You’ve decided to start your own business and want to know what steps to take? Then you’ve arrived at the right place. If you’re starting a company in Indiana, you should be aware of the state’s LLC creation criteria. The LLC is one of the best business structures because it gives owners versatility, is inexpensive, and simple to manage. The benefits of creating an LLC include limiting the owner’s liability, establishing the company quickly, and gaining tax flexibility. When we claim it covers the owner’s liability, what exactly do we mean?
Consider the following scenario: a member of the company participates in unlawful environmental practices. Now, the company could face legal action for failure to pay damages. The LLC’s assets can be taken by the court to compensate for the losses, but not the owners’. It would be a different story if the owners were aware of the activities. In Indiana, you can choose between formal associations such as LLCs, S corporations, C corporations, and general partnerships, as well as informal associations such as single proprietorships and public partnerships. You’re probably wondering what advantages you’ll get if you shape an LLC in Indiana. Take a look at this:
- Limited Liability: The owner is only responsible for a certain sum of money. To put it another way, creditors can sue the LLC, but not the investors or shareholders.
- An LLC is classified as a pass-through corporation, which means it does not have to file corporate income tax.
- When you file a new business in Indiana as an LLC, you will have the option of choosing from a variety of profit distribution options.
- Meeting Minutes are not required: LLC does not need meeting minutes to be kept.
Step 1: Choose a name for your Indiana limited liability company.
One might wonder how difficult it is to come up with a name. However, picking a company name is easier said than done. You must be vigilant because the name reflects your business. It is the first thing that the consumer can notice. We’ll learn how to search for the title in Indiana in this step. Before naming your LLC, bear the following in mind: Make sure you have the essentials, such as a memorable, easy-to-pronounce name that can survive over time. You should still look on the internet for inspiration and see any name disputes in your state or local authority.
Just a suggestion, whether you want to do business internationally or nationally, a catchy and unique name will help you to stand out. The US Patent and Trademark Office allows you to conduct a trademark quest. You should check to see if your name has any potential conflicts.
There are some naming criteria now:
- The terms limited liability corporation, limited company, or the abbreviation LLC must appear in your company’s name.
- Without proper approval, it should not include restricted phrases or terms such as university, solicitor, bank, etc.
- The name of your business must be distinct from any other individual or business name registered in Indiana.
Reservation of your company’s name
You’ve finally settled on a name for your business after much deliberation. But there’s always the worry that someone else will file the same name before you. However, there is a solution; you can lock your chosen name for 120 days in Indiana. It will take some time if you have some papers to sort out before starting your LLC. As a result, you have the option of keeping your name on the INBiz website.
You must first establish an account before logging in. After selecting the name reservation option under the Secretary of State business divisions, you’ll see a list of directions, which you must obey before paying $10 and submitting your form. Your company’s selected name will be saved right away.
Step 2: Appoint an Indiana LLC Registered Agent
Now that your LLC has been established, you’ll need to appoint a registered agent to manage state and routine communications. Every LLC must appoint an agent, as it is an integral part of the business that handles all confidential communications with the government. As a result, it is a necessity rather than a luxury.
The licensed agent is the company’s authorized delegate and point of contact, according to the Secretary of State Division of Business Services website. As previously stated, it is mandatory, and if you fail to do so, you will be administratively disbanded. To make it official, you must include the agent’s name and resident on the Articles of Organization after you’ve chosen one. Even before writing down your agent’s name, make sure you have his or her permission. The registered agent’s details will be reported on your LLC’s public record after submitting the “Article of Organization.”
Who is qualified to serve as the registered agent?
You have two choices: a person or a corporation/business/services.
You may employ someone to work as your LLC’s registered agent, but they must be Indiana residents, have an address in Indiana, and age should be 18 years old or above. You only need these basic requirements; no special training or experience is required. You can recruit a neighbor, a member of your family, or even yourself. You may also employ consultants or lawyers as third-party options.
Service of Registered Agents
If you don’t want to deal with an individual as your registered agent, you can utilize an LLC creation service. They will assist you with company formation criteria in addition to having a licensed agent. If you want to set up the LLC by yourself, you can also use national registered agent service services to handle the agent responsibilities.
Step 3: Submit the Articles of Organization for your Indiana LLC.
