How to Start a Business in Indiana
With its low corporate, property, and income taxes, and easy-to-navigate regulations, Indiana makes it easy to start and maintain a business. Starting a business in Indiana is as simple as selling a product or service. Maintaining that business is a whole other animal. If you’re making sales but haven’t registered your business with the state, you’re a sole proprietor. If you’re looking to protect your assets and grow your business, our guide to starting a business in Indiana can help.
Ready to Start a Business in Indiana?Let's Get You Started
Pick a Business Structure
Name Your Business
File Formation Paperwork
Draft Internal Records
Get Indiana Business Licenses
Organize Your Money
Get Business Insurance
Understand Your Tax Burden
Build Your Business Website
File the Indiana Business Entity Report
Apply for Trademarks
1. Pick a Business Structure
Your first step is to pick a legal structure for your business. Already selling stuff or providing paid services? You’re doing business as a sole proprietor. If you’ve got a partner, you’re a general partnership. In both scenarios your business and personal finances are tied together. This means that if your business gets sued or goes bankrupt, your personal assets (house, car, retirement funds) could be in jeopardy. If you want asset protection, you need to formally separate yourself from your business. Forming an LLC or corporation will do that.
Indiana Limited Liability Company (LLC)
LLCs offer business owners asset protection, flexible taxation, and a simple management structure. LLCs build a protective wall between their owners (members) and the business. If the business gets sued or goes bankrupt, the personal assets of the members of the LLC are, in most cases, protected. LLCs are popular with business owners because they are generally affordable to start and easy maintain.
To start an Indiana LLC, you’ll need to file formation papers with the Indiana Secretary of State.
Like LLCs, corporations insulate their owners from lawsuits and bankruptcies. However, unlike LLCs, corporations are not as flexible when it comes to management. Corporations are owned by their shareholders who appoint a board of directors. Corporations are a popular structure for business owners who want to raise money and grow the business.
To start an Indiana corporation, you’ll need to file formation papers with the Indiana Secretary of State.
Can an LLC be just one person?
Yes! A one-person LLC is called a single-member LLC. Single-member LLCs are one of the most common kinds of businesses in the country. For the most part, single-member LLCs are just like multi-member LLCs, but there are some slight differences in how they file taxes and protect personal assets.
Read all about Single-Member LLCs.
2. Name Your Indiana Business
Business owners can pretty much choose any name for their business as long as it adheres to the naming rules of Indiana. In Indiana, your business name must:
- Include the words “limited liability company” or “corporation,” or an abbreviation like “LLC” or “Inc.”
- Be distinct from any other active business name in Indiana.
- Not use words that suggest your business offers a professional service, like “accountant” or “therapist.”
Indiana’s business name search will help you confirm that your business name is available.
Can I reserve a business name in Indiana?
Yes. If you think Hoosier Baby, LLC is the perfect name for your baby boutique, but you’re not quite ready to form your business, you can reserve your the name for up to 120 days. Indiana makes name reservations easy. Just go online to the forms section of INBiz and click on “Name Reservation.” The fee to reserve a business name is $10.
What is a DBA?
A DBA (doing business as) name is called an assumed business name in Indiana. An assumed business name is any name you do business under other than your legal business name. If you’re a sole proprietor, your business name is automatically your first and last name. To use a more creative name, you need to apply to use an assumed business name.
To get a DBA in Indiana, you have two options. File online, or print out the form and file by mail. Both the online form and the paper form can be found at InBiz under “Registered Assumed Business Name.” Online filings cost $21 and mailed filings cost $30. It should be noted that sole proprietors and general partnerships must file their assumed business name with the county where they do business.
What about trademarked names?
It’s a good idea to check with the US Patent and Trademark Office (USPTO) to make sure your business name hasn’t been trademarked by someone else. If it has, and you use it anyway, there’s a chance that the business could come after you for infringement.
3. File Formation Paperwork
If you’re a sole proprietor or part of a general partnership, you’re not creating a separate business entity, which means you don’t have to file formation paperwork with the state. However, you will need to get an Indiana business license.
