How to Start an LLC in Indiana

Do you want to start a Limited Liability Company (LLC) in Indiana but don't know where to begin?

In this article, we'll explain:

• The tasks you must complete to form an LLC in Indiana
• Additional steps to take after registering 
• The costs of starting an LLC in Indiana and how long it takes

If you want to start an LLC in Indiana, read on to learn everything you need to know!

Step 1: Name your Indiana LLC

You'll need to pick an appropriate name for your LLC before you can create it.  However, you can't simply name your business whatever you want. To properly name your LLC, you need to follow some simple rules. Some words must appear in your name, while other words aren't allowed at all.

Words You Have to Use

Indiana Code Section 23-0.5-3-2 says that every LLC needs to identify itself as an LLC in its name. So, your name must contain one of the following:

• “limited liability company”
• “L.L.C.”
• “LLC”. 

Words You Can’t Use

There are also some rules about words your LLC name can't include.

In general, you can’t name your LLC something that makes it seem like it is a government agency or that you do something illegal.

If a job requires licensing or accreditation, your LLC name can't make it seem like you provide that service unless you are legally allowed to provide it.

For example, Indiana Code Section 28-1-20-4 says that only certain financial institutions can use the following words in their company name:

• “bank”
• “banc”
• “banco”
• “bankcor”

Also, Indiana Code Section 23-0.5-3-1 says that your LLC's name must be different or “distinguishable” from every other registered name on record with the Indiana Secretary of State. This rule helps avoid confusion by preventing two businesses from having the same name.

Research the LLC Name You Want

After choosing the LLC name that you want, you can use the Indiana Secretary of the State’s Business Search to find out if the name is available.

If someone else has already claimed your chosen LLC name, you will have to get their consent to use it. You can have them file a consent form by mail or online to prove that they are fine with you using their name. There is no filing fee for this form.

If the name you want to use is available, Indiana Code Section 23-0.5-3-3 lets you reserve the name for renewable 120-day periods. You must submit your Reservation of Business Name online through the INBiz online service portal. There is a $10 filing fee for each name you reserve and another $10 fee every time you renew.

Indiana DBA: Using an Assumed Name

When choosing a name, know that you don't need to use your LLC's official legal name to run your business if you don't want to. In fact, many LLC owners use a “doing business as” name (often called a “DBA”) in place of their LLC’s real name. 

When you file a DBA, your LLC can “go by” a different name. You can use your DBA on your website, signs, and business cards. You just have to use the LLC’s true name in legal records. This lets you operate your business without that pesky “LLC” in your name.

In Indiana, a DBA is known as an “assumed name.” Indiana Code Section 23-0.5-3-4 says that if you want to use a DBA for your LLC, you need to file a Certificate of Assumed Business Name with the Secretary of State. 

You can file a paper copy of this form by mailing it to the following address:

Alternatively, you can also file a DBA online.

We recommend that people in every state file documents online whenever it is possible in order to receive faster processing. In Indiana, there is also the added benefit of lower fees for online filing. The fee to register your LLC's assumed name is $20 when filing online and $30 when filing by mail. 

Step 2: Appoint a Registered Agent for your LLC

A “registered agent” is a person or business that accepts legal papers and other important documents for an LLC. 

Indiana Code Section 23-0.5-4-1 requires all LLCs to choose a registered agent to receive service of process.

The law requires every registered agent to have an office in Indiana. Your agent must also be able to accept documents during routine business hours.

In Indiana, you can use a commercial or non-commercial registered agent.

Any person or business with a physical address in the state can be either type of agent. The main distinction is that a commercial agent must file a document with the Secretary of State that says they are “in the business” of being a commercial registered agent.

Since anyone can serve as your LLC's registered agent, many new business owners think it's best to be their own LLC’s agent. But the truth is, this usually backfires.

Experienced business owners understand that choosing a commercial registered agent is the better choice. But even though you can hire a commercial agent to accept service of process for a small fee, you might not think it is worth paying for.

Many new LLC owners think being their own registered agent is a good idea because: 

• It’s cheap: You’re not paying someone else to do it for you.
• It’s easy: The only address and contact information you have to keep current is your own.
• It’s reliable: You will receive all important documents personally.

Despite these benefits, we strongly advise against naming yourself as your LLC’s registered agent.

