The limited liability company is one of the most accommodating business structures available to domestic entrepreneurs. For all its accessibility, especially when it comes to its ability to sustain small Indiana businesses, the LLC structure still requires a clear understanding of the formation process.
The aim of this article is to provide basic information to prospective Indiana LLC owners, including:
We will also provide our readers with other helpful links related to Indiana LLC formations and professional services for a more comprehensive understanding of the subject.
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Naturally, the first major decision any future business owner needs to make about their Indiana LLC is its name. For LLC owners, the naming rules in Indiana won’t be that different from those imposed in other states, so as long as you do your research, you should be fine.
What you call your company won’t necessarily be used for your promotional material —there are fictitious LLC names for a reason—but it’s still important to find something that would reflect the core nature of your business.
According to Section 23-0.5-3-1 of the Indiana Code, all entities must choose a distinguishable name, i.e. a name that hasn’t been taken by another company already registered in Indiana, including assumed names.
As per IC 23-0.5-3-2, the names of limited liability companies must reflect their business structure designation:
Curiously, Indiana’s restrictions are a bit different from the standard list of forbidden words found in other states’ statutes. Here, the key rule comes in the form of restricting any association with banks unless an entity using such indicators in its name is, in fact, able to qualify as a financial institution of this type.
But if your LLC uses the word “bank” or its derivatives in violation of IC 28-1-20-4, the business may indeed be dissolved by the state of Indiana. As it stands, unless given explicit permission by the department of financial institutions, your LLC name can’t feature the following words:
Aside from adhering to the “bank” rule, you might want to check whether the same regulations apply to other licensable occupations. If you need business licenses of a more specific nature, you might need to look into how the state handles such businesses.
For LLC name searches, you can use the state’s business search tool that allows you to look up other entities in the state of Indiana that might have the same or similar name as the one you’ve chosen for your company.
Although the state technically requires LLC names to be distinguishable, in Indiana, you can actually use an unavailable name as long as you obtain written consent from the owner of the company already using this name. The owner will have to fill the consent form to prove they are fine with another company using their name. This filing is free.
But say your chosen name is available. You’re not in any rush to proceed with the registration quite yet but don’t want to lose your naming options. Fortunately, according to Section 23-0.5-3-3 of the Indiana Code, business owners can reserve their LLC name for up to 120 days at a time. This can be done online via your INBiz profile. The filing fee is $20 for the initial application and every renewal.
Attaching a fictitious name to your business is relevant for all types of business owners, so it can come in handy even if you managed to register your LLC under the name you initially chose for it. Often LLCs branch out and diversify their product lines, and the initial LLC name doesn’t wholly encapsulate their trade anymore.
You started an Indiana LLC as a beauty specialist, specializing in eyelash extensions. It made sense to name your company “Sally’s Eyelash Lifts LLC” upon launch, except since then, you have gone through additional training and obtained a license to perform full cosmetological procedures. There is no need to change your LLC name—instead, you can operate under an assumed name that better suits your services now such as “Sally’s Cosmetologist Center.”
Thankfully, Indiana allows business owners to register multiple fictitious names known as Doing Business As (DBA) names. You can do it by submitting the state’s Certificate of Assumed Business Name form, though keep in mind you might need to get it approved by a notary.
The filing costs differ based on the application method—$21 per name for submitting it online and $30 per name for mailing it to:
Secretary of StateBusiness Services Division
302 W. Washington Street
Indianapolis, IN 46204
All Indiana LLCs are legally required to have a registered agent. By definition, a registered agent is an individual or entity responsible for receiving state correspondence and legal documents such as service of process on behalf of the LLC and forwarding them to the company’s business address.
Service of process describes the procedure of the plaintiff party informing the respondent of the lawsuit being brought against them by issuing a legal notice. Personal service of process is usually given to individuals being sued. When an LLC is sued, your Indiana LLC registered agent receives this notice instead.
According to Indiana Code Section 23-0.5-4-3, an LLC may appoint a non-commercial or commercial registered agent. They can be:
Commercial registered agents in Indiana must first file a listing statement with the state to legalize their status. Additionally, LLC owners must obtain a signed consent statement to appoint a registered agent.
When it comes to reducing filing costs, a popular solution for LLC owners is to appoint themselves as their Indiana LLC registered agent to:
But for all its pros, this course of action can be very inconvenient and even amount to significant expenses if you personally fail to receive vital documents. After all, an LLC’s registered agent is obligated to:
It’s highly recommended to avoid these risks by hiring a professional registered agent service. Their annual fees vary from $99 to approximately $250, but you will likely be able to find a formation service that charges only about $100 per year with a potential first-year free trial. Moreover, commercial registered agents will always keep you informed of upcoming filing deadlines.
Most top registered agents operate nationwide. If you need business advice on how to find a fitting agent for your Indiana LLC, be sure to check out our list of the best-ranked registered agents.
What you need to remember about registered agents is that you can’t use the same one in other states. If you need business expansion, for instance branching out your Indiana LLC to other states, you will need to register your entity as a foreign LLC in each new jurisdiction with its own registered agent.
The key filing in a business formation process occurs when you submit the registration forms with relevant information about the company to the state agency that manages formal entities.
For LLCs, this document is called the articles of organization. To register your LLC, you have to file the Indiana articles of organization with the Secretary of State. The LLC can only begin operations once the state has approved the application.