State formation documents are what legally create your business in Indiana, and officially create the separation necessary to protect your personal assets.
- To form an Indiana LLC, file Indiana Articles of Organization.
- To start an Indiana corporation, file Indiana Articles of Incorporation.
Note: The information you list on your articles will become part of Indiana’s public record. The names and addresses you provide will be easy to find online.
What is an Indiana registered agent?
An Indiana registered agent is the person or company that is designated to receive legal correspondence and official paperwork on behalf of your business. Your registered agent needs an Indiana street address, and must be available during regular business hours.
How can I keep my information off the public record?
Listing your own name and home address on your Indiana business formation documents can mean giving up your personal privacy. When you hire a professional registered agent service, you can use their information on all documents allowable, which keeps prying eyes away from your personal information.
4. Draft Internal Records
So far in this guide, we’ve dealt with public forms that you’ve had to file with the Indiana Secretary of State. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company.
Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS.
Here are the major internal documents you need to organize for LLCs and corporations:
Indiana LLC Operating Agreement
This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.
Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft an Indiana LLC Operating Agreement template that you can use as a solid foundation.
Indiana Corporate Bylaws
Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. Corporate bylaws are required by Indiana law (IC § 23-1-21-6).
As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted an Indiana Corporate Bylaws template you can use to get started.
Starting a nonprofit? Learn about Indiana nonprofit bylaws.
5. Get Indiana Business Licenses
All businesses in Indiana, even home-based businesses and sole proprietors, will need some type of state or local licensing in order to legally operate. Here’s a breakdown of the types of licenses you may need.
Indiana State Business License
Indiana doesn’t have a state business license. What it does have, however, is a state seller’s permit called a Registered Retail Merchant Certificate (RRMC). The RRMC allows business owners to legally conduct retail sales and services in the state of Indiana and collect the state’s 7% sales tax.
It should be noted that if your business engages in sales of liquor, tobacco, firearms, and other federally regulated businesses, you’ll need to be prepared to get state and federal licenses or permits from the authority in charge of those activities.
Indiana Professional Business Licenses
Professional business licenses are required for businesses and individuals that provide services that require specialized education. Accountants, engineers, lawyers, social workers, massage therapists, and health care professionals are all examples of businesses that need to get a professional license. For instance, if your business is involved in massage therapy, you’ll need to apply for a license with Indiana’s Board of Massage Therapy. Not only will your business need a professional license, everyone who works in the capacity of a massage therapist will also need state accreditation.
Local Business Licenses
Local business licenses are obtained from the municipality where you do business. For example, if you run a bed and breakfast in Gary, Indiana, you’ll need to get a general business license that is issued by Gary. But that’s not all! Because your bed and breakfast serves food, you’ll also need to obtain a retail food license, and a food handler permit from your local authorities.
Learn more about How to Get a Business License.
How do I get an Indiana business license?
You’ll need to file a Business Tax Application with Indiana’s Department of Revenue. Once the application is approved, your business will receive its RRMC, which will need to be posted in each business location. You can file online by registering your business with the Secretary of State at InBiz. You can also print out a Business Tax Application (Form BT-1) and file it by mail. Online filings take about three business days to be approved. Mailed filings can take two weeks or longer.
How much does it cost to get an Indiana business license?
The application fee is $25. The Indiana Department of Revenue will automatically renew the certificate 30 days before the expiration date, at no cost to the business. If a business has unpaid sales tax debts, the certificate may not be renewed. Businesses cannot continue to operate without a valid certificate.
How do I get a professional license in Indiana?
Your first stop is to register online at Indiana Licensing Enterprise (ILE), and create a MyLicense account. ILE will direct you to the corresponding state agency for professional licensing. For example, chiropractors will need to apply with Indiana’s State Board of Chiropractic Examiners, and pay a $100 application fee. Some professions will also need to complete continuing education courses and pay yearly renewal fees in order to maintain the license.
How do I get a local business license?
Local business licenses are issued by the city or county where the business is located. For example, if you are a pet groomer in Indianapolis, you’ll need to obtain a “Kennel/Pet Shop/Stable License” and pay the $200 fee. Opening a restaurant in Fort Wayne, Indiana? You can look forward to applying for a restaurant license with Allen County.