The “Article of Organization” must be filed with the Secretary of State’s Business Services Division to make your LLC legal. This move makes your LLC legal, and you can do it yourself or with the aid of a lawyer or a professional LLC filing service. If you want to file it yourself, you can do so online, by postal mail, or hand-delivery. The price for using the online filing system is $95, while the fee for using the mail and in person is $100. It takes about 3 to 5 workings days for your order to get processed.
So, if you want to send the form by mail or deliver it by hand, you must first download the form, fill it out, and then return it to the following address:
Secretary of State Business Services Division
302 West Washington Street
Indianapolis, IN 46204
For filing the form online, Go to the INBiz website, build an account, and then click on Start a new business on the website’s homepage to get started. Within an hour, your form will be processed.
Assume you’ve submitted an Application for Exclusive Use of Corporate Name to secure the name (as mentioned in step 1). It should also be presented with the Articles of Organization in that situation. You can create your Articles of Organization or employ an LLC creation service. They will ensure that you file anything correctly and include other services and items you will need. It is entirely up to you to make your decision.
Step 4: Make an operating agreement for your Indiana LLC.
This agreement is a critical part of your company, even though it is not legally necessary and is optional. What is the reason for this? The structure lays out the LLC’s procedures, actions, and activities and defines processes for them. In a nutshell, that is the corporation’s bylaws. Any legislation does not govern this agreement. Nonetheless, the company can safeguard the assistance in legal conflicts, process and maximize performance, and legitimize the LLC in the eyes of banks, government agencies, courts, and other stakeholders. If you’ve decided to start a company without this agreement, think twice.
The following should be included in the operating agreement:
- Every member’s responsibilities
- The steps for new member admission
- existing members’ options for terminating or transferring their membership
- how earnings and dividends will be allocated
What is the significance of operating agreements? This document is essential because it ensures that all company owners are on the same page and reduces potential conflict.
When it comes to writing the operating agreement, you have two options: you can write your LLC’s operating agreement or use an attorney. Both alternatives are feasible. There are several models available online that will help you draft a comprehensive and successful operating agreement. However, if you want to be meticulous and don’t want to do it yourself, you should appoint an attorney. You would not miss a single crucial point in your agreement in this situation. The lawyer will double-check that all of the information and evidence is included. Your paper can also be checked by an attorney, who can make recommendations. He or she will ensure that the operating agreement follows the state law, avoids default rules, and contains all necessary provisions.
Phase 5: Obtain an Employer Identification Number (EIN).
Employer Identification Number (EIN) is assigned by the Internal Revenue Service (IRS) to identify companies for tax purposes. In other words, it’s a company’s version of a Social Security number. It is known with a variety of names including, Federal Employer Identification Number (FEIN) and Federal Tax Identification Number (FTIN) (FTIN).
Why is it essential to have an EIN? An EIN is required because it is necessary to:
- Open a bank account for your company.
- Organize and register your state and federal tax returns.
- Employ people.
One important thing to remember is that LLCs do not need to file corporate income tax returns, so it does not require an EIN; this is not the case. However, the owners’ actual returns contain profits and losses. Certain circumstances or conditions necessitate the payment of federal taxes by LLCs. If they hire staff, register as a company, or sell products, they are considered a business.
How can you obtain an EIN?
There are three choices available to you:
To obtain your EIN, you must submit an online submission. This is the quickest form. On weekdays Monday to Friday, from 7 am to 10 pm, you can visit the official site, fill in your details, and you’ll get your number instantly. As part of the procedure, you must also have an individual taxpayer number.
If you don’t have access to the internet, you can fax your form, the second-fastest option. You must download and complete Form SS-4, and you can send it to (855) 641-6935. Four working days are needed for processing. Your EIN will be sent to you after that.
You may still use the postal service. This method is slow-moving since it takes about four weeks to process. If you’re okay with it, download and complete Form SS-4 and send it to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Step 6: Obtaining Permits and Licenses
The formation of your LLC has been completed. You’ve completed all of the measures necessary to make your LLC a legal entity up to this stage. Officially, you are the owner of your company. However, it is preferable to come to a halt before going forward or dashing. There are quite a few crucial steps that must be completed. You will need special permits and licenses for your LLC, and you must follow all federal, state, and local laws. The Articles of Organization have given your LLC legal status, but you will need to obtain special licenses before starting doing business. One thing to keep in mind is that the specifics of business licenses and permits differ from one state to the next.