Why do we say this? Here are some reasons:

• No privacy: Your name and address will be published on the Secretary of State’s website. This means that anyone with an internet connection can find your personal information. 
• Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
• No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
• Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
• It’s your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.

Using a commercial agent only costs about $100 a year. Plus, your registered agent service will let you know as soon as you receive mail or other papers, often by email. It's easy to see why this is a better choice.

If you plan to conduct business out of state, we recommend using a national registered agent service.

To be able to conduct business in another state, you must register as a foreign LLC and appoint a registered agent in that state. With a national service, you can use one company to be your agent in every state instead of having to deal with multiple agents.

Step 3: File Your Indiana LLC Articles of Organization

Articles of organization are the legal document you'll need to file if you want to start an LLC. They contain basic details about your business and must be submitted to the Indiana Secretary of State.

What to include in my Indiana Articles of Organization?

Indiana Code Section 23-18-2-4 requires your articles of organization to contain the following:

• The LLC’s name.
• The name and address of the registered agent.
• Whether the LLC will end by a certain date or if it will exist perpetually. 

If your LLC will use an outside manager to run the business, you must include that info in your articles. You can also choose to add any other matters that the members (the LLC owners) agree to include.

You can file your LLC's Articles of Organization by mailing them to the Secretary of the State. However, we suggest you use the INBiz online service portal for faster processing and a lower filing fee.

Indiana LLC Filing Fee

The filing fee is $95 if you file online and $100 if you file by mail. You can use the online fee calculator provided by the Indiana government to check the costs of various business-related filings.

Indiana LLC Processing Time

The processing time for online filings ranges from a few minutes to an hour based on how many submissions are in the queue. If you file after regular business hours, your articles will be processed the next business day.

Paper applications are processed within 1-2 business days after they are received.

Step 4: Draft your Indiana LLC Operating Agreement

An operating agreement is a contract between members of an LLC that sets the rules for how the business will run. It provides an overview of how the members will work together and outlines their respective roles within the LLC.

Indiana law does not require you to create an operating agreement when forming an LLC. Still, an operating agreement will help you start up and run your business well. 

A formal contract ensures that every LLC member (LLC owner) knows their responsibilities. Plus, setting clear rules in advance can help you handle challenging situations as they come up.

Indiana Code Section 23-18-4-5 lists some topics you should cover in your operating agreement. For instance, suppose one member wants to sell their interest in the LLC. The operating agreement will list the process for buying them out. It can also name someone to take over their job or state the method for making this decision.

Other reasons why operating agreements might be useful include:

• They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so. 
• They say what the manager has the right to do. Managers also have special duties to the company and the members. The operating agreement should state these.
• They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
• They say how new members can join the company. They also have rules about how exiting members can leave.
• They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
• They say whether members or managers are in charge. They also say how to hire and fire managers.
• They say how and under what circumstances the LLC should end. You might not want to dissolve your business now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
• They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.

Operating agreements are important so that everyone knows exactly where their responsibilities lie within an LLC. Every member should be involved in drafting the contract so that they all understand and agree to the terms. Once everyone signs, keep a copy of the agreement for your LLC's files.

Step 5: Get an EIN (Employer Identification Number) for Your Indiana LLC

An Employer Identification Number (EIN) is a nine-digit tax identification number that the Internal Revenue Service assigns to businesses. In other words, it's like an SSN for your LLC. Your EIN can be used to file taxes and complete other transactions with the federal government.

Here are the most common times when you need an EIN:

• Does your LLC have more than one member? 
• Does your LLC have any employees? 
• Is your LLC taxed as a C corporation or S corporation?

If you answered yes to any of these questions, then you'll need to get an EIN for your LLC.

Single-member LLCs don’t need an EIN to file taxes. You can file under your SSN instead. Still, even if it’s not required, an EIN can be helpful when running your business.

For instance, most banks need an EIN to open a business account. It can also help you stop fraud and maintain separation between your business and personal finances.

You can get an EIN immediately by applying on the IRS website. You can also request an EIN by mail with IRS form SS-4. 

You don't need any special skills to get an EIN online; it takes less than five minutes, and it's free and easy to do it yourself. It’s not worth paying anyone to get an EIN for you unless it is part of an LLC formation package.

