Follow our free guide to form an LLC in Indiana
- Pros and Cons of Forming an LLC in Indiana
- Starting Your Indiana LLC
- Maintaining Your Indiana LLC
- Additional Indiana Resources
Setting up an LLC in Indiana is a multi-step process—our informative guide will show you how to form an LLC in Indiana and walk you through every phase.
Pros and Cons of Forming an LLC in Indiana
No Corporate/Franchise Taxes
Indiana does not impose a corporate or franchise tax on LLCs. Only state and federal income taxes are owed by LLC members.
Low State Income Tax Rate
Indiana’s state income tax rate is among the lowest in the nation at only 3.23%. Unlike some states with a sliding scale based on income, Indiana has a flat tax rate for all income brackets.
Privacy for Owners
Indiana state law does not require the LLC members/manager to be listed in the Articles of Organization. An organizer (the party who prepares and files the paperwork) can be used to submit the official documents to the state in place of the actual owners.
Rising Unemployment Rate
Indiana’s unemployment rate rose again recently to 3.5%, which is the highest it has been since the 2008 recession. The state’s unemployment rate is only slightly lower than the national average, which is currently 4%.
Lack of Qualified Workers
According to recent statements by the Governor of Indiana, Eric Holcomb, there are not enough qualified workers to fill the job vacancies in Indiana. The possibility for more than 80,000 jobs exist, but the right kind of employees needed for those jobs are not available.
Double Taxes on Indiana Properties
Property owners in Indiana must essentially pay taxes twice - state tax and county tax. The statewide property tax rate is among the lowest in the country at 0.87%; however, the county rates vary and can be as high as 1.18% (Lake County)
Cost of Doing Business
- $100 filing fee / $50 Business Entity Report
- No corporate/franchise tax
Starting Your Indiana LLC
Creating an LLC in Indiana is not as difficult as you might think — all you need is the right kind of help and a guide show you the whole picture.
The first part of the LLC formation process begins with these steps:
- Step 1: Name your LLC
- Step 2: Establish Ownership of your LLC
- Step 3: Decide on a Registered Agent
- Step 4: File the Articles of Organization
- Step 5: Create your Operating Agreement
- Step 6: Register for an EIN
Step 1: Name Your Indiana LLC
The first thing to do for your Illinois LLC is to give it a name. As you are working up your list of business names, keep in mind that the state has its own rules concerning business names.
Business Name Guidelines
- The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C.
- Your business name cannot be intentionally misleading to consumers
- The name of your new LLC must not be similar to another organization’s name/trademark
Some state and federal laws place restrictions concerning certain words that cannot be used for a business name.
A few examples include:
- “Lottery” and “Bank” are ineligible for use (any state)
- Terms that represent educational or Veterans’ organizations are restricted
- Terms related to the Armed Forces or civil servants (police, EMT, fire)
LLC business names associated with government and/or financial entities are not always restricted - it depends on the state. Additional paperwork may be required.
After you have decided on a name for your Indiana LLC, you also need to choose a website address where customers can find you online. Check domain name availability through online web services sites.
Step 2: Establish Ownership
Indiana LLC owners are actually called members/managers. The title difference depends on the LLC’s management structure.
LLC Management Structures:
- Member-managed: The members actively contribute to the operations and decisions of the LLC
- Manager-managed: The manager handles running the LLC; the members are typically not involved.
Indiana LLC Member Guidelines:
Required Number of Members
Indiana LLCs must have at least one member or manager in order to form a business.
Member Disclosure Requirements
An organizer/authorized representative may sign and file the Articles of Organization in place of the LLC members.
LLC members in Indiana may be of any age.
There are no residency restrictions imposed on LLC members in Indiana.
Step 3: Find a Registered Agent in Indiana
Indiana LLCs are required by the state to have a registered agent. Your LLC business cannot be officially formed without this party.
What is a registered agent?
A registered agent is a person or business who accepts official government notices (including the Secretary of State) and service of process notices on behalf of the LLC.
Why do you need a registered agent?
According to Indiana state laws, all businesses must have a registered agent on file. The purpose of the agent is to receive all government and other official notices/mail for your LLC.
What are the main requirements for a registered agent?
- Have a physical address (no P.O. Box)
- Be available during business hours
Who can be a registered agent in Indiana?
- An Indiana resident with a physical address
- An LLC or corporation that is licensed to conduct business in Idaho
Can I be the registered agent for my business?
You are legally allowed to be your own registered agent as long as you are a state resident with a physical address.
Is being my own registered agent discouraged?
Being your own registered agent is discouraged because you risk compromising your personal information since the agent’s name and contact information must be available to the public.
Tip: Avoid the hassles and choose Swyft Filings to fill the registered agent needs for small businesses in Indiana. Find more information here.
Step 4: File the Articles of Organization
The most important step in creating your Indiana LLC is filing the Articles of Organization with the Secretary of State.
What is the Articles of Organization?
The Articles of Organization is a legally binding document that is filed with the state government to officially and legally form your LLC.
Why do I need the Articles of Organization?
Your LLC business in Indiana will not be legally recognized by the Secretary of State without filing this document. Consider the Articles of Organization as part of your LLC’s foundation.
What information is included in the Articles of Organization?
