How to start an LLC in Indiana

The process of LLC formation in Indiana involves filing the articles of organization with the Indiana Secretary of State Business Services Division. This is the most crucial step because it creates your Indiana LLC. However, there are things that you need to do before and after filing your articles of organization.

For instance, you must have a business name before submitting any articles to the Indiana Secretary of State. Once approved, you will also need to apply for all relevant business licenses and permits. On this page, you will find a step-by-step guide on how to start an LLC in Indiana.

Key takeaways

• To start an LLC in Indiana, you will need to file articles of organization with the Indiana Secretary of State Business Services Division.
• The upfront cost of filing articles of organization in Indiana is $95 if you file online and $100 if you send by mail.
• Every entrepreneur is required to appoint a registered agent when forming a limited liability company in the state of Indiana. If you don’t know one, you may use a professional registered agent service provider like Sprout.
• Although it’s not required by Indiana state law, it’s essential to obtain an EIN for your company during the formation phase.
• Indiana limited liability companies are subject to state sales tax (for those selling physical goods), state income tax and federal income tax.

Indiana LLC fee breakdown

The upfront cost of forming a limited liability company (LLC) in Indiana is $95 if you file your articles of organization online and $100 if you send them via mail. This amount is payable to the Indiana Secretary of State.

Note that if you are starting a foreign LLC in Indiana, you will file a Foreign Registration Statement rather than articles of organization. Your statement should be accompanied by a filing fee of $125, but you may be charged up to $250 if you are registering a foreign master LLC.

Besides the filing fee for articles of organization, you will also be charged an extra $20 to file a DBA name. Short for “Doing Business As”, a DBA name allows your LLC to use a different name other than its registered business name. This may be necessary if you don’t want to use your LLC name as it currently is. But keep in mind that you can change your business name altogether.

How to start an LLC in Indiana: a step-by-step guide

The Indiana LLC application process takes at least nine steps to complete – starting with an LLC name search and ending with marketing efforts. You will need to jump through a few legal hoops on the way. If you feel like it can be overwhelming, or perhaps you are strapped for time, consider creating your LLC Indiana with Sprout.

For as little as $39, Sprout will do most of the legwork for you, including a name availability search, filing articles of organization, preparing all the required legal documents, and on-going compliance monitoring once you open your LLC doors to customers. Find out more about Sprout here.

If you would rather take the leap yourself, then here’s a step-by-step guide for LLC formation in the state of Indiana.

Step 1: Name your Indiana LLC

The first thing you will need to do when forming a limited liability company in Indiana is to find a name for the business. The state has guidelines that entrepreneurs must follow. First, your business name must include the phrase “limited liability company” or any of its abbreviations (like LLC or L.L.C).

Secondly, your LLC name should not contain words that can make people confuse your business with a government agency such as the State Department, FBI or Treasury. Finally, there are restricted words that you can only use if you have a professional in the particular field as part of your company. For example, you can’t use “Attorney” unless a lawyer is part of your LLC.

Ideally, you want a unique, memorable business name that is easy to pronounce and has some emotional appeal. Even so, the naming process doesn’t end there:

• Do a name search: if you’ve found an LLC name you like, run a name availability search to determine if it’s available for use. Indiana state law requires LLC owners to only use names that are not already taken within the state. The easiest way to find out if your preferred name is taken is to do a name search at INBiz. INBiz is Indiana’s one-stop portal for business registration and compliance. If you find that your name is available, you may reserve it for 120 days to prevent others from using it as their own. This will give you enough time to complete your Indiana LLC application without fear of losing your business name.
• Get a domain: after reserving your LLC name, you can go ahead and check whether its domain is available. While “.net” and “.co” are great, nothing gives your business as much legitimacy as a “.com” domain. Therefore, try to secure the “.com” domain, either using your business name or its close variation. Remember, you can always turn to Sprout for business domain name registration and website building.
• Trademark your Indiana LLC name: this is not mandatory for Indiana business owners, but it may be necessary if you want to add an extra layer of protection for your brand name. A trademark gives you brand protection for 10 years, which you can renew indefinitely. Apart from providing identity, a trademark offers legal protection for your brand and business, and it also guards your products against counterfeiting and fraud.
• Register a DBA name: a “doing business as” name is not a requirement in Indiana. However, you may need it if you want your business to trade using a name other than its legal name. For example, you can register your Indiana LLC as XYZ and later obtain a DBA as ABC. This will allow you to trade as ABC and only use XYZ when necessary.

