Are you thinking of opening a new company in the Hoosier state? If you answered yes here are some notable changes that you might want to consider and form a Limited Liability Company (LLC). To add weight to its name, the LLC avails its stakeholders more than a few advantages such as freedom of management and decision-making, protection of its members from being personally liable for business debts, and providing tax incentives for the members.
If you own an LLC, you do not have to bear the burden of the company’s debts or obligations, which is quite relieving. At the same time, incorporating and managing an LLC is quite easy to accommodate most of the ‘young’ businesspersons who wish to seek a strong platform for the activities they undertake.
In this detailed guide, we shall go one step at a time to form an LLC in Indiana, starting from choosing the business name and completing the document filing. This is a resource worth having for both veterans and first-timers in the business world as it will assist in the timely establishment of an LLC.
Why Choose to Form an LLC in Indiana?
Indiana is a state that has a business-friendly attitude toward LLCs. Below are points supporting this level of preference:
Protection of Personal Assets: An LLC protects you from losing personal property for any debts and liabilities incurred by the company in business.
Tax Benefits: The business can use the advantage of having a single identity for several registered firms which makes the use of different taxation approaches possible.
Operating Agreements: An LLC operating agreement helps each member to strictly adhere to the proposal as it contains the basic principles of operations for the members.
Ease of Formation: The formation of an LLC in Indiana takes a relatively short time when contrasted with the formation of other business entities.
Step 1: Choose a Name for Your LLC
The first step in forming a limited liability company in this state is to choose a name that can be easily remembered and abide by the set principles in the state on names. This stage is important because it involves naming your business, which has to be particular and conform to the regulations of the state.
Unique Name: Make sure to choose a name that is not similar to any other registered business in the state of Indiana. Such uniqueness aids in the protection against litigation as well as confusion in commerce. There is an option where you can check the availability of names in the Indiana Secretary of State so that you do not risk being duplicated.
Include “LLC”: Something very basic is the phrase ‘Limited Liability Company’ or its acronyms ‘LLC or “L.L.C.” must appear in the name of your business. This inclusion is a requirement by law and especially identifies the other people in the structure of your business.
Reserve Your Name (Optional): When you want to secure your chosen name but are not ready to file your LLC yet, then you can reserve the name for 120 days for a small fee. This can be done by filing the appropriate form and paying a nominal fee which gives you time to complete the other details concerning your business without necessarily losing the name you want.
Step 2: Appoint a Registered Agent
A registered agent provides the address for your LLC and a Government Agent phone number acts as the official recipient for receiving any legal documents related to the formation of the Limited Liability Company.
Requirements: Some of the requirements include: the registered agent must have a physical address in Indiana and must be present during normal business hours to receive service of process documents in the event of a lawsuit.
Selecting an Agent: You could be your registered agent if you qualify, otherwise you could delegate this function to an appropriate person, or use a registered agent service provider. Outsourcing to a registered agent service can reduce risks of violations and maintain confidentiality.
Step 3: File Articles of Organization.
The Articles of Organization also known as the AZ Corporations Commission form is the document which when filed with the required fee creates the Limited Liability Company in the eyes of the formal authorities.
Required Information: You will need to provide your LLC’s name, its principal address, registered agent information, and the names of the LLC members or managers. This information makes the record of your business available to the public.
Filing Methods: Filing of the Articles of Organization most conveniently is done electronically on the Indiana Secretary of State’s website, although paper submission is also available if one chooses.
Filing Fee: A charge is brought when filing the Articles of Organization, which is $100 in the case of online filing or $110 if rather filing the forms through the post office. However, this charge is essential to ensure your company gets registered with the state.
Step 4: Prepare an Operating Agreement
Although In Indiana, it is not a legal requirement, it is advisable to prepare an Operating Agreement to define who owns what or whom and how the LLC is run.
Such key components should include the following:
- Percentage of ownership: Outline how much ownership interest each member has in the LLC.
- Rights and duties in voting: Explain who will vote, how the voting will be conducted, and what will be the extent of members in decision-making.
- Profit and loss allocation: Define how financial aspects are handled among members.
- Management structure: Reiterate whether it’s member-managed or manager-managed, and specify roles if needed.
- Procedures for adding or removing members: Set clear guidelines to manage changes in membership.
Step 5: Apply for an Employer Identification Number (EIN)
An EIN, or Employer Identification Number, is a number assigned in a business operation undertaking since it is necessary in the activities of taxation.
Application: It is also free to obtain an EIN from the IRS website either through an online application, which will give the number almost immediately, or through mailing Form SS-4.
Uses: An EIN is needed to have a business bank account, pay employee taxes, and payroll, and is needed for the employment of staff. Imagine it as a social security number for businesses which gives a platform to practice legality and finances.
Step 6: Enroll for Askew State Taxes and Permits and Tax
Depending on your business activities, you may have to ask for state taxes and certain permits or licenses to carry on your business legally.
Sales Tax Permit: If in the course of your business, you will be selling goods, it will be necessary to apply for a Sales Tax Permit with the Indiana Department of Revenue. This registration permits you to charge customers sales tax.
Business Licenses: Before setting up any business, one is advised to first check with the local city or county offices if they are to obtain extra business licenses. The licensing requirements differ from one industry to the other even though the general law pertains.
Step 7: Schedule Compliance
To maintain the LLC compliance, it is necessary to remain in line with other regular compliance actions with the state.
Annual Report: Indiana statute requires all LLCs to file biennial reports with the Secretary of State showing any changes that have occurred to the business or with the payment of a $50 online fee or $100 for postal filing sent every two years. This report helps the state to keep a record of the address and ownership details provided by the client.
State Taxes: Note that you should also take care of state tax obligations. This may include filing the necessary returns and payment in case taxes are owed. Accuracy in financial records will assist in this area in ensuring that there is compliance and even help avoid sanctions.
Conclusion
Forming an LLC in Indiana involves a series of steps that can be completed with careful planning and attention to detail. By following this guide, you’ll be well on your way to establishing a legal and operational LLC in the state.
Do you have a question for us? Get in touch with a lawyer or a business consultant (Easyfiling) to help you deal with or fulfill the requirements needed and set up your business in a manner that will be stress-free as you take the step of becoming a business owner.
Frequently Asked Questions
What are the costs associated with forming an LLC in Indiana?
The main expense related to your LLC formation is the processing of Articles of Organization with the Secretary of State which is $100 if you process it online and $105 in case you process it via mail. There may also be registered agent services or business license costs if necessary.
How many days does it take to have an LLC in Indiana?
The usual processing time for applying online is nearly instant while that of mailing the application usually takes 4-5 working days upon receipt.
Do I need an Operating Agreement for my Indiana LLC?
Even though it’s not a law, the Operating Agreement is quite important. This document provides information on the management and operations of the LLC therefore minimizing chances of disagreements between members in the future.
Nabin Adhikari