- The name and address of the LLC
- The type of registered agent (personal or commercial)
- The name of the members or organizer filing the paperwork
- The name and location of the registered agent
- The chosen LLC management structure
- The duration of the LLC (perpetual or not)
Additional Indiana Filing Requirements — Professional Service Businesses
Indiana does not have any rules against people in professional service business from forming an LLC. The business must follow the same regulations as any other LLC.
Professional Service Business Types:
- Professional Counselors and Psychologists
- Architects and Engineers
A few points to consider:
- All members of the PLLC must be licensed in the profession of the business.
- The PLLC is only allowed to provide services for which the business was formed.
- The members are still subject to whichever licensing boards govern the PLLC’s profession.
Step 5: Create an LLC Operating Agreement
Even though Indiana’s state government does not require LLCs to have an Operating Agreement, it is still necessary for the successful continuation of your business.
What is an LLC Operating Agreement?
The LLC Operating Agreement is a legally binding document that details the responsibilities of each member and their rights in the business. The agreement also dictates the functions of the business in regards to meeting schedules and voting percentages of the members.
Why do I need an LLC Operating Agreement?
The LLC Operating Agreement is necessary because it defines the business’s operating procedures and structures the roles of the members and/or managers. Because the members’ designation is explained, the agreement will also greatly reduce issues and disputes in the future.
Do I need to file the LLC Operating Agreement?
The Operating Agreement does not need to be filed with the state — it remains in-house for the business.
What goes into an LLC Operating Agreement?
The LLC Operating Agreement should be unique to the business; however, most agreements include the following:
- Designation of the members/managers
- Initial capital contributions of the members
- Voting designations and percentages
- Member transfer/addition rules and restrictions
- Distribution of profits
Tip: Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.
Step 6: Obtain an EIN
Most businesses formed in the state of Indiana must register for an EIN. Your Indiana LLC will not be able to conduct business without this ID.
What is an EIN?
EIN is a nine-digit number that is assigned to your business by the Internal Revenue Service. EIN is the acronym for Employer Identification Number and is also called a Federal Tax ID. The numbers identify your business with the federal government similar to a personal Social Security number.
Are all businesses required to have an EIN?
Federal law dictates that certain types of business entities register for an EIN:
- Any business with employees (even if owned by one person)
- Any business with more than one member
- A partnership (LLC or C-corp)
Please Note: A sole proprietorship is not required to have an EIN, but it is still recommended.
Why does my LLC business need an EIN?
The more common reasons you would need an EIN are:
- To hire employees
- To open a bank account in the U.S.
- To file your company’s taxes
- To pay independent contractors
In short, if you make money through your business and it has employees, you must have an EIN.
Is the EIN publicly listed?
The EIN for your LLC will be publicly available.
Can I use my Social Security Number as the EIN?
If you are a sole proprietorship who wants an EIN for your business, you can elect to use your social security number; however, your EIN is part of public record.
Swyft Filings offers EIN services for small businesses in Indiana. Find more information here.
Maintaining Your Indiana LLC
The first phase of creating your Indiana LLC is complete and now you are ready for the next set of steps that will prepare your LLC to conduct business.
- Step 1: Register for Taxes in Indiana
- Step 2: Apply for Permits and Licenses
- Step 3: File the Business Entity Report for your LLC
- Step 4: Request a Certificate of Good Standing
Step 1: Register for Indiana State Taxes
Indiana is among the few states in the country that does not charge LLCs any corporate or franchise taxes. LLC members are still required to pay state and federal income taxes on their earnings. The state income tax rate for Indiana is 3.23% of the adjusted gross income (AGI).
If you choose to have your LLC taxed as a corporation, your business will be responsible for paying the state’s corporate tax. The current Indiana corporate AGI tax rate is 5.75%, but this rate is scheduled to decrease every year (effective every July 1st) until it reaches 4.9% in 2021.
Other taxes your LLC may need to pay include:
- Sales Tax at 7%
- Employee Withholding Tax
- Unemployment Tax
Step 2: Obtain Business Licenses and Permits
The licenses and permits required for an LLC in Indiana can vary, depending on a number of variables:
- Location (city and county)
- Type of Business
Tip: If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.
Step 3: File a Business Entity Report
LLCs formed in Indiana are required to file a business entity report with the Department of State. Also known as an annual or biennial report, the business entity report keeps your business’s information and status updated with the Secretary of State.
Due Date: Every 2 years on the anniversary month of LLC formation
Implications of Late Filings: No late fee; eventual LLC dissolution
Swyft Filings helps you stay compliant by providing stress-free solutions. File your business entity report with us today.
Step 4: Obtain a Certificate of Good Standing
After your Indiana LLC has been formed and is ready for business, there is still one last step — securing a Certificate of Good Standing for your business.
What is a Certificate of Good Standing?
The Certificate of Good Standing is an official notification that is issued by the Secretary of State and confirms that your business has been properly formed and is still in compliance with all state regulations.
Why do I need a Certificate of Good Standing?
Many businesses and financial institutions want proof that your LLC is in good standing with the state government. Some companies may not even agree to conduct business if your LLC does not have this certification.
Additionally, some states require a Certificate of Good Standing before a business can apply for Foreign Qualification.
Does the Certificate of Good Standing have an expiration date?
The Certificate of Good Standing does not expire/does not need to be renewed.
Swyft Filings can create a Certificate of Good Standing for your Indiana LLC. Click here for more information.