Step 2: Choose a registered agent in Indiana

Indiana law requires all business owners to appoint a registered agent when forming a limited liability company in the state.

What is a registered agent? A registered agent is an individual or company that you designate to accept official service of process, mail and other legal documents on behalf of your business. Your Indiana registered agent serves as the point of contact with the state. By state law, they must be a resident of Indiana or a company authorized to do business in the state. Whatever the case, the registered agent must have a physical address (not just a P.O. Box) within the Hoosier state.

Generally, anyone can be a registered agent in Indiana as long as they meet the above criteria. You can even be your own registered agent. However, there are some risks involved in that. A registered agent should always be physically available to accept service of process, tax documents and other important correspondence. If you put yourself as your LLC’s registered agent, you may easily miss to accept important legal documents when you are away for business (like attending a meeting), and that can have legal consequences.

That’s why it’s always a better idea to use registered agents provided by LLC formation service companies like Sprout. You will get an Indiana registered agent who is always available to accept correspondence on behalf of your LLC.

Step 3: File Indiana articles of organization

After finding a name and an Indiana registered agent for your LLC, the next step is filing your company’s articles of organization with the Secretary of State Business Services Division. This will formally create your limited liability company.

There are two ways to file LLC articles of organization in Indiana. You can file online at Access Indiana. You will need to create an account first before you file online.

Secondly, you can file your articles via mail. In which case, download Form 49459 from the Indian state website.

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Fill out the Indiana LLC application form and mail to:

Secretary of State

Business Services Division

302 W. Washington St.

Room E-018

Indianapolis, IN 46204

Generally, Indiana articles of organization collect information about your new business, including the following:

• Name and address of the LLC.
• Name and address of your appointed registered agent.
• Whether your LLC will be member-managed or manager-managed.
• Whether the duration of your LLC will be perpetual or for a specific period of time.
• Name and signature of the organizer.

LLC Indiana articles of organization take one hour to process if you file online and five to seven business days if you send by mail. Filing fees are $95 for online filings and $100 if you send via mail.

As already mentioned, Indiana articles of organization are only necessary if you are starting a new business from scratch. If you are expanding an existing business into the state, you will need to register it as a foreign LLC, which means filing foreign registration statement.

Step 4: Receive a certificate of formation from Indiana

Once your articles of organization have been approved, the state of Indiana will issue your business a certificate of formation. This certificate acts as proof that your business formally exists. Beyond that, you may use it to obtain business licenses, open business bank accounts, and apply for an Employer Identification Number (EIN).

Step 5: Create an Indiana operating agreement

Limited liability companies are not required by law to have an operating agreement. However, it’s a good idea to draw it up anyway.

What is an LLC operating agreement? In short, an LLC operating agreement is a legal document that shows the ownership of a company as well as the laid down procedures for operating it. It is to LLCs what bylaws are to corporations. However, operating agreements are generally more flexible. Business owners can customize this document to fit their needs and the interests of the business. Although Indiana doesn’t mandate entrepreneurs to have an LLC operating agreement, failure to prepare one for your company means that it will be subject to the default state law when it comes to ownership and management.

What should a typical LLC operating agreement include? Among other things, a well-crafted agreement should cover:

• Business ownership. It will outline the interest of each shareholder, particularly in the case of multi-member LLCs.
• Rights and responsibilities of members and managers. This includes their voting rights and requirements.
• Transfer of interest. An operating agreement may also state the procedure to be followed when selling the business. it may also create a process for removing and/or admitting a new shareholder to the LLC.
• Business structure. It may establish how your LLC should be legally recognized. For example, your operating agreement can determine from the outset that the company is an S-corp and not a C-corp or limited liability partnership.
• Profit allocation. Single-member LLCs may not need this because the sole owner keeps all the profits. But multi-member LLCs may. The agreement essentially determines how business profits are to be divided among the various shareholders.