Although the articles of organization is not a complex filing per se, it could still take up quite a lot of time if you aren’t familiar with the procedure in Indiana. A good way to simplify the process is to hire an LLC provider who can oversee all key filings for owners that need business solutions. To get a better idea of your options, take a look at our review of the best LLC formation services.
When submitting State Form 49459, LLC organizers must provide the following information:
You can send your articles of organization by mail to:
Business Services Division302 W. Washington Street
Indianapolis, IN 46204
A faster and less expensive method is to apply online via Indiana’s INBiz portal.
For online filings, the one-time articles of organization fee is $90. For a mail application, it’s $100. Indiana’s INBiz portal also provides a handy calculator tool for calculating your fees, including formation.
The method and time of your application directly affect the period that the state takes to review your articles of organization. With expedited filings, online applications can be processed on the same day or within a single business day. For mail filings, the same process may extend to 1-2 days.
An operating agreement is the same as corporate bylaws in its conception in that it’s designed to regulate an entity’s internal organization. Unlike bylaws, an operating agreement is specifically designed to regulate LLCs, serving as a set of regulations that outline responsibilities of LLC owners, and various procedures related to running the business as a whole.
Indiana LLCs are not required to draft the operating agreement to get their registration approved by the state. Nevertheless, having an operating agreement is crucial for running a stable and successful business.
In the Indiana Code, Section 23-18-4-4 describes the general expectations of what an operating agreement might look like. It’s not enough to simply write up whatever comes to mind—an LLC operating agreement must be effective.
As such, when drafting the operating agreement, Indiana LLC owners might want to outline the following provisions:
An operating agreement can be as specific as the situation necessitates, especially if your LLC works in a highly regulated industry. Drafting a well-worded and legally-sound operating agreement helps avoid internal disputes and generally ensures smoother sailing for any type of business.
An Employer Identification Number, or EIN, is issued by the IRS to business entities with the purpose of monitoring their tax activities. This nine-digit number has the same application that an SSN has for individuals, but EIN is used by an LLC for transactions, taxes, and to keep records of other financial activities.
Note that although the EIN is not a requirement for LLCs, it’s a vital part of running any business. Chances are you will need to apply for an EIN for your business if:
The reason we single out EIN for multi-member LLCs is the taxation method applied to entities with more than one LLC member. If you run a business as a sole proprietor, you can report all your business taxes using your SSN since you are the sole member. That said, even sole owners will find using EIN a more efficient solution that could help you organize your finances.
The fastest way to obtain an EIN from the IRS is by submitting an online form. Alternatively, you can send the IRS form SS-4 by mail. The IRS charges no fees for EIN applications, so it makes more sense to do it by yourself as opposed to paying a formation provider for an entirely free service.
After you complete your LLC filing, EIN application, and operating agreement drafting, there are still quite a few things left to take care of if you want to better organize your business.
Technically, Indiana LLCs don’t need to have a separate business bank account to have their registration approved by the state. Plenty of single-member LLC owners choose to run the financial aspects of their business through their personal accounts. However, there are quite a few good reasons for starting a business bank account, including:
If any of these pros can make you consider opening a business bank account, it’s likely to be the promise of asset protection. The LLC utilizes the so-called “corporate veil” model.
Adapted from the much older corporate structure, this concept describes the separation of securities owned by the LLC owners in individual capacity from their business assets.
This means that when the business is sued (for example, by creditors or for financial compensation), the court order can only concern the LLC assets.
The only instances when the personal assets of LLC owners can be at risk are professional negligence lawsuits or if the business owners signed personal guarantees.
Business insurance is an indispensable asset for any type of LLC. Even if your LLC doesn’t have to deal with heavy manufacturing—or other forms of business practices that require precautions against the risk of physical damages—insurance goes a long way to protect your financial securities.
To understand how business insurance coverage works, most LLC owners choose to consult a professional accountant or go directly to the insurance agency. Some of the most common LLC insurance policies include:
Even if the launch of your LLC was an easy affair, the work that goes into maintaining your business requires continuous effort and not just whatever you outlined in the operating agreement. To keep an Indiana LLC compliant, owners have to keep their information up to date through regular state filings, tax reports, and renewing their business licenses on time.
There is no general Indiana business license requirement as a whole, but that doesn’t mean your LLC needs no licensing at all. In fact, you will likely need to obtain several licenses and permits even for the most basic of businesses simply because your county and city governments have their own regulations. You can find more on business licenses in Indiana on the official state website.
Standard state taxes in Indiana include sales and use tax, withholding tax, unemployment tax, and various industry specific-taxes. Some industries have more complex tax systems than others, so be sure to check how it applies to your business. More information on Indiana business taxes on the state’s DoR website.
Most LLC owners have an advantage over certain corporate entities when it comes to federal income taxes. The LLC is classified as a pass-through entity, meaning all business profits and expenses go through the individual returns of the LLC members on Schedule C, Form 1040.
However, an LLC’s federal tax duties extend to social security and Medicare. The withholding rates are fixed, but the unemployment compensation is determined by the LLC’s income and other factors.
Any Indiana business entity is required to file regular reports using Form 48725 to update the state of any changes or lack thereof. You might be familiar with the annual report requirement imposed by some states, but in Indiana, this duty is biennial, meaning you have to submit the report once every two years. For online filings, the fee is $31, while mail submissions cost $50.
A limited liability company is a welcoming legal structure for many businesses. Start an LLC is easy. Select your state to start.