Besides putting in lots of hard work, there are a few steps you need to follow to start a business in Indiana. Find out how to start your own business in Indiana in this guide.
Indiana ranks ninth of the U.S. states that pay the lowest sales tax in the U.S., and ninth for the easiest state to access funding for your business.
How to Start a Business in Indiana:
1. Choose a legal structure.
In Indiana the most prevalent legal forms for businesses are partnerships, sole proprietorships, limited liability companies (LLCs) and corporations. Special versions of these structures are limited partnerships and S corporations.
You need to consider which business entity offers you and your business the best financing, tax and financial benefits before making a decision. You also need to determine the type of liability protection you want for your business.
To start a sole proprietorship or partnership in Indiana, you are not required to file any business documents with the state.
To establish an LLC or a corporation in Indiana you need to appoint a registered agent for service of process, and file Articles of Organization with the Business Division of the Secretary of State (SOS). Most of this filing can be done at inbiz.in.gov, and you can order forms to do this by mail from secure.in.gov. Alternatively you can visit the SOS's offices to do this.
The Corporations Division of Indiana's SOS does not offer legal advice, and recommends you contact an attorney to guide you through this process.
2. Register your business name with the Secretary of State.
If you are starting a sole proprietorship or a general partnership in Indiana, you don't need to register your business name—unless the business name does not contain your name. In this instance your business name needs to be registered with the County Recorder. If the County Recorder does not have the correct forms available, you can call 1-800-457-8283.
You can file your corporation's assumed business name with Indiana's SOS by going to inbiz.in.gov and scrolling down to the bottom left of the page. If you are trading under a different name than the name on your corporation's Articles of Incorporation, you need to register that name with the County Recorder.
If your LLC in Indiana is doing business under a different name than the one filed with the SOS's Office, you need to file a Certificate of Assumed Business Name with both the County Recorder and the SOS.
When you register your business's Assumed Business Name with the SOS, you can reserve an available name for 120 days.
3. Get an Employer Identification Number (EIN).
Your Employer Identification Number (EIN), also known as a Federal Employer Identification Number (FEIN), is your business's equivalent of a social security number. If your business in Indiana has employees or is taxed separately from you, you must obtain an EIN from the IRS.
Even if the aforementioned does not apply to your business, you need an EIN as banks often ask for this to open a business account. They could ask for your EIN to loan your business money or issue credit cards as well. You also need an EIN when filing tax returns (except if you trade as a sole proprietorship), and other entities you do business with such as wholesalers will ask you for an EIN as well.
You need to apply for an EIN after forming your legal entity, because the legal name of your business needs to match the business name on the EIN application. Registering an EIN is free, and takes only a few minutes. Go to irs.gov to apply for an EIN.
4. Open a business bank account.
You can open a business bank account once you receive your EIN.
A business bank account offers you limited personal liability protection by keeping your business funds separate from your personal funds. It also keeps your customers' personal information secure, offers them purchase protection, and it enables you to get your staff to do your business's daily banking tasks.
Banks have varying policies regarding new business bank accounts, so it is best to call their customer service department or to visit a bank to speak to a consultant for advice on the best option for your business.
From there you'll provide the correct documentation and deposit funds into your new business account.
5. Register your business for paying tax.
To register your business for taxation purposes with the State of Indiana you need to visit an office of their Department of Revenue or go to inbiz.in.gov.
Businesses That Need to Register for Taxation in Indiana:
Businesses that sell products or tangible items.
Businesses that employ staff.
Businesses that sell food and beverages.
Sales tax and food-and-beverage tax
Businesses that sell accommodation for less than 30 days.
Businesses that rent motor vehicles.
Motor vehicle rental tax
Businesses that distribute gasoline or special fuel.
Prepaid fuel tax
Businesses that sell tires.
Businesses that sell fireworks.
Sales tax and safety fee
Businesses that sell prepaid wireless cards.
6. Apply for Indiana licenses and permits.
Indiana does not have a general, state-issued business license, and certain businesses in this state do not need a license to operate. For instance, the only construction contractors licensed by the State of Indiana are plumbers.
Businesses in Indiana are subject to regulatory requirements that involve several state agencies at times though. Indiana has over 400 different permits, licenses, certifications, and other permissions, which may be required for various businesses.