In case you are not sure how to write up an LLC operating agreement, you can use one of the many templates that are available online. Better yet, Sprout can help create templates that are specifically customized for you and your business.

Step 6: Get an EIN

The Internal Revenue Service (IRS) – and by extension, the Indiana state law – requires LLC business owners to have an EIN if:

• Their company is a multi-member LLC, and/or
• The company has employees.
• The company collects sales tax.

What is an EIN? Short for Employer Identification Number, EIN is a unique nine-digit number that the IRS issues to businesses for identification and tax purposes. Thus, businesses must use this number to file tax returns. It, therefore, serves the same purpose as a Social Security Number, but strictly for businesses.

Beyond filing tax returns, an EIN is also helpful in many other cases. You may use it to open a business bank account, hire employees, prevent brand identity theft, establish business credit, and access business loans.

How do you get an EIN for LLC Indiana? There are two ways of applying for an Employer Identification Number. You can either apply online via the IRS website, or apply by mail. In case you choose the latter, download the EIN application Form SS-4, fill it out and mail to the IRS at this address:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935

Applying for an EIN is completely free; there are no applicable federal or state fees either by the IRS or the state of Indiana.

Note that if you are converting a sole proprietorship to an LLC in Indiana, you will need a new EIN for the new LLC. This is a requirement by the IRS. Something else worth mentioning is that you don’t need a Social Security Number to obtain an EIN in Indiana, particularly if you are a foreigner starting an LLC in the state. Instead, simply fill out IRS Form SS-4 and leave section 7b blank. After that, call the IRS at (267) 941-1099 and they will guide you on how to complete your Indiana LLC application.

Step 7: Get Indiana business licenses and permits

The state of Indiana doesn’t have one general business license or permit for limited liability companies. However, most LLCs can or must obtain one or more business licenses and permits to operate in the state. These typically vary based on:

• The industry in which your LLC operates. For example, restaurants typically need health permits. Similarly, if your business offers professional services like accounting or legal services, you will likely need a permit from the Indiana Professional Licensing Agency (PLA). The PLA website contains a list of all the professions and occupations that need business licenses to operate in Indiana.
• The type of business that you and forming. Apart from the industry in which it operates, the type of LLC you’re creating will also determine the types of licenses you need. For example, businesses in healthcare must meet HIIPA requirements.
• The location of your business. Some county and local governments have licensing rules that may apply to small businesses and LLCs. For example, both Indianapolis and Marion Counties require that entrepreneurs obtain a license to conduct business in the county.

To determine the exact business licenses and permits that your LLC needs in Indiana, check out the state’s business owner’s guide. You can also reach out to the State Information Center at 317-233-0800, 800-45-STATE to find out what licenses and permits your LLC Indiana needs to stay compliant with state law.

Step 8: Open a business bank account for your Indiana LLC

Once you’ve fully complied by obtaining business licenses and permits, you can proceed to open a dedicated bank account for your Indiana limited liability company. Some banks will require an EIN for this, so keep it in hand.

Having a business bank account is a great way to separate business finances from personal finances. This is beneficial for many reasons. For one, it creates a dedicated account where all business transactions can pass through in a neat and organized manner. This not only simplifies business accounting, but it will also save you the hassle of having to sort out your finances during tax time.

Perhaps more importantly, opening a business bank account provides personal liability protection. It establishes your LLC as a separate entity from you (the owner). Thus, creditors cannot seize your personal assets to recoup business debts. That’s the essence of LLC formation, but if you intermingle personal and business finances, someone can sue your business and lay claim to the personal assets that you have included in business transactions.

Finally, maintaining a separate business bank account for your LLC may increase your chances of getting approved for business loans. In fact, most lenders are usually hesitant to extend credit to LLCs that are structured as sole proprietorships because there’s no corporate veil between the company and the owner, which in turn increases risk.