You must do thorough research and make appropriate plans. Your LLC’s Articles of Organization may have already established its legitimacy, but it may also need a license before it can conduct business. You’ll need a liquor license, a food service license, and a food handler’s permit to open a coffee shop. Visit the Indiana professional licensing agency’s website to learn more about which licenses your LLC can need. Several cities and counties, in addition to the state licenses, need their own.
Step 7: Annual reports and Taxes
Your LLC is on the floor running, and it has begun doing business in Indiana. Every two years, your LLC will be required to file a Business Entity Report. All LLCs in Indiana must file a biennial report, and if you fail to do so, you will face fines or even automatic dissolution. You may either file the details online or send them by hand to:
Secretary of State
Business Services Division
302 W. Washington St. Room E-018
Indianapolis, IN 46204
The cost of submitting a report electronically is $32, but it is easier since it is processed in one hour. It will cost $50 to send a hard copy, and it will take up to 3 to 5 working days to process.
Federal Taxes levied by the federal government.
LLCs don’t pay income taxes; instead, the owners must report the profits and losses on their income tax returns. One piece of good news for you is that LLCs have flexible tax structures; you can select your company to pay tax like a corporation. You must file a corporate income tax return if you want to do so.
You don’t have to follow much hassle regarding state tax in Indiana. These state taxes are similar to federal taxes. Indiana does not impose privilege or franchise tax, so you don’t have to worry about that. The owners have to report the profits and losses on their returns instead of a separate corporate income tax return. But that changes if you have selected to tax your LLC like a corporation.
There are, however, certain extra taxes that you will be required to pay. If your LLC meets those criteria, for example, you must pay indirect taxes.
What are the facts of the situation? If your LLC meets one or more of the following criteria, it will be required to pay one or further of the below-mentioned taxes:
- Hire people, and you’ll have to pay withholding tax.
- If you sell goods, you must file sales tax.
- If you sell food and drinks, you must file a Food tax, beverage tax, and a Sales tax.
- Rents rooms and pays the innkeeper’s tax.
- Sells fire-crackers, fireworks and pays a safety charge as well as sales tax.
These are only a few examples; others might depend on your industry, so it’s always a good idea to examine the official website for more details. Furthermore, such taxes are levied based on the position of your LLC. A local tax may be owed to the county, city, or municipality, basically to your local government. For more information, go to the website of your local government.
Following the establishment of an LLC, there are a few things you can do.
Accounts for corporate banking and credit
After your LLC is on the floor, you must complete this step. It’s time to set up your LLC as a separate legal entity so you can protect your properties. Business banking cards and credit accounts are essential for personal asset security. If your Indiana LLC is sued, your properties are at risk if you combine your personal and company reports.
How can you protect your assets? The answer is simple, by following these steps:
- Open a bank account for your company.
If you have a business bank account, it divides your assets from the assets of your company. It is essential for the security of one’s personal properties. The separate report aims to simplify accounting and tax filing.
- Obtain a credit card for your company.
If you have your company’s credit card, you can keep your personal and business expenses apart. Your company’s credit history is established with a business credit card.
- Insurance for your business
It is a necessary move because business insurance aids in risk management. If you’re covered, you can concentrate on developing your Indiana LLC.
Insurance will assist you with getting back on your feet in the event of a failure.
- Set up a Bookkeeping System
It’s a responsible move to set up the accounting and record-keeping system. The business records, including a list of all owners and addresses, financial statements, copies of all incorporation documents, annual reports, and improvements to the company, must be held for three years. Both tax and corporate filings should be held for at least three years.
- Marketing and branding
You’ve set the business up for success at this stage. Now that your LLC is up and running, it’s time to spread the word. You must develop a marketing strategy for your goods and services that is aimed at your ideal customer. As a result, the very first step in creating a marketing plan is to:
- Make your website.
Developing a website is an essential step in expanding your company. Even if it’s a small business, every company needs a website. You must build an LLC website if you want to open the doors to potential clients and sales. You don’t have to be concerned about whether it’ll be complicated or whether I’ll be able to complete it. With the progression of technology and the internet, building a website is no longer a challenging task.
- Distribute a Press Release
A press release is the best choice if you want to advertise your company quickly and easily. They provide exposure, are one-time investments, are cost-effective, and increase traffic to the company’s website.
So, we’ve arrived at the end of the lane. But now you know how many measures are involved in forming an LLC. You are capable of creating and operating your own limited liability company. Forming an LLC can appear to be a lengthy and challenging task, and it can be scary at times, but the payoff is well worth it.