6. Organize Your Money
The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.
Open a Business Bank Account
To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.
Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.
How do you set up a business bank account?
Do I need a business bank account to accept credit card payments?
Probably. Payment processors require you to provide them with a bank account. This is where they’ll deposit funds from transactions. Most of the time, this needs to be a business bank account.
Some payment processors may let you get away with listing a personal bank account, but it’s not a great idea. Mixing your business finances with your personal finances erodes the separation between you and your business, weakening your liability protection. It also turns tax season into a nightmare.
Learn more about Payment Processing.
Set up Payroll
You didn’t get into business to not make money, and your employees don’t work for you for free. Payroll is what gets everyone paid. Here’s how you set it up:
- get an EIN
- register for a Indiana SUTA Number (unemployment insurance)
- register for an Indiana Wage Withholding Account (Form WH-1)
- prepare, collect, and file the necessary forms that your employees will need to fill out
- buy payroll software, hire a professional accountant, or figure out payroll yourself
- schedule payroll
Payroll isn’t everyone’s strong suit, especially if you’re super busy maintaining your business. That’s why a lot of business owners employ payroll software or hire a reputable accounting firm to do it for them.
What forms do my employees need to fill out?
Your new employees will need to fill out a W-4 to determine how much you’ll withhold and an I-9 to verify that the employee is eligible to work in the US.
What’s the difference between an independent contractor and an employee?
It’s important to understand the difference between an independent contractor and an employee. That’s because for employees, you’ll need to withhold and pay income, social security, and Medicare taxes. Independent contractors pay these taxes on their own.
An independent contractor is self-employed—how they complete their work is not directly controlled by an employer. An independent contractor may perform the same kind of work for other businesses, and can do the work when and how they choose.
An employee, on the other hand, performs their work how and when their employer chooses.
If you’re unsure, you can file Form SS-8 with the IRS and let them decide.
How do I get an Indiana Tax Withholding Number?
Indiana’s Withholding Tax Form (WH-1) is required for any business that is withholding taxes from its employees. You can complete the form online at the Indiana Department of Revenue website. Note: Your business will need an EIN before you complete the online registration.
7. Get Business Insurance
Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is going to have to pony up some cold hard cash. Business insurance can help cover the costs.
The insurance you need for your business generally depends on what kind of business you’re in, and what kind of risk you feel comfortable with. If you’re installing new HVAC systems, you can bet Indiana will require you to have insurance. Selling cutting boards on Etsy, probably not. It all comes down to how much protection you are required to have and how much you want to have.
Here’s a quick list of the most commonly purchased types of business insurance:
Workers’ Compensation Insurance
Workers’ compensation insurance helps provide for employees who become injured or disabled while working their jobs. The insurance covers the lost wages and medical bills of the injured worker. It will even cover the cost of rehabilitation. Any employer who fails to carry workers’ comp insurance could face a fine up to $10,000 or a complete shutdown of the business until insurance is obtained.
Indiana’s Workers’ Compensation Act states that all employers with one or more employees working in the state must carry workers’ comp.
Workers’ comp insurance in Indiana can be purchased from private insurance companies authorized by the state to provide coverage. Employers who can’t find private insurance also have the option of joining the state’s Assigned Risk Pool. Employers must be declined by three private insurance carriers before they are eligible to apply for Assigned Risk coverage.
This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.
Do business owners need workers compensation insurance in Indiana?
Indiana law dictates that business owners must include themselves in the company’s workers’ compensation coverage unless they are a sole proprietor, part of a partnership, or an independent contractor.
Do I need business insurance for my home-based business?
Most likely. That’s because you can’t count on your homeowners’ or renters’ insurance policy to cover damages related to your business. Most insurance companies offer a home-based business insurance plan.
8. Understand Your Tax Burden
Taxes are an important aspect of doing business. Business owners need to pay attention to federal, state, and local taxes if they want to avoid costly penalties from the IRS.
- LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. LLC members are responsible for their own federal self-employment taxes (15.3%). LLCs can elect to be taxed as an S-Corp or C-Corp by filing the appropriate paperwork with the IRS.