First Tasks After Registering your Indiana LLC

Once you set up an LLC, there will be some additional steps you need to take. Make sure these tasks are completed before you start officially running your business.

Open a Business Bank Account

You don't legally need a business bank account to start an LLC. But, opening a business bank account makes keeping track of business costs easier. You can also use a business account to separate your assets from those of the LLC. This protects your personal assets from claims made against your LLC by its creditors.

Some of the advantages of using a business bank account include:

• Convenience: Keeping things separate makes your LLC’s bookkeeping much simpler.
• More business opportunities: Your LLC can only receive credit card payments through a business account. You can also do business with people who won’t take personal payments. 
• Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC’s debts. 

Asset protection is important for several reasons.

Generally speaking, the owner of an LLC can't be held personally responsible for its debts. Only the LLC’s assets can be used to pay business creditors. This means that your own assets will not be put at risk.

The idea that you and your LLC are separate is known as the “corporate veil.” But, when you mix personal funds with the LLC's assets, this corporate veil can be “pierced” if someone sues your LLC. If this happens, you can be held personally liable for any business debts that the LLC has.

Using a business bank account for your LLC will ensure that your personal funds don't get mixed in with your LLC's assets. This will protect your assets from creditor claims if your LLC is ever sued.

Get Business Insurance For Your Indiana LLC

It’s essential to get the right kind of insurance coverage for any type of business. If you don't have insurance, you could be left with nothing if the worst occurs. State law might also require that your LLC get certain policies.

Before making any decisions about which type of business insurance you need, think through your specific situation. You'll be able to pick out which policy best fits your industry's risks.

Here are a few kinds of business insurance policies you should consider:

• General liability insurance: You’ll need this if there’s an injury on your property. It pays for damages and a lawyer if you need one.
• Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
• Workers’ compensation insurance: Indiana requires most employers to carry workers’ compensation insurance, with a few exceptions. You can buy a policy through a private insurance company.
• Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
• Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
• Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.

Keep Your Indiana Company Compliant

Being an LLC owner means you must follow certain laws relating to your business. As an example, you may need to obtain a business license, prepare an annual report or file taxes.

It's important for you to keep up-to-date with any changes in local laws that might impact your business. This will help ensure that you don’t break any laws while running your LLC.

Indiana Business Permits and Licenses

While Indiana does not require a general business license, there are over 400 types of licenses, permits, and other permissions that may be required to conduct certain types of business. Check out the Indiana Business Owner's Guide for more info.

Indiana Tax Requirements

Indiana businesses may be subject to several types of state tax. The most common types are sales tax if you sell goods and withholding tax if you have employees. You can learn more on the Indiana Department of Revenue's website. 

Federal LLC Tax Filing Requirements

LLCs are a type of “pass-through” entity when it comes to federal taxes. This means that your LLC doesn't pay income taxes on its profits. Instead, you’ll report your LLC’s profit and loss statements on Schedule C of your personal income tax return.

You must also pay social security and medicare taxes even if you don't plan to hire any workers. If you do plan to have employees working for your LLC, you'll need to withhold payroll taxes from their checks.

Biennial Report and other Filing Requirements 

Indiana Code Section 23-0.5-2-13 requires LLCs to submit a biennial business entity report to the Secretary of State every other year. You can file online for a $31 fee or by mail for a $50 fee. 

Indiana Business Formation Quick Links

• IRS — apply for an EIN online
• IRS information regarding the federal tax treatment of LLCs
• INBiz Online Filing (SOS)
• Business Search (SOS)
• Start a Business (SOS)
• Fee Calculator (SOS)
• Business Tax FAQs (DOR)
• Business Owner's Guide 

Statutes:

• Naming Requirements: Indiana Code Section 23-0.5-3-2
• Name Must Be Distinguishable: Indiana Code Section 23-0.5-3-1 
• Name Reservation: Indiana Code Section 23-0.5-3-3
• Assumed Name: Indiana Code Section 23-0.5-3-4
• Registered Agent: Indiana Code Section 23-0.5-4-1
• Articles of Organization: Indiana Code Section 23-18-2-4
• Operating Agreement: Indiana Code Section 23-18-4-5
• Biennial Reports: Indiana Code Section 23-0.5-2-13