The Limited Liability Company (LLC) is a popular entity structure for many businesses starting in Indiana. The LLC provides personal liability protection and has the potential to save money on taxes. With our guide, you can learn how to form an LLC in Indiana without an attorney.
Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.
Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.
Steps to Form an Indiana LLC
Let’s break down the steps to complete the Indiana LLC formation process.
Total Time: 10 minutes
Step 1: Choose an LLC Name
The first step in forming an Indiana Limited Liability Company is to make sure the name you want is available. LLC names have to be distinguishable from other entity names registered in the state of Indiana. Here, you can check on Indiana LLC name availability on the state’s business entity database before filing.
In addition to checking for name availability, you may also want to see if a domain name that is also available.
The name of the LLC must include one of the following designators (words or abbreviations) at the end of the business name:
– Limited Liability Company
A comma may be used after the business name and before the designator. “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.
If there is a name you want to use, but are not ready to form the LLC, a Name Reservation application can be filed with the Secretary of State. This application will hold a name for up to 120 days and will cost $20.
Step 2: Appoint an Indiana Registered Agent
Every LLC in Indiana is required to have a Registered Agent. A Registered Agent will act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.
The requirements to be a Registered Agent in Indiana include:
– The agent must be an Indiana resident at least 18 years of age or a commercial Registered Agent service
– The agent must have a physical address in the state (PO Boxes aren’t allowed)
– The agent must generally be available during normal business hours at the address provided to receive service of process
Learn more about the requirements for a Registered Agent in Indiana
Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed. Hiring a registered agent service like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.
Step 3: File the Indiana Articles of Organization
The paperwork to officially create an LLC in Indiana is called the Articles of Organization. To file, either file online with Indiana INBiz. Alternatively, you can download the Articles of Organization (Form 49459).
If you have questions, contact the Indiana Secretary of State, Business Services Division.
302 West Washington Street
Indianapolis, IN 46204
phone at 317-234-9768
email at https://faqs.in.gov/hc/en-us/requests/new
Estimated Cost: 100 USD
Turnaround Time: It normally takes 5-7 days by mail and 1 day for online filing in Indiana. Expedited processing is also available for an additional fee.
When filling out the Articles of Organization, there are a few sections that may be unfamiliar. Let’s go over a few of those sections.
Period of Duration – This question on the LLC’s duration is to choose a date in the future when the LLC will close. Most businesses don’t have a set date in mind when they expect to shut down and would choose “Perpetual.” If you do have a specific end date (typically used for investment-related businesses), choose the date the business will close.
Effective Date – The next area asks about the effective date of the LLC. By default, the LLC is effective on the date submitted. If you prefer to have the LLC officially start at a later date (up to 90 days), enter that date and time in these fields.
Principal Office Address – In this section, enter the street address, city, state, and zip code of the initial principal office. This address can be the LLC’s physical address or the address where the business records are stored. The Principal Office Address does not have to be in Indiana.
Manager / Member Information – This section asks if the LLC is Member-Managed or Manager-Managed.
- Member-Managed LLCs have members (owners) that are active in the day-to-day operations of the business.
- Manager-Managed LLCs have managers hired by the members to run the LLC, similar to a CEO of a corporation.
Most LLCs are not managed by managers.
The next question is optional and asks if the LLC is a Single-Member LLC. A Single-Member LLC is simply one that is owned by one person.
Principal Information – Enter the title, name, and address of the principals of the LLC. A principal is an officer, director, board member, partner, etc., in the business. This is an optional section.
You don't have to form your LLC by yourself or pay an attorney!Forming an LLC is a little intimidating, especially when it’s your first time. Professional entity formation services help guide you to make sure it’s done right. Check out our reviews of popular LLC formation services to learn more.
You have an Indiana LLC! Now what??
Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.
Prepare an Indiana LLC Operating Agreement
The operating agreement is a document that governs the framework of an LLC. This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.
The state of Indiana does not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:
- The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
- Member’s personal liability protection may be diminished.
- Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.
Related: Indiana operating agreement template
Obtain an EIN
The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Federal Tax Identification Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file federal and state taxes, and more.
There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.
Related: How to Apply for an EIN
Elect the LLC’s Form of Federal Income Taxation
One of the significant benefits of the Limited Liability Company is the tax flexibility it provides. When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:
- Sole proprietorship
While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.
Related: How can an LLC be taxed?
By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.
Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.
Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.
In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership is that the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership. As a result, the owner will pay self-employment taxes on all business profits. As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes. Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.
Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you.
Open an LLC Bank Account
Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.
Several documents will be needed to open a business bank account, such as:
- A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
- Copies of the original LLC formation paperwork from the state showing the creation of the LLC.
- Driver’s licenses of the members.
- In some circumstances, an Indiana Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:
- Business Licenses – The state of Indiana doesn’t have a general business license; however, many cities require a business license to operate.
- Registered Retail Merchant Certificate – Businesses selling products and certain services will need to register for a Registered Retail Merchant Certificate with the Indiana Department of Revenue, which will allow the business to collect sales tax.
- Professional Licensing – Some occupations and professions such as home inspectors, interior designers, manicurists, and plumbers in Indiana. While this isn’t a license on the business, licensing is required in order to operate.
- Unemployment Insurance Registration – If you hire employees in Indiana, registration through the Department of Workforce Development will be needed.
File the Biennial Business Entity Report
LLCs are required to file a biennial report called the Business Entity Report with the Indiana Secretary of State. This report is due every other year in the anniversary month when the LLC was formed. For example, if the LLC was formed on November 15th, 2020, the next report would be due on November 1st, 2022. The filing fee is $32 for online filing and $50 for mailed-in reports.
Common Questions To Starting An LLC In Indiana
How much does it cost to start an LLC in Indiana?
There is a filing fee of $95 for online filing versus $100 if the Articles of Organization are mailed in.
Is there a yearly fee for an LLC in Indiana?
A Biennial Report will need to be filed every other year. The fee for filing the Biennial Report is $32 for online filing and $50 for mailed in reports.
How long does it take to start an LLC in Indiana?
It normally takes 1 day for the state to approve the LLC paperwork for online filings and 5-7 business days for mailed-in forms.
Do I have to pay to hire a registered agent?
Anyone can act as a registered agent, provided they are at least 18 years old, reside in the state, and are generally available to receive documents during normal business hours.
If I have an LLC, is a business license required?
It’s sometimes thought that the LLC and business license are the same, but they aren’t. An LLC is referred to as the business entity, which is how the business is organized to conduct business. A business license is an approval from a government entity to legally operate.
What is a Foreign Limited Liability Company?
A foreign LLC refers to an LLC that is physically operating in states outside of the state where it was formed. Physically operating means having a presence, such as having an office or employee. The LLC will need to register as a foreign LLC in each state that it plans to operate.
What is a Professional Limited Liability Company?
Businesses that require state licensing, such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc., often must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the LLC.