- Corporations. Corporations are taxed as C-Corps by default. This means that corporations pay the 21% federal corporate tax rate and the Indiana corporate tax rate of 4.9%.
To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.
Do I need an EIN if I’m self-employed?
If you’re operating a sole proprietorship or single-member LLC that doesn’t employ anyone else and you don’t need to file excise or pension plan returns, you don’t legally need an EIN.
However, you can still get one—and you probably should. Otherwise, you’ll have to use your own social security number to do business. Plus, you’ll likely need an EIN to open a business bank account.
How do I get an EIN
To get an EIN, you can either apply online or file form SS-4 by mail with the IRS. Getting an EIN is free.
Check out our guide to applying for an EIN.
What is an S-Corp?
An S-Corporation is a federal tax election. Registered business entities like LLCs and corporations start out with a default tax status, but can file paperwork with the IRS to be taxed as an S-Corp. Like LLCs, S-Corps are taxed as pass-through entities. Like corporations, S-Corps can make distributions that aren’t subject to the 15.3% self-employment tax.
Learn more about the S-Corp tax election.
What is a C-Corp?
A C-corporation is the default federal tax election assigned to corporations. Most corporations are taxed as C-Corps, but LLCs can also apply for C-Corp tax designation by filing paperwork with the IRS. C-corps file federal corporate income taxes and state corporate income taxes (in Indiana, the corporate income tax rate is a flat 4.9%). C-corps can pay their shareholders in distributions, and the shareholders report those profits on their personal tax returns.
Learn more about the C-Corp tax election.
Indiana State Business Taxes
Indiana has a 7% state sales tax, and a flat 4.9% corporate income tax. The Hoosier State also has one of the lowest income taxes in the US, at just 3.23%.
Local Indiana Business Taxes
Every county in Indiana levies an added income tax called a Local Income Tax (LIT). For example, Jasper County has a 2.864% income tax, which when you add the state income tax of 3.23%, brings your total income tax payment in Jasper County to 6.094%. There is no added sales tax in Indiana municipalities, though each county and city can choose to charge a County Innkeeper’s Tax (CIT) and a Food and Beverage Tax (FAB). Both taxes vary by location.
9. Build Your Business Website
If you want actual Indiana customers to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or a social media expert to establish a robust online presence. You’ll just need the following:
- Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
- Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“email@example.com”).
- SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
- Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.
10. File the Indiana Business Entity Report
Most states want businesses to file a report every year. Indiana only needs to hear from your business every other year. Your first report will be due two years after your business first registered with the state. If you formed your Indiana LLC or corporation in 2021, you’ll file your report on the anniversary month of when you registered your business. You can file your Indiana Business Entity Report online or by mail. You’ll need an account at InBiz in order to file online. Online filing costs $32, mailed filings are $50.
Read up on How to File an Indiana Annual Report.
What if I don’t file the business entity report in Indiana?
Indiana doesn’t charge fees for filing a late report, but if you don’t submit a report within 60 days of the due date, the state may choose to revoke the ability for your business to do legally engage in business activities.
11. Apply for Trademarks
A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.
You can apply to register your trademark with the Indiana a or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in Indiana is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in Indiana.
You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.
Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.
How do I register for a trademark in Indiana?
Start by checking to see if your desired trademark is already in use by searching Indiana’s Trademark Database. Next you’ll need to fill out the online application at INBiz. All trademark filings in Indiana are required to be submitted online. Attach one example that shows the actual use of your desired trademark, and one drawing that shows the design elements of the mark. The fee to register a trademark in Indiana is $10 per mark. Your trademark will need to be renewed every five years.
Can I register a trademark before I use it?
No. But you can file an application with the USPTO under Intent-to-Use status. This gets your application in line before you’ve actually used the mark, which could be helpful if you’re worried someone else might register your mark before you’ve had a chance to use it.
For your trademark to become official, you’ll eventually need to show proof that you’re using it. An Intent-to-Use application buys you some time to do that.
Learn more about filing an Intent-to-Use Trademark.