Starting incorporation in the state of Indiana comes with loads of benefits. Indiana business owners enjoy affordable real estate, low taxes, a well-established workforce, and vibrant communities.
The following step-by-step guide will show you how to start a corporation in Indiana.
1. Select a name for your corporation
Before forming your Indiana corporation, you’ll need to check whether the name you consider is available. Additionally, the name that you are considering must comply with Indiana state naming requirements.
General corporate name guidelines
Bear the following naming requirements in mind when deciding on an Indiana corporation name:
- Your Indiana corporation name must be significantly different and unique compared to the existing businesses in the state. This also pertains to reserved business names in Indiana.
- Only a professional corporation where all shareholders are licensed physicians may use the term “medical” in its business name
- If the type of corporation you’re forming is a professional corporation, then the words “professional service corporation,” “professional corporation,” or abbreviations of these two terms must be used in your Indiana corporation name
Your Indiana corporation name must contain the word Inc., corporation, company, limited, or the abbreviations of these words
For further information on corporate naming guidelines in the state, refer to the Indiana state statutes.
Trademarking your Indiana corporation name is a good way to protect your business name and distinguish it from competitors. You’ll first need to conduct a trademark name search to determine whether the name is available or is currently in use by another business entity.
Once you’ve established that the name is indeed available, you can go ahead and file a trademark application with your state’s office. For additional information on state trademark applications, contact the Indiana Secretary of State.
All Indiana corporations have a legal entity name. This is the name that is on all formation documents and is the name that the state uses to identify business entities in Indiana.
DBA (Doing-business-as) name
All businesses that plan on using a name aside from their legal entity name to conduct business will be required to file for a DBA. A DBA or doing business as name, is also referred to as an assumed business name in the state of Indiana. You’ll need to file an assumed name with the Secretary of State.
2. Nominate a registered agent
Every business entity or new business in the state of Indiana is required to appoint and maintain a registered agent. Registered agents are known by many different names, such as statutory, resident, or service of process agents.
However, all of these terms mean the same thing. The primary role of registered agents is to deceive or accept service of process, compliance documents as well as government correspondence on the corporation’s behalf.
Therefore, it is necessary that all corporations appoint a responsible individual who is:
- Over the age of 18
- Has a physical address in Indiana
- Consents to the appointment
- Maintains availability during normal business hours
3. Appoint initial directors at the organizational meeting
The next step in the process of incorporating in Indiana is holding an organizational meeting where directors are appointed. The role of corporate directors or the board of directors is to implement corporate policies and strategies as well as manage the corporation’s affairs.
Directors have a fiduciary responsibility to the business, and this means that they should practice good business judgment and place the corporation’s interests above all else at all times.
Every corporation will need to appoint at least one corporate director until the first shareholders’ meeting. Directors do not have to be Indiana residents or shareholders unless your corporation’s articles or bylaws require this.
Your corporation may have one or more directors, and the number of directors you’ve chosen should be stated in the Articles of Incorporation or the bylaws.
4. File Articles of Incorporation
Filing the Articles of Incorporation or Certificate of Incorporation is one of the most important steps in forming your Indiana corporation. This step officially and legally forms your Indiana business. The Articles of Incorporation document must include corporation basics such as:
- The name and principal address of your business
- The number of shares the corporation is authorized to issue
- The street address and name of the corporation’s registered agent
Additionally, you should note that the Articles of Incorporation Form offered by the Indiana Secretary of State is used to start a corporation with one share class. If your business needs a multiple share structure, then you should add an additional section to the articles titled “Exhibit A.” This section should detail the type, rights, and preferences of shares.
Indiana Secretary of State
Business Services Division
302 W. Washington Street, Room E018
Indianapolis, IN 46204
5. Create and approve bylaws
Corporate bylaws are required for all Indiana corporations. Simply put, corporate bylaws are the internal rules of your company or organization. They create your corporation’s structure and help business processes run smoothly.
These fundamental rules will streamline your business and how it operates so that everyone, including shareholders, executives, and employees, is on the same page about how things work.
Your Indiana corporation’s bylaw should contain the below information:
- The date of the annual shareholder meeting
- How the bylaws will be added and amended in the future
- The process of handling disputes
- How records will be stored and managed
- The process of holding annual meetings, voting procedures as well as electing directors and corporate officers
- The roles and responsibilities of officers and directors within the corporation
6. Select a share structure
Corporations may have varying types of stock, also referred to as series or classes. These types of stock can have various advantages.
