If you want to start a limited liability company (LLC), making a budget is an important step. But to plan your expenses, you need to understand how much it really costs to form an Indiana LLC.
This article will teach you everything you need to know about Indiana LLC formation expenses.
Read on to learn:
- The expenses associated with creating an LLC in Indiana
- Optional costs that you should consider
- How to choose the right LLC formation method
Once you have finished this article, you will have a good idea of how much you need to invest in Indiana LLC startup costs.
Total Indiana LLC Cost – Starting at $95
According to the Indiana Fee Calculator, the bare minimum cost of starting an LLC in Indiana is $95.
This only includes one item:
- Indiana Articles of Organization filing fee: $95 (online) to $100 (paper)
However, many companies will need to obtain a Registered Retail Merchant Certificate, which will cost an additional $25 for each business location. You may also need local or professional licenses, the costs of which vary.
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Indiana LLCs – the Basic Costs
The expenses you will incur when forming an LLC will vary based on several factors. However, the lowest possible cost is $95. In the sections below, we’ve outlined your possible mandatory expenses.
Articles of Organization Filing Fee — $95 to $100
Articles of Organization are legal documents that officially start LLCs. You will need to file your articles with the Secretary of State to create your LLC. While this sounds like it might be tricky, you only need to list some basic details about your business.
The filing fee is $95 if you file online and $100 if you submit a paper form.
Registered Retail Merchant Certificate — $25
LLCs that sell goods or tangible personal property need to get a Registered Retail Merchant Certificate. This is a permit that lets you collect sales tax from your customers.
To receive your certificate, you’ll need to register your business with the Department of Revenue. You’ll need to submit a separate business tax application for each business location. There is a $25 fee per application.
Professional Licenses and Business Permits — Various
There are more than 400 types of state-level licenses, permits, and permissions that may be required for your business to operate legally. You can review the Indiana Business Owner's Guide to learn more.
Further, some local governments also mandate licenses or permits for certain industries, the costs of which vary. For example, the city of Indianapolis requires some companies to get local business licenses.
Indiana LLCs – Optional Costs to Consider
On top of the required expenses, you may want to invest a little cash in some additional costs. While these expenses are not mandatory, these extra expenditures can set your business up for success.
Expedited LLC Filing Fees — N/A
Indiana does not offer expedited service for LLC filings. However, online filings will be processed by the next business day at the latest, and are typically completed within an hour. Paper applications will be processed within 1-2 business days of receipt.
Registered Agent Fee — about $100 per year
Under Indiana law, every LLC is required to have a registered agent to accept legal papers on behalf of the business.
You will include your Indiana registered agent’s information in your articles of organization, and there is no fee if you ever need to change your agent.
Some new LLC owners think it makes the most sense to serve as their own LLC’s registered agent. Unfortunately, to be an agent, you must always be available during standard business hours to receive documents. Your address will also be published online.
Using a professional registered agent service is a better idea. They usually cost around $100 per year, and the business will ensure that your LLC fulfills its registered agent obligations.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement — Variable
Operating agreements are legally binding contracts that set the rules for how LLCs will run. These contracts explain crucial topics. For instance, they might define the members’ rights and obligations. They could also outline the process for joining or leaving the business.
Indiana does not require LLCs to make operating agreements. Still, we suggest that you have one. Although there is no rule against drafting an LLC operating agreement yourself, it’s not advisable to do so unless you have a background in law or other experience in the area.
You can choose to engage an attorney to write an LLC operating agreement for your business entity. This option will ensure that the contract is correct and complete. But lawyers can be pricey, so make sure you keep that in mind.
If you want to save a little money, you can also hire an LLC formation service to draft an operating agreement for as little as $39.
DBA Fee — $20 to $30
It’s not uncommon for an LLC owner to run their businesses using a name that is not its legal name. For instance, they often drop the “LLC” from their company’s day-to-day name to keep things more casual. Others will adopt a brand new name to reflect changes to their company.
If you want your LLC to “go by” an alternate name, you must register a “doing business as” or “DBA” name. In Indiana, DBAs are called “assumed names.”
Name Reservation Fee — $10
If you know the name you want to use for your LLC but aren’t ready to officially start it, Indiana allows you to reserve the name for renewable 120-day periods. This will stop others from using the name first.
You must reserve your business name online. There is a $10 filing fee for each reservation and renewal.
Domain Name — about $20 per year
Most LLC owners want to have a website that will help their business grow. And to make a website, you will need to purchase a domain name. Luckily, domains are fairly cheap and simple to buy.
Make sure you buy the domain you want ASAP. If somebody else gets it before you, you can’t buy the same name. Moving quickly will also let you avoid “domain squatters.” They purchase domains that new LLCs might want and then resell them for a profit.
You can buy a domain from GoDaddy.com or a similar company for about $20 to $50 per year. In fact, you can often pay even less if you purchase your domain during a sale.
Getting an Employer Identification Number (“EIN”) — Free
An EIN is a 9-digit identification number that the Internal Revenue Service assigns to businesses. It’s easiest to think of it as a social security number for your LLC. Some LLCs are legally required to get an EIN, while other LLCs don’t have to.
