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Starting a business can be the scariest and most exhilarating venture in an entrepreneur’s life. However, with so many administrative and legal steps in how to start a business, you can feel overwhelmed. Moreover, there are steps and documents unique to each state to consider, so it’s important that you’re prepared before moving forward.
If you’re an entrepreneur thinking of starting a business in Indiana, then you’ve chosen a great state to plant the seeds of your business in. According to a profile by the U.S. Small Business Administration, the Hoosier State’s small businesses employed about 45% of the private workforce in 2015 and create 33,267 jobs in 2016. In 2017, Indiana has grown at an annual rate of 2.7%.
Indiana’s small business scene is thriving and if you’re thinking about joining, then let us help you. Here is everything you need to know about starting a business in Indiana.
Part of your customer’s first impression of your business is your business name. That’s why it’s important to choose a name for your business that is memorable and distinguishes you from other businesses.
It may take some time but it’s important to ensure your name is available—you wouldn’t want to get mixed up in any legal troubles in the future because you had the same name as a related business. Here are a few steps to verify your desired business name is yours for the taking:
When searching for your desired business name with the Indiana Secretary of State, it can get a little confusing. Here are a few tips to keep in mind as you’re doing your search:
If you’re wondering how to start a business in Indiana, you might not realize there are certain requirements your name needs to meet, depending on the business entity you choose—something we’ll get into below.
When you’re forming a limited liability company (LLC), your business name must end with “limited liability company” or “LLC.”
Alternatively, if you’re forming a corporation, your business name must include the word “corporation,” “company,” “incorporated,” or “limited.”
After confirming availability, you may reserve your business name for 120 days. This is useful if you’re not ready to start your business, but you still want to secure your desired business name. You can reserve your business name by filing an online application with the Secretary of State at INBiz, Indiana’s online resource for small businesses. Please note that a filing fee of up to $20 may apply.
Forming a business entity can be more paperwork and research than you’d like. Fortunately, we’ve made it easy for you by outlining the three most common business structures:
This is a common business structure for single-member businesses, like freelance services. However, there are a few things to keep in mind if you choose this business structure.
If you’re using a business name different from your legal name, you must file a certificate of assumed business name. You may do this by visiting your local county clerk or accessing the form online. Note that a filing fee of $26 will apply.
Also, your business is not a separate business entity. Legally, that means you assume total liability for any debts and legal issues. Also, your personal assets and business assets are the same when filing taxes.
Forming an LLC offers certain advantages over a sole proprietorship. One attractive benefit is that you gain some liability protections. If you find yourself stuck in a legal dispute, the other party can only sue the company and not you, the individual.
While LLCs are allowed pass-through taxation, they don’t have some tax advantages that corporations do. For example, LLCs are required to pay full self-employment taxes, while corporations have methods to ease those costs.
Also, don’t believe that an individual can’t form an LLC. LLCs can be formed either by yourself or with multiple business partners.
A corporation is an independent legal entity that gains liability protection, much like LLCs. Corporations tend to be options for larger businesses that expect to scale aggressively.
However, there are more paperwork and costs to consider if you want to form a corporation over an LLC. For example, corporations can expect to have bylaws, a board of directors, and must file IRS Form 2553 with the IRS.
Starting a business without a business plan is like navigating the country without a map. Your business plan will ensure that you know where you’re heading and how to get there. Also, many banks require you to write a business plan when applying for business loans. Here are a few items to include in your business plan:
The most valuable business ideas solve problems. Research your target customer to help you develop a product or service that caters to their desires and pain points. If you need inspiration, check out our top small business ideas.
This analysis will help you understand the size of your market and whether it’s showing growth or decline. How will your product fit into this type of market and target demographic? When you’re starting a business in Indiana, researching your market and competition will also help you determine a pricing model for your product or service.
Capital is the lifeblood of any business. It keeps the lights on and your employees paid timely. Rushing this critical step would be a mistake that could shut your doors forever. Don’t be afraid to consult with a business attorney or an accountant. Their expertise will help you navigate your business’ financial health and comply with tax requirements.
It isn’t enough to just come up with the best business idea. You need to get the word out there. If you want your business to stand out among the noisy competition, marketing will be your best friend. How will you build a brand that creates a loyal customer base? Building your small business website and growing your social media presence will help promote your business.
Your business plan is important, so don’t be afraid to dedicate extra time to this step. Our business plan template or a business plan software will help you get started.
Take a moment to reward yourself because you’ve already done so much work. The next step is registering your business and it’s a lot of information to digest. But hang in there, because this step means that you’re much closer to starting a business in Indiana.