As an added advantage, opening a dedicated business bank account will make it easier for you to get a business credit card. This may come in handy when you need to make purchases or pay bills on credit. Plus, a business credit card is a powerful tool for building business credit.

Step 9: Finalize everything else

To complete your Indiana LLC formation, consider setting your company up for success from the outset. You can do this in a number of ways, including the following:

• Get business insurance for your LLC. Just as personal liability protection protects your assets against business liabilities, business insurance protects the business against risk. A good insurance policy will help you worry less about risk and focus more on growing your Indiana LLC. Some of the policies worth considering include general liability insurance, professional liability insurance and worker’s compensation insurance.
• Create a website for your Indiana LLC. A website is an essential part of business marketing and advertising because it gives your company an online presence. And with proper optimization, a good website can turn traffic into leads and conversions. In fact, stats show that small business owners who have no websites for their companies potentially lose 70 to 80% of their customers¹.
• Put out a press release. 78% of journalists still want to receive regular press releases². Many of them won’t hesitate to publish a press release about your new company in local media, as long as you package your brand story in an appealing way. That is what makes press releases a cost-effective way of reaching the masses within a locality.
• Hire your first employee(s). Of course, this won’t be necessary if your new business is a single-member LLC that’s owned and operated solely by you. But if you need a team around you, you will have to keep Indiana’s compliance requirements in mind when hiring. For example, the current minimum wage in the Hoosier State is $7.25. Thus, you can’t pay your employees anything less than that. You will also need to verify that your new hires are legally allowed to work in the U.S. As the employer, it’s your responsibility to report them as “new hires” to the state of Indiana. Besides that, it’s your task to provide workers’ compensation insurance and withhold their income tax returns.

LLC state taxes in Indiana

When you start an LLC in Indiana, you will be required by state law to register for one or more forms of taxes. Here’s a breakdown of the various types of taxes and the categories of companies that are required to file them:

Sales tax: you will typically be required to file sales tax returns in Indiana if your limited liability company sells a physical product. Start by obtaining a seller’s permit at the Indiana Department of Revenue. This will allow you to collect sales tax on the products you sell.

Income tax: LLCs are considered pass-through entities in Indiana as long as the owners elect to be taxed as C-corp, S-corp, sole proprietorship or partnership. As such, entrepreneurs with this business structure are not required to pay income tax on business profits. Instead, they have to pay income tax on the money they pay themselves as salaries. In other words, your company’s profits are not taxed. Instead, you only file income tax returns on the amount you pay yourself. Similarly, if you have employees, they will also have to pay state taxes on their earnings. The current Indiana income tax rate is a flat 3.23%, but some counties have an additional tax, which may bring the total tax rate up to 6.3%.

Corporate income tax: if you elect your Indiana LLC to be taxed as a corporation (rather than C-corp, S-corp, sole proprietorship or partnership), you will be required to pay a corporate income tax. This is because corporations are not pass-through entities and are, therefore, mandated to file income tax returns at corporate level. The current Indiana corporate income tax rate stands at 4.90%.

Federal tax: apart from state taxes, LLC owners and their employees have to pay federal taxes to the Internal Revenue Service on all their earnings (minus allowances and deductions). As the owner of the business, you are required to file federal income tax as well as self-employment tax. Additionally, it’s your responsibility to contribute (in part) and withhold federal tax from your employees. This too, is remitted to the IRS.

Needless to say, filing state and federal tax returns can be quite complicated. If you are not sure how to go about it, consider hiring the services of a professional accountant. But if you would rather go it alone, you may find the various state and federal tax forms at the Indiana Department of Revenue website (towards the bottom-right).

Filing a Business Entity Report in Indiana

While in most states limited liability companies are required to file an annual report, in Indiana it’s a biennial report called the Business Entity Report. You typically file your company’s biennial report with the Indiana Secretary of State. You can either file online via the INBiz website or by mail.

