domestic and foreign business in Indiana
A domestic business in Indiana is one that's headquartered within the state. Foreign businesses, on the other hand, are headquartered outside of Indiana
Now let's discuss the processes of establishing each individual business structure.
How to start a Sole Proprietorship in Indiana
Most Solopreneurs launch their business as a Sole Proprietor due to its simplicity of set up and cost effectiveness. You're always free to upgrade to a more advanced business structure (such as an LLC or Corporation) at any time as your business grows.
If your business solution poses any level of
financial risk to your clients, it is better for you to choose a business structure with a higher level of personal asset protection, such as an LLC or Corporation.
If you've already completed all the general steps for launching a business in Indiana there's nothing more you need to do to register your Sole Proprietorship.
How to start a Partnership in Indiana
A Partnership is the simplest business structure that accommodates two or more cofounders.
There are three different forms of partnerships in Indiana:
General Partnership (GP)
This is the default type of partnership. All members within a
General Partnership share debts of the business.
Limited Partnership (LP)
The personal liability of Limited Partnership members is capped to the amount they invested in the business. Limited partners don't have as much jurisdiction over business decisions as general partners. They function more like investors.
Limited Liability Partnership (LLP)
Limited Liability Partnership members are not held responsible for any financial negligence or fraud committed by other members.
The process is the same for foreign LPs and LLPs. Just be sure to select a foreign certificate for your selected partnership.
Create an Indiana Partnership Agreement
This is not an Indiana state requirement, but it is highly recommended. A partnership agreement is an internal document all members sign to indicate their agreement to set business procedures. To save time you can use a
partnership agreement template.
How to form an LLC in Indiana
If you want the peace of mind of knowing that your personal assets are protected in the event of a lawsuit, you may want to structure your business as an LLC.
LLCs can either be run by managed by members or a designated manager.
Naming an LLC in Indiana
The names of all LLCs in Indiana need to end in any of the following:
Limited LIability Company
Appoint a registered agent in Indiana
Indiana requires all LLCs to appoint a registered agent. A registered agent guarantees the acceptance of all business mail to ensure any legal mail is not missed.
All registered agents in Indiana must meet the following criteria:
Be located in the state of Indiana
Accept mail via a residential or business address (not via a PO BOX).
Guarantee availability during business hours.
Guarantee the timely forwarding of all accepted mail to respective business owners.
Should you be your own Registered Agent in Indiana?
You can legally appoint yourself (or a cofounder) as your own registered agent. However, this is not recommended because, as busy business owners, you can't guarantee your availability during business hours to accept mail.
Alternatively you could appoint a friend, relative or any of the following professional registered agents in Indiana
Submit Indiana Certificate of Organization
This document officially registers your LLC with the state of Indiana. The Indiana LLC Articles of Organization can either be
lodged online or
submitted by mail. Create an operating agreement
An LLC operating agreement is not an Indiana requirement, but highly recommended. It contains all the rules and procedures that will govern your LLC.
You can design this agreement however you like or use an
LLC operating agreement template. All members should sign this document during the initial corporate meeting.
Host initial Corporate meeting
This is an opportunity for all members to plan the company's launch as well as complete the following procedures:
Vote for initial term directors to serve
Distribute stock certificates
Complete settlements for high-value business purchases
Create a list of corporate laws that will govern the business (Bylaws)
Foreign LLCs in Indiana
To establish a foreign LLC in Indiana, business owners need to obtain a Certificate of Good Standing from their home-based Secretary of State and also submit
Foreign LLC Registration Statement.
How to form a Corporation in Indiana
A Corporation is the most sophisticated business structure available in Indiana. This structure offers the most superior level of personal asset protection to its members.
A Corporation can be very complicated to set up on your own, so you might want to get help from an attorney.
There are two different types of corporate structures in Indiana:
C-Corporation
This is the default corporate structure. There's no limit to the number of members a C-Corporation can have and they can issue all classes of stock.
The primary downside of C-Corporations is the double taxation process that takes place at both the corporate and personal income level of their members.
S-Corporation
An S-Corporation is classified as "pass-through-entity," so they're only taxed once at the personal income level of their members.
To elect to be an S-Corporation, you need to submit
Form 2553 with the IRS.
S-Corporation can only distribute one class of stock and are limited to 100 members.
Naming your Corporation in Indiana
Corporation names in Indiana must end with any of the following suffixes:
Appoint a registered agent for your Corporation in Indiana
The process of appointing a registered agent for Corporations is the same as the process for LLCs.
Submit Indiana Articles of Incorporation
A Corporation is officially formed in Indiana upon the approval of its Articles of Incorporation.
This document can be submitted online or by mail.
.
Host initial Corporate meeting
The following procedures should be completed during this meeting:
Initial directors that will serve during the first term should be appointed
All members should agree upon a set of bylaws that will govern the Corporation
Stock certificates should be distributed to members
Finalization of important business purchases
Meeting minutes should be recorded and stored in a Corporate Records Book alongside all other important business documentation
Foreign Corporation in Indiana
Foreign Corporations in Indiana need to obtain a Certificate of Good Standing from their home state, appoint an Indiana registered agent and submit a Foreign Corporation Registration statement.
How to form a Nonprofit in Indiana
If your business solution is predicated on improving the lives of others, you should consider choosing a nonprofit structure.
Naming your Nonprofit in Indiana
The business names of nonprofits in Indiana need to end in any of the following suffixes:
Appoint a registered agent in Indiana
The process of appointing a registered agent for nonprofits is the same as the process for LLCs.
Submit Nonprofit Articles of Organization in Indiana
To register your non profit, you need to submit the
Nonprofit Articles of Organization. If you plan to also apply for Federal tax exempt 501(c)(3) status, you must include specific IRS standard statements in your Articles of Incorporation. For more guidance, refer to the section "Articles of Organization" on page 25 of this
IRS document.
Host initial Corporate Meeting
All members should collaboratively create the bylaws that will govern the nonprofit, settle any pre-launch business transactions as well as any other matters that require attention prior to officially launching the business.
Apply for nonprofit tax exemption in Indiana
To obtain a 501(c) tax exemption with the IRS, nonprofits in Indiana need to file
Form 1023 with the IRS. Smaller nonprofits may be eligible to submit the simpler
Form 1023-EZ.
Registering for fundraising activities in Indiana
Charitable nonprofits in Indiana do not need to register before commencing any fundraising activities. Professional fundraising, however, must be registered with the I
ndiana Attorney General's office.
Protecting your business in Indiana
Some recommended insurance policies for your startup in Indiana are:
Business owners policy (BOP)
This type of insurance policy combines both business property insurance and business liability insurance.
This policy can protect business owners from theft, fire, loss of income, lawsuits and data breaches.
Commercial property insurance
This policy protects your business furniture and inventory in the event of a fire and theft
General liability insurance
A general liability insurance policy protects your business against reputational damage, property damage, personal injury and copyright infringement claims from any advertising.
Business income insurance
This insurance policy supplements any lost income while your business recovers from any damage to its processes.
Workers compensation insurance
This will ensure your employees get compensated in a timely manner in the event of any work related injuries.
Helpful resources for businesses in Indiana
Regsiter for state based taxes, submit taxation forms and access State rates
Helpful business setup resources and business registration portal.
This is a great resource for small business news, tips and advice, market research and industry-specific links.
The US Small Business Administration offers advice, advocacy and instruction for small businesses across the country.
Our own guide to launching your startup will walk you through every step of starting a business, from concept to execution.