If you’re starting a business in Indiana, registering your business and forming your business entity is more convenient than ever. INBiz was created as “Indiana’s one-stop resource for registering and managing your business.” Take a moment to create your INBiz account before you are prompted to register your business online.
You can visit the IRS website to apply for your EIN. Similar to how you file personal taxes with your SSN, a business requires an EIN to file taxes. This number is required when hiring employees and opening a business account. If you’re operating a sole proprietorship without other employees, you can skip this part because it’s not required, though there are benefits to using one, especially when it comes to seeking funding for your business.
Think of a registered agent as the middle-man (or woman) between your business and the state. Their responsibility is to serve as a reliable communication point and to receive business-related tax and legal documents.
Retaining a registered agent is a requirement when you’re starting a business in Indiana. You must supply your registered agent’s name and registered office address when forming your business entity.
You’ll want to ensure you appoint a reliable registered agent suitable for your business, so be sure to do your research. Ultimately, you can decide that you, a friend, or an associate should act as the registered agent—just make sure whoever you appoint is a resident of Indiana.
If you’re starting a business in Indiana, an LLC operating agreement is not required by law, but it is recommended that you complete one. This agreement creates structure to your LLC by outlining the rights and responsibilities of each owner.
Depending on the business entity you choose, you’ll have to file some paperwork to start a business in Indiana. If you want to form an LLC, you must file the articles of organization. If you want to form a corporation, you must file the articles of incorporation. Both of these forms will be filed directly with the Office of the Illinois Secretary of State and can be completed online.
The application process will require the following (but not limited to):
Please note that a $100 filing fee will apply when submitting your application to form either an LLC or a corporation.
If your business is conducting any sales, the state of Indiana requires that you obtain a RRMC. You can also register for it with the Indiana Department of Revenue online.
Please note that a $25 filing will apply and your RRMC be valid for two years upon receipt. Fortunately, your RRMC will renew automatically for free if all of your tax filing and payment submissions are timely.
Opening a business bank account will help you separate your personal and business assets, which is an important step. Creating a barrier between the two will be helpful for the following reasons:
Another good idea when starting a business in Indiana is to open a business credit card. A business credit card will help you keep your business expenses separate, while building your company’s credit history.
Earlier, we mentioned how capital is the lifeblood of your business. If you want to get your business started and off the ground, you’ll require startup funding. Fortunately, there are several routes you can take to secure funding:
A good place to start if you want to apply for a loan is with your bank. However, it’s easy to get discouraged if you’re a new entrepreneur with little-to-no business history. Fortunately, there are other business loan options you can consider.
If you’re not qualified for a traditional bank loan, a popular option is to apply for an SBA loan. SBA lenders offer low-interest rate loans to small business owners. Depending on your business needs and credit history, you can be approved for up to $5 million, with interest rates starting at 7.75%.
Some businesses require specialty equipment that can be costly to purchase or rent and maintain. You may want to research equipment financing to help equip your business with the tools it needs to operate. The approval amount, term, and interest rates would depend on your credit score and financial health.
Often called bootstrapping, some small business owners rely on their own cash reserves. There are attractive reasons for self-financing, like full ownership of your company and increased financial discipline. However, having a smaller budget may slow down growth and you risk your own savings. If you have the financial reserves and stability, bootstrapping may be an option for you.
Depending on your business, the state of Indiana may require you to obtain certain business licenses. Unfortunately, there is no general, state-issued business license for Indiana businesses.
With over 400 licenses available, it can be difficult to know which licenses you require. However, if your specific business falls under any of these categories, you can expect to require certain licenses and permits.
Be sure to consult the license and permit section of the Indiana Business Owner’s Guide to ensure your complying with the necessary regulations.
If this is your first business venture after working only as an employee, prepare yourself. Transitioning from employee to employer presents more challenges than you might expect.
In the early stages, expect to wear several different hats. You’ll be hiring employees, working payroll, setting business strategy, and handling customer service. When your business grows and scales, you can hire more employees to reduce these responsibilities.
The state of Indiana requires for employees to post certain posters in plain view. You can learn which posters are required at the Indiana Department of Workforce Development.
Also, please note that Indiana employers must report all new and rehired employees within 20 days of employment or risk a $500 fine. You may report new hires online with IN-NewHire.
A significant reasons why entrepreneurs don’t start their businesses is fear and uncertainty. Our goal is to equip you with the knowledge to conquer that fear and finally build the business of your dreams. Starting a business in Indiana, like any worthwhile venture, will be difficult but this guide will ensure that you start and grow your business on a strong foundation.