Forming an LLC in Indiana can be a great way to protect your business and investments. An LLC (Limited Liability Company) ensures your assets are protected from legal action against the company.
If you're looking to form an LLC in Indiana, this article will help you understand the costs, requirements, and overall process.
LLC Cost In Indiana
The cost of filing an LLC in Indiana depends on whether you are filing a domestic or foreign entity. Local organizations must pay a filing fee of $100 when sending their application through the mail and only $95 if submitted online.To register an LLC in Indiana as a foreign entity, the filing fee ranges from $125 to $250 when submitted by mail or between $105 and 240 for online applications. When sending your physical paperwork to the Secretary of State, use a money order or write a check for payment.
The Five Steps To Forming An LLC In Indiana
Let's take a close look at the steps required when forming an LLC in Indiana.
Name Your LLC
The first step to forming an LLC in Indiana is to choose an appropriate name for your business entity. It must contain "LLC" or "Limited Liability Company" as part of its name, and it must be distinguishable from any other existing business names on file with the Secretary of State (SOS).
In addition, certain words may require additional paperwork to register with the state. For example, words such as "bank," "insurance," or "university" require proof that you are qualified to use such terms.
Choose A Registered Agent
Next, you will need to choose a registered agent who will accept legal documents on behalf of the LLC. This person or business must be located in Indiana, and their address should be public when filing your Articles of Organization with the state.
File Your Articles Of Organization
Once you have chosen a name for your LLC and selected a registered agent, you must file the Articles of Organization with the SOS. This document outlines basic information about your company, such as its name, address, type of entity, purpose of formation, and more. You can file this document online through the SOS website or submit it by mail.
Create An Operating Agreement
An LLC Operating Agreement is a legally binding document that outlines how your company will operate financially and internally. This agreement should cover topics such as ownership interests, voting rights of members, management responsibilities, profit allocation, dispute resolution procedures, etc.
Even if you are the sole owner of an LLC in Indiana (i.e., a business that doesn't involve multiple members), it is still highly recommended that you create an operating agreement, as it can serve as proof of ownership should a dispute arise.
An Operating Agreement is not legally required for your LLC to exist; however, it is highly recommended that you create one regardless because it outlines how the company will be run and protects members from potential disputes down the line.
Obtain An EIN From IRS
An Employer Identification Number (EIN) is a Social Security number for businesses. This number allows companies to open bank accounts and hire employees without using their personal Social Security numbers.
This feature protects their personal information from potential fraud or identity theft.To obtain an EIN, businesses must apply through either the IRS or the Indiana Department of Revenue (IDOR).
Submitting A Biennial Business Report
To retain legitimacy and uphold Indiana state laws, all businesses in the area must submit a biennial business report.
This report includes basic contact information about the business and its officers/owners/members/managers/directors/trustees—i.e., anyone with control over the company's operations or finances.
Regarding deadlines, this report must be submitted by April 15th of each year, or the owner(s) risk facing potential penalties from IDOR.
Requirements For Forming An LLC In Indiana
To form an LLC in Indiana, you must submit Articles of Organization to the Secretary of State's office either by mail or online.
The Articles must include specific information, including the name and address of the registered agent; names and addresses of each member; the date when dissolution will occur; the purpose of the corporation; and a signature page with authorized signature(s).
You may also have to complete a Foreign Registration Statement if forming a foreign entity. This document serves as notice that you are doing business outside your state and must be filed with the Secretary of State's office.
Checking And Correcting Errors On Your Filings
The first step after registering your LLC is to check for any errors that may have occurred during the registration process. If any errors are found, it is important to correct them immediately to avoid future complications.
This includes double-checking all information for accuracy, such as spelling mistakes or incorrect addresses. It is also essential to ensure that all required documents are filed correctly with the state government and that all filing fees are paid correctly.
Researching And Reserving A Business Name
Searching for and reserving a business name is a simple and affordable process. Through the Secretary of State's website, you can easily search for availability and file to reserve the title with just a $20 fee.
This reservation will last up to 120 days, but if you need additional time after that, you can extend it for an additional $10 fee.
Hire Or Be Your Own Registered Agent
Your company must have a registered agent and office located within the state of Indiana. This person serves as an official point of contact between your business and government agencies, so they must be reachable during regular business hours.
You can hire a professional registered agent for a fee between $50-$300 or become your own LLC's registered agent in Indiana, though professional representation is recommended.
Taxes For LLCs In Indiana
When starting an LLC in Indiana, you need to know the tax obligations associated with filing in the state.
Here are the various taxes to consider.
State Income Tax
In Indiana, all LLCs are subject to a standard State Income Tax rate of 3.3%. This rate applies to all income earned from sources within Indiana. Any revenue generated from sources outside Indiana may also be subject to taxation. It's important to note that some counties may have higher or lower income tax rates than others, so it's essential to research before filing.
The standard Sales Tax rate applicable to most goods and services sold by an LLC in Indiana is 7%. As with the State Income Tax Rate, some counties may have higher or lower sales tax rates than others.
It's essential to research any county-specific regulations before filing your taxes. In addition, some goods and services are exempt from sales tax, so check your local laws before you begin a business in Indiana.
Federal Self-Employment Tax
If you own an LLC in Indiana and you're also working as an employee for that same company, you'll need to pay self-employment tax on earnings from wages or investments made by the business itself.
The standard rate for this is 15.3% of the taxable salary earned during the year. Again, it's essential to research any regional variations when filing your taxes each year.
Employer Payroll Withholding Tax
If you employ workers at your LLC in Indiana, you must withhold payroll taxes from their monthly salary. The standard rate is 7.65% of their total taxable monthly wage (or 7% if they earn under $1,500 per month).
Each April 15th deadline approaches! It's essential to keep up with changes in employer payroll withholding tax rates each year and adjust accordingly when filing your taxes.
Certified Documents And Good Standing Certificates
In addition to reserving your business name and filing for a DBA, there are other costs associated with forming an LLC that you must consider.
Certified document copies cost $15 + $1 per page in Indiana, while obtaining a certified good standing certificate costs $26 for online filing or $30 for mail.
Setting Up Your Domain Name And Website
Once you have registered your LLC in Indiana and obtained the necessary documents and good-standing certificates, you can start setting up your domain name and website. You'll need to purchase a domain through an accredited registrar like GoDaddy, Namecheap, or Register.com.
Registering a domain usually ranges from $10 to $15 per year. You can then create a website using an online platform like WordPress or Squarespace, which will also require a monthly fee.
Once you have your domain name and website set up, you can start marketing yourself and growing your business. If you have experience with coding, you can build your website from scratch.
Lastly, don't forget about insurance!
Depending on what kind of insurance you get—whether general or professional liability insurance—the amount paid will vary depending on coverage amounts and any discounts available from providers.
Establishing an LLC in Indiana requires careful planning to ensure compliance with all relevant laws and regulations.
There are also several fees associated with setting up and maintaining an LLC, so it is essential to know these costs upfront before committing yourself fully to this venture.
With some research and preparation beforehand, setting up an LLC could provide significant benefits for current owners and potential investors.
Further reading on MikeVeHere'som: Here are various articles on starting LLCs in different states:
If you're more interested in comparing the costs of an Indiana LLC to other states, check out this article dealing with an LLC in NJ cost.