In case you choose to file your LLC’s biennial report via mail, simply download and fill out Form 48725 and mail it to the Indiana Secretary of State at this address:

Mailing Address:

Secretary of State

Business Services Division

302 W. Washington St.

Room E-018

Indianapolis, IN 46204

The filing fee for an Indiana biennial report is $32 if you file online and $50 if you file by mail. The report is due after every two years in the anniversary month of your LLC’s formation. If, for example, you created your company on 6^th June 2022, your first biennial report will be due in June 2024 and you will have to file subsequent ones in June of every other year after that (2026, 2028 etc.).

Although Indiana has no late filing fees for annual reports, failure to submit your biennial report can lead to dissolution of your limited liability company. Therefore, compliance is important to keep your company in good standing.

FAQs about LLC formation in Indiana

How much does it cost to start an LLC in Indiana?

Forming an LLC in Indiana costs $95 if you file your articles of organization online and $100 if you send them by mail. You will pay an extra $20 if you wish to use a DBA or fictitious name for your limited liability company.

How long does it take to form an LLC in Indiana?

The processing time for Indiana LLC articles of organization is about one hour if you file online and five to seven business days if you send the articles by mail.

What are the benefits of an LLC in Indiana?

One of the major advantages of forming an LLC in Indiana is that you get tax flexibility. As the business owner, you can decide between being taxed as a pass-through entity or as a corporation. If you opt to be taxed as a pass-through entity, your LLC’s profits won’t be subject to Indiana income tax. Instead, you will only pay tax on the salary you pay yourself.

Another advantage of incorporating an LLC in Indiana is personal liability protection. Even as the business owner, creditors have no right to seize your personal property as compensation for your business’s defaults on debts. Plus, you get liability protection on litigation brought against your company.

The cost of starting a business in Indiana is low. With a filing fee of $95 to $100, it is one of the friendliest states to incorporate an LLC in. There are no stringent requirements either. For example, large and small business alike are not required to create annual reports. Instead, entrepreneurs are only mandated to file biennial reports.

How is an Indiana LLC taxed?

An Indiana LLC may either be taxed as a pass-through entity or as a corporation. It depends on how the business owner decides. If you opt for pass-through taxation, you may elect to be taxed either as a sole proprietorship, partnership, S-corporation or C-corporation. Either way, business profits will not be taxed. Instead, you will only pay income tax on the salary you pay yourself. On the other hand, if you elect to be taxed as a corporation, then you will have to pay income tax on profits.

Apart from income tax, LLCs that trade physical goods are required to pay a sales tax to the state of Indiana. Finally, you will also need to pay federal tax to the IRS.

What are the types of LLCs in Indiana?

There are seven main types of LLCs that you can form in Indiana:

• Single-member LLC: this is a type of limited liability company that is owned and operated by one person. It’s more or less a sole proprietorship that brings personal liability protection to the table.
• Multi-member LLC: this type of LLC has two or more owners, each with limited liabilities. In other words, every member enjoys personal liability protection.
• General partnership: contrary to a multi-member LLC where all shareholders enjoy limited liability, a general partnership has several owners but at least one of them must have unlimited liability.
• Family limited partnership: this is a business structure where all the shareholders are members of one family.
• Professional limited liability company: a professional LLC is typically formed to offer professional services like accounting, medial or legal services.
• Series LLC: a series limited liability company is a type of LLC where assets are segregated. The company divides its assets into small portions (series) with the aim of protecting them from creditors.
• Member-managed and manager-managed LLCs: these types of limited liability companies are categorized based on who runs the company. While a member-managed LLC is run by its shareholders, a manager-managed LLC is run by professionals who are hired.

Where can I conduct a name search for my Indiana LLC?

You can run a name search for your Indiana LLC at the state’s INBiz website.

References

1. Pixolabo. “255 Revealing 2022 Small Business Website Statistics.” 6 Apr. 2022, https://pixolabo.com/2022-small-business-website-statistics/
2. Prowly. “20+ PR Industry Statistics You Should Know in 2022.” 5 Jun. 2022, https://prowly.com/magazine/pr-statistics/