Forming an LLC in Indiana
Are you interested in forming an Indiana limited liability company? A limited liability company (LLC) is a business entity that many small businesses choose as a way to organize themselves when they are just getting started. An LLC has a few advantages for small businesses but may not be appropriate for larger ventures or startups seeking investors. In addition, LLCs have a unique business structure that can get very complex.
It would help if you looked closely at other business entities like partnerships and S-corporations before launching an Indiana LLC.
We make business formation EASY. Learn about our DIY business formation services here.
Advantages of LLCs:
- Limited personal liability for members for business debts and lawsuits
- Fewer reporting and recordkeeping requirements than other kinds of entities, including corporations
- Avoiding the double taxation—business and personal—of corporations if taxed as a pass-through entity
- Unlike corporations, Indiana LLCs do not have to file annual or biennial reports with the state
Disadvantages of LLCs:
- An LLC is not a good investment vehicle for outside investors
- LLCs and S and C-corporations pay commercial activity taxes, unlike sole proprietorships and partnerships
- LLC owners may pay self-employment taxes
Registering Foreign LLCs in Indiana
Any foreign (out-of-state) LLC that wants to do business in Indiana must register with the Secretary of State for a certificate of authority. This is done through the OneStop Business registration page, as described below.
Step-By-Step: Forming an Indiana Limited Liability Company
With all of that, you have decided to form an LLC in Indiana. You have your members, your business plan, and a little startup capital, and you are on your way.
Here is a step-by-step guide for creating a fully operational Indiana LLC.
Step I: Name Your LLC
Creating a legally proper LLC name and then protecting it is one of the first actions in LLC formation. This process can be complex and time-consuming, but it is essential to start an LLC in Indiana.
The first thing you have to do is create a great name (that's up to you). Indiana law requires that the name be unique and different from any other company's name.
Your first task will be to search the Secretary of State business name availability search page to ensure that your chosen name isn't already in use for an existing business.
This search is just a preliminary step to the state filing. You still need to go through the registration process to get your name approved by the state.
After you have decided on a name, the name you submit to the Secretary of State must then contain one of these legal suffixes:
- Limited Liability Company
- Limited Company
- Ltd. Co.
- Or any other variation
The name of the LLC cannot use any variation of the word “corporation." It cannot use language considered obscene or that claims a profession or business affiliation that does not exist.
Indiana law does not explicitly allow for a professional LLC (PLLC) designation. However, an Indiana LLC can provide professional services, and it does allow for professional corporations.
Step II: Appoint a Registered Agent
The State of Indiana requires an LLC to have a registered agent for service of process before formally filing with the state. A registered agent is designated to receive process (legal documents) on behalf of the LLC. An Indiana registered agent can be an individual or a company (domestic or foreign), but it must have a physical Indiana street address.
A forming LLC will often choose a professional registered agent service or the company lawyer. An Indiana corporation can only have one registered agent; the business itself cannot act as its own agent.
Step III: Register With the State for your IN.Gov ID
For your business to transact with the state, create an account with Access Indiana, which will then generate IN.Gov ID login credentials. This allows you to conduct business with the state as a business.
Reserve Your Name
Indiana allows you to reserve your business name for 120 days while the formation process continues. This is done through your INBiz account. Sign in, go to "Online Services," navigate to "Secretary of State Business Services Division," select "Name Reservation," and follow the directions. Reserving a name is not a guarantee that your name will be approved, but it keeps anyone else from using it for that time. There is a $10 filing fee for this.
Step IV: Legally Protect Your Business Name
Next, make sure that no one else can use it in business or on the internet. This means that you have to make sure that no one else uses that name. You do this by doing a name search to ensure that the internet domain name is available. If available, grab it immediately (that will only cost a few dollars).
If you want to do business nationally or operate in several other states, you should trademark the nonprofit's name with the United States Patent and Trademark Office (USPTO). This process takes some time and money. While that application is pending, the name is still protected as a common law trademark.
Once you receive your federal trademark, apply to the Indiana Secretary of State to register it as an Indiana trademark or service mark. You may also trademark the Indiana LLC name with just the state, without a federal trademark.
If you are going to do business under a fictitious name—that is, a DBA—you must file a Foreign Registration Statement with the Indiana Secretary of State or online with an INBiz.Gov account.
Now that name is yours, you can keep anyone else from using it, and it conforms to Indiana law.
Step V: Structure the Business
An LLC has a particular, unique business structure.
To begin with, the stakeholders of an LLC are called “members." There is no stock issued, so they cannot be “stockholders." This is the primary reason that an LLC is not a good investment vehicle for either the founders or potential investors. There is no number of members required. You can have a single-member LLC.
Then you should write an LLC operating agreement. This is not required under Indiana law, but it is a good idea to keep everybody's interests clear.
An Indiana limited liability operating agreement should contain the following points:
- Percentage of members' ownership
- Voting rights and responsibilities
- Powers and duties of members and managers
- Distribution of profits and loses
- Holding meetings
- Buyout and buy-sell rules (procedures for transferring interest or in the event of a death)
The members may manage an LLC or hire an outside manager. You will indicate which you have chosen on your registration application.
Step VI: Write and File Your Indiana Articles of Organization With the Secretary of State
You are now ready to compose and register your Indiana LLC as your business registration with the Indiana Secretary of State.
Foreign LLCs cannot use this process. They must register separately, as noted above.
Your LLC Articles of Organization must contain the following:
- LLC name and mailing address of the principal office
- Name and physical address of the registered agent (must have an Indiana street address)
- Whether the LLC will be perpetual or for a limited time
- Organizer name
- Whether the LLC will be member-managed or manager-managed
- Organizer signature(s)
- A filing fee of $100 if filing by mail (instructions are in the form), or $95 if filing online through INBiz
After You File Your Articles of Organization
You will have numerous state and federal requirements for your new LLC after filing with the state.
State Business Licenses
Certain Indiana businesses require business licenses. There will also be local business licenses that you may need to obtain from local governments.
Indiana Employment Rules
- Your LLC will be subject to state rules if it has employees—even if the employees are also members.
- All new hires must be reported to the Indiana New Hire Reporting Center.
- You must pay unemployment insurance.
- Most employers are required to carry Workers' Compensation Insurance. This is always through a private carrier.
Taxation for LLCs
You will be subject to both state taxes and federal income taxes. This is a job for your accountant, but here is a brief outline of your tax obligations.
You will be subject to both federal withholding tax if you have employees and, of course, to business income taxation.
LLCs also have particular requirements for filing taxes. You may choose one of several different tax designations for your LLC, including C or S-corporation, partnership, or pass-through organization with personal liability for the members. Consult with your accountant for the best approach.
If you have employees, you must file to receive an IRS Federal Employer Identification Number (FEIN) on the Internal Revenue Service website. You must also apply for your FEIN if the LLC has more than one member. You will be subject to all federal tax-withholding rules.
Indiana Business Taxes
The Indiana Department of Revenue handles all business taxation online, including sales taxes, withholding taxes, use taxes, etc. This is through a one-stop online portal called INTIME (Indiana Tax Information Management Engine). You sign up for INTIME online.
Indiana LLCs must file a biennial business entity report with the Secretary of State to remain in good standing. This is done through your INBiz account.
Want to Form an Indiana LLC?
Fortunately, forming an LLC in Indiana can be a straightforward process with FindLaw's Business Formation Service. If you need further assistance, you should get in touch with a local business organizations attorney who will be experienced with forming an LLC in Indiana and guide you through the process.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.