For example, one share class may offer voting privileges, while the other may not. When it comes to your stock or share structure, your articles must include the following:
- The Articles of Incorporation should disclose the total number of shares that are authorized
- In the event that there are multiple share classes, the articles should list the number of shares in each class and provide a distinguishing designation for each class
7. Obtain an EIN
An EIN is an Employer Identification Number. It’s a unique code consisting of nine digits and ultimately identifies your business for tax purposes. Essentially it’s a social security number but for your business and is only intended for business-related purposes.
You’ll need an EIN to open up a corporate bank account, submit federal and state taxes, and apply for business licenses and permits.
You may apply for an EIN with the Internal Revenue Service, and the application is completely free of charge irrespective of whether you are forming a small business or large business. The quickest way to apply for and obtain an EIN is via the online application process.
However, if you’d prefer to download the IRS Form SS-4 and mail it to the following address, then that is another option as well. However, please note that the online option is the quickest way as you’ll receive your EIN immediately, provided you print it out prior to closing your session.
8. File Indiana state taxes
Aside from federal tax, Indiana corporations may be liable for the following corporate taxes:
- Corporate income tax: Indiana corporations must pay corporate income tax rates that are currently set to decrease every 12 months.
- Indiana sales tax: If you plan on selling products in the state of Indiana, then you must register for the seller’s permit. The registration process must be done through the Indiana Department of Revenue’s website for you to receive the certificate allowing your business to collect sales tax on taxable sales.
- Indiana employer taxes: If you plan on hiring staff for your corporation, then you need to register for Indiana employer taxes through the Indiana Department of Workforce Development Uplink website. Here, you’ll be able to file for employee withholding tax, disability insurance as well as unemployment insurance tax.
9. Indiana business licenses and permits
Certain permits and licenses are needed to operate your business in the state of Indiana. This will, however, vary based on your business activities and the location of your corporation. Some of the most common licenses and permits required are:
- Business license: Indiana itself does not have a statewide business license. But, some licenses may be required by municipalities at the county or city level. Ensure that you check with your local government where your business is operating to see if a license is required.
- Professional licensing: Certain professions and occupations such as home inspectors, manicurists, interior designers, and plumbers in Indiana will need a professional license to operate in the state.
- Registered Retail Merchant Certificate: If you’re selling services or products, you’ll need to file for the Registered Retail Merchant Certificate. You must file with the DOR or Indiana Department of Revenue and this will allow your business to collect sales tax
10. Annual report requirements in Indiana
All Indiana corporations must file an annual report with the Indiana Secretary of State every second year. The biennial report is required to stay in good standing with the state.
11. Costs of starting a corporation in Indiana
The filing fees below apply to all Indiana corporations:
- Name reservation: $10
- DBA name: $30
- Articles of Incorporation: $22.44
- Biennial report: $50
- Indiana Certificate of Good Standing: $26 online and $30 via mail
Next steps after forming a corporation
Set up an accounting system
If you want to ensure long-term success for your corporation, you need to set up an accounting system. By organizing and staying on top of your finances, you won’t encounter any trouble with the IRS, and you also be able to monitor and track trends in business, ultimately allowing you to maximize your profits.
Get to business insurance
Business insurance is often an overlooked aspect; however, it’s critical to protect your business. Business insurance is mostly optional; however, in most states, workers’ compensation insurance is compulsory. Depending on the type of services your business is offering, you may need to get professional liability insurance as well. Business insurance is essential to ensure that you don’t incur costs in the event of unforeseen circumstances such as a personal injury lawsuit, theft, or fire.
While many states require corporations to file an annual report each year on the anniversary of the company’s formation, many other states require a biennial report. The biennial report needs to be filed every second year.
In comparison to sole proprietorships, and limited liability companies, corporations offer the strongest protection to their owners from personal liability. However, the process of forming a corporation is also much lengthier than forming other types of business structures.
The purpose of a C corporation is to make a profit, while nonprofit organizations are formed for charitable purposes. Therefore, nonprofits avoid a number of taxes that C corporations are still required to pay, such as corporate tax.
C corporations pay taxes on profits paid, then everything else is filed under the corporate tax rate. Therefore, a C Corp is liable for double taxation. S corporations are taxed differently, with profits passing through to the owner’s individual tax returns.
There are many ways to protect your personal assets when you form a corporation. This is because a corporation is considered a separate legal entity, however, it won’t protect you from everything. This is why business insurance is highly recommended irrespective of your business type.