But even if the IRS doesn’t require you to get an EIN, we suggest applying for one anyway. Most banks need you to have an EIN in order to open a business bank account. Plus, an EIN can also help you avoid identity theft by keeping your SSN private.
Foreign LLC Qualification Fees — about $100 per extra state
If you plan for your business to operate in other states, it’s important to budget some extra cash. You don’t have to create a new LLC in each state, but you will need to register as a foreign limited liability company wherever you want to do business.
Foreign LLC filing fees will vary, but you can plan on it costing about $100 per state.
Writing Formation Costs Off
Your LLC formation expenses can be deducted as business startup expenses when filing your income taxes. The IRS gives some complex guidance on this issue, so we suggest that you take some time to read it on the IRS website.
By default, LLCs are “pass-through” tax entities. This means that LLC owners can deduct up to $5,000 in startup costs in their first year.
Georgia decides to start a single-member LLC and open a pet store in Indianapolis, Indiana. Her formation costs are as follows:
- Indiana LLC Articles of Organization (online): $95
- Registered Retail Merchant Certificate: $25
- Indianapolis Pets Shop License Fee: $200
- Operating Agreement: $70
- Registered Agent Fees: $100
- Name Reservation Fee: $10
- DBA Fee (online): $20
- Web Domain Costs: $30
Because LLCs are pass-through entities, the business itself won’t be subject to income taxes. Instead, Georgia will report her profits from the LLC, as well as her deductions, on her state and federal income taxes.
Georgia’s total formation expenses were $550. Before she deducted these costs, her total taxable income was $42,000. However, by deducting her start-up costs, she reduces her taxable income to $41,450. This will lower her 2022 federal income taxes from $4,989 to $4,868.
Even though this is not a huge drop, business owners who regularly deduct their expenses will see marked tax savings over time.
Cheapest Way to Start an LLC in Indiana
It’s vital that you consider the needs of your business when choosing a formation approach for your Indiana LLC. We’ve discussed some of the most common methods below.
Formation Service – $39 + state fees
Business formation services are companies that you can pay to start your LLC for you. They aren’t attorneys, but they have plenty of experience. One of these services can handle the entire process on your behalf.
Using an LLC formation service is the right choice for many LLCs. The advantages of this approach include:
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
However, formation services aren’t the right fit for all businesses. The disadvantages of using an LLC formation service include:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products or business services you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
When you work with a lawyer, you can rest easy knowing you have a trained professional on the job. Just keep in mind that experts charge expert-level prices. Many lawyers bill hourly for their services, often at a rate of several hundred dollars per hour.
Even though they are costly, attorneys offer some notable benefits:
- Lawyers help you manage risk. If you are starting a business with complicated legal issues, hiring a lawyer would be the best choice.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
Still, the drawbacks of this approach often outweigh these pros for the average LLC:
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very careful people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Another option is to roll up your sleeves and just do it yourself. But before choosing this approach, make sure you take the cost of your time into account. The time you would commit to working on LLC formation documents may be better spent elsewhere.
Still, there are advantages to a DIY method:
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t account for the value of your time, a DIY solution is the cheapest option.
But, it’s also important to consider the disadvantages of this approach:
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that can cost them even more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual Indiana LLC Fees: How Much Will it Cost to Maintain your LLC?
To keep your LLC in good standing, you must file a biennial business entity report with the Secretary of State every other year. You can file your report online for a $31 fee or submit a paper form for a $50 fee.
You may also need to pay fees to renew your business licenses or permits.
In addition, some of your optional expenses will likely be due on an annual basis. Some ongoing optional costs include:
- Registered agent service fee: approximately $100
- Domain name registration: $20 to $60
How Much are LLC Taxes in Indiana
As pass-through tax entities, LLCs usually do not have to pay state income taxes. Rather, the LLC’s owners will be taxed on their profits.
You may also be subject to Indiana business tangible personal property tax. This is a tax on the property that your LLC uses, excluding real estate and inventory.
If the total of all of your business personal property is less than $80,000, you are exempt from paying this tax. But, you still need to file business tangible personal property forms with your local county assessor’s office each year.
Indiana LLC Formation Costs Quick Links
- Indiana Online Filing
- Indiana Department of Revenue Registration
- Indiana Fee Calculator
- Indiana Business Owner's Guide
- Indiana Secretary of State
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
Indiana LLC Formation Costs FAQs
How much does it cost to start an LLC in Indiana?
The minimum cost is $95. But depending on the type of business you are starting, and where you will operate, it may cost you more.
What is the cheapest way to start an LLC in Indiana?
A do-it-yourself method is the least costly in terms of money spent. But if you account for the value of your time, the most cost-effective approach is usually an affordable business formation service.
Do I need to hire an attorney to form an LLC in Indiana?
No. Most LLCs can be formed without a lawyer’s help. In many cases, a DIY approach or an LLC formation service will be adequate.
Can I pay to form an LLC more quickly in Indiana?
No. Indiana does not offer expedited service, but online filings are processed by the next business day.