Typical regulatory requirements for your business in Indiana:
- Businesses serving, selling, or manufacturing alcoholic beverages for consumption need to obtain a permit or license from the Alcohol Tobacco Commission by going to in.gov.
- Bed and breakfasts, restaurants, food vending operations and grocery stores need to comply with a range of state responsibilities and requirements, for instance being inspected and regulated by a County health department. Contact the Division of Retail Foods on (317) 234-8569 for information.
- Manufacturers, processors, repackers, or wholesale distributors of all non-dairy products need to comply with a range of state responsibilities and requirements. Contact the Division of Wholesale Foods on 1 (317) 234-8569 for more information.
Go to in.gov to learn more about regulatory requirements for your business type in Indiana.
7. Decide on your location.
Research found the top three places to start a business in Indiana are Bluffton, Monticello and Batesville. Blufton is an attractive prospect due to affordable housing, and Monticello is a popular tourist destination. All three of these places enjoy the support of various business resources.
Top 10 Cities to Start a Business in Indiana:
8. Purchase insurance.
All businesses in Indiana are required by law to carry workers’ compensation insurance, which protects small businesses from costly medical bills and legal fees as a result of staff injuries and sickness relating to the workplace. It also covers medical expenses and lost wages resulting from workers' compensation claims.
In Indiana general liability insurance, which is designed to protect business owners from direct or indirect damages to another party, is not mandatory for all businesses.
There are other types of insurance that you may want to purchase for your business:
9. Hire employees and report them to a state directory.
Once you start hiring staff, bear in mind that you are required by law to report newly hired and re-hired employees to the Indiana New Hire Reporting Center within 20 days.
Visit the Indiana New Hire Reporting Center at in-newhire.com, and register at the bottom left of the page to report your new employees.
Indiana has a range of laws that protect the rights of workers. For instance, the Indiana Age Discrimination Act prohibits employers from discriminating against individuals aged 40 to 75. This does not apply to employers that are subject to the federal Age Discrimination in Employment Act (ADEA).
10. Keep up with ongoing requirements.
After you start your business in Indiana, there are some requirements that are ongoing. You should always pay attention to regulations regarding your business's industry and entity.
If you own a sole proprietorship, partnership or LLC in Indiana, you pay business income tax as part of your personal state income tax. Shareholders in corporations pay state taxes on their dividends from the corporation, and shareholder-employees with salaries also pay state income tax on their personal state tax returns. Corporations pay Indiana corporation taxes as well.
If you own a partnership, you need to file Indiana Partnership Returns. You need to file additional partnership or corporation returns if you own an LLC, depending on how your company is classified for federal tax purposes.
Indiana LLCs or corporations also file biennial reports with the Indiana Secretary of State.
Starting a Business in Indiana FAQs:
How do I form an LLC in Indiana?
Appoint a registered agent for service of process, and file Articles of Organization with the Business Division of the SOS. Most of this filing can be done at inbiz.in.gov. You can order forms to do this by mail from secure.in.gov or you can visit the SOS's offices.
How much does it cost to set up an LLC in Indiana?
Setting up an LLC in Indiana will cost $95.00 when filing your business's Articles of Organization with the State of Indiana online, and $100.00 when submitting it by mail or in person. These fees are non-refundable.
How do I choose a company name for my LLC in Indiana?
Ensure your company name includes “limited liability company," LLC or L.L.C. Exclude words that could confuse your LLC with a government agency such as FBI—these are not allowed. Restricted words such as University may require additional paperwork, and in these instances a licensed individual needs to be part of your LLC.
Do I need a business license for starting a business in Indiana?
There is not a general, state-issued business license for starting a business in Indiana, and some businesses do not need a license to operate. For example, the only construction contractors licensed by the State of Indiana are plumbers.
How do I register my business in Indiana with the Business Division of the SOS?
To register an LLC or a corporation in Indiana you need to appoint a registered agent for service of process, and file Articles of Organization with the Business Division of the SOS. To start a sole proprietorship or partnership in Indiana, you are not required to file any business documents with the state.
Fees for Starting a Business in Indiana:
Filing fee for Articles of Organization (by mail)
Filing fee for Articles of Organization (online)
With numerous Small Business Development Centers throughout Indiana, the Business Ownership Initiative and more, the Hoosier state is a good place to start your new business. These steps and tips will help you to create a legal business entity in Indiana.
To assist you further in starting your own business in Indiana, also read through How to Start a Business.