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While Louisiana has its share of issues, it also has plenty of qualities that make it a great place for entrepreneurs to do business. For one, its distinct culture makes it a lively place to live and work: New Orleans, the state’s largest city, is one-of-a-kind in the United States, possessing a heady mix of great food, music, and architecture with many cultural influences. Other regions of the state are similarly unique; Cajun and Creole populations have left their mark.
Another aspect of Louisiana that makes it a prime place to start a business is its affordability: US News ranks it 17th in the cost of living and 22nd in housing prices. The state’s agreeable prices and housing costs help keep expenses down during a make-or-break time in a business’s existence. This is reflected in Louisiana’s high startup survival rate, as 80.29% of businesses survive through the first year.
We’ve produced this step-by-step guide to starting a business in Louisiana with the hopes of making the process easier for entrepreneurs setting out to earn their keep in the Bayou State. Getting a new company off the ground is never easy, but by following procedure and using the right resources, you have a good chance of thriving.
Louisiana small business statistics at-a-glance
- US News ranks Louisiana the 20th best state for affordability, based on its 17th rated cost of living and 22nd rated housing affordability.
- Louisiana has the 4th lowest average unemployment insurance prices.
- 80.29% of Louisiana businesses survive their first year.
- Louisiana startups create 5.03 new jobs on average in their first year.
- 437,437 small businesses operate in Louisiana, accounting for a whopping 99.5% of total businesses in the state.
- 917,466 Louisiana residents are employed by small businesses, which is 53.2% of the state’s workforce.
- Louisiana’s leading small business employer industry is health care and social assistance, followed by accommodation and food services, and retail trade.
Starting a business in Louisiana in 12 steps
1. Develop an idea
Every successful business starts with a good idea. Ask yourself these questions:
- Which product or service can your business provide that doesn’t already exist on the market?
- How does your business idea refine an existing product or service?
Determine your personal strengths and interests: developing an idea that suits your personality and positive traits will provide motivation to put in the long hours necessary in addressing the myriad challenges you’ll face in getting your business off the ground.
Figure out how to market your expertise: if your business idea is not something you totally believe in and can sell effectively, it will be much harder to succeed.
2. Do the research
Once you have an idea, it’s time to put it through the wringer and decide if it’s viable in the market. Conduct market research to arrive at answers to these key questions:
- Is there a demand for your product/service in Louisiana?
- Who is your target market?
- Do existing businesses in Louisiana offer a similar product/service?
- What makes your business unique compared to the competition?
Coming up with satisfactory answers may require refinement, or even a total overhaul, of your original idea. Be patient: you’ll only want to proceed with the next steps after determining that a niche exists in the Louisiana market for your business idea.
3. Draft a business plan
Now it’s time to write the blueprint of your business. A great business plan should chart the path of your company from infancy to success while being able to attract investors to provide financing.
Your business plan ought to include the following sections:
- Executive summary – An overview of your business and why it will be successful
- Description of business – Explain the advantages of your business and the problems it solves
- Market research – Provide research on your industry, target market, and potential competitors
- Organization and staff – Detail the nuts and bolts of your business; how it’s structured and who will run it
- Product or service description – State what you are selling or offering
- Marketing plan – Explain your strategy for attracting customers
- Fundraising – The money you’ll need in the next five years to grow your business and how you’ll spend it
- Financial forecast – Data and balance sheets providing a financial forecast for your business
- Appendix – An optional section with supporting and/or requested documents like resumes, letters of reference, permits, etc.
Plan on running your business well
4. Secure funding
Every business needs money to get off the ground. In fact 82% of businesses that fail do so because of a lack of cash flow, U.S. Bank found in a recent study. Your business plan should include a detailed estimate of the funds you’ll need to cover expenses for at least a year, so now it’s time to acquire the money.
If you aren’t wealthy enough to self-fund your business, you can choose from a number of other funding options. These include a loan from the U.S. Small Business Administration, taking out a loan from a commercial bank, launching an equity crowdfunding campaign, or securing funding from an angel investor or venture capitalist group active in Louisiana.
An angel investor is a wealthy individual who invests their personal finances in a startup, typically in the beginning stages, whereas a VC is a group of investors that will fund a business throughout its existence.
Which route you choose depends on the specifics of your business: angel investors typically invest smaller sums to help get a startup off the ground, while VCs invest larger sums of money in exchange for a greater say in the operations of a business. Smaller startups usually opt to pursue funding from angel investors.
Louisiana’s Angel Investor Tax Credit provides an incentive for investors in the state through a 25% tax credit on investments in state businesses of up to $720,000, per business per year.
Louisiana Angel Investors and VCs
- BRF: New Louisiana Angel Fund – A group founded in 2015 dedicated to filling the gap in available angel investment funds for startups operating in north Louisiana.
- Lagniappe Angels – A ‘member-managed’ angel investment group based in New Orleans with a focus on early-stage companies with high growth potential.
- Angels of Southwest Louisiana – Not a fund, but rather a group of investors that present opportunities in a group setting before making independent investment decisions.
- NO/LA Angel Network – A group of accredited New Orleans-based investors with nearly 20 companies in their investment portfolio, so far.
Additional Investor Resources
- AngelList: Louisiana Angel Investors – An extensive directory of 4,930 investors and 653 companies interested in promising funding opportunities in the Bayou State. Profiles give an investor’s professional background, along with the sum of total investments made, and areas of interest.
5. Decide on a legal business entity
The form of business entity you choose will affect many factors going forward. There are 3 main options to decide from:
- Sole proprietorship – The name for running a business by yourself. Legally, you and your business are one and the same, with no separate legal entity for your business. A partnership is legally identical to a sole proprietorship, except that it comprises two or more people.
- Corporation – A complex legal structure that is a separate entity (providing legal protection to owners) from the owner and comprises directors, officers, and shareholders.
- LLC – AKA “Limited Liability Company”, this is a hybrid entity between a sole proprietorship and a corporation that possesses advantages of both. An LLCs provides the liability protection of a corporation, yet isn’t subject to double taxation as the profits go through your personal tax return.
Nowadays, LLCs are the option of choice for small business owners as they are easy to manage and provide the benefits of a corporation while lacking their complex structure. Taxwise, they operate more like a sole proprietorship.
You may want to consult with an attorney to help decide which entity works best for your business.
6. Acquire federal and state tax IDs
Now you should obtain a Federal Employer Identification Number (EIN), which is like a social security number for a business and allows you to open bank accounts, handle payroll, and file taxes.
Each state has its own laws and taxes regarding businesses. Visit the Louisiana Department of Revenue website to register your business to pay state taxes that may apply to your company.
Tax-ready all the time
7. Register your business
Once you settle on the entity that’s right for your business and obtain an EIN, it’s time to register with the State of Louisiana. The registration process and associated fees vary depending on the entity you choose.
For sole proprietorships
If a sole proprietor is using their own name to do business, no special filings are necessary. However, using an assumed business name separate from your given name requires you to file an application to register a trade name with your local Parish Clerk of Court.
First, run a search with the Louisiana Secretary of State to make sure that your chosen business name is available in the state, then fill out the application, and have it notarized. Once the application is completed, you can file it with the Parish Clerk of Court in the Parish where your business is located. The fee is typically around $10, although varies depending on the municipality.
For LLCs and corporations
Every LLC and corporation is required by law to appoint a registered agent to handle process notices and other government correspondence on the business’s behalf. If you live in the state, you can be your own registered agent, although we recommend hiring a professional for $50-$200 a year.
Once you have a registered agent you should confirm that your business name is available, and then proceed to file the necessary application to register your business with the state. You’ll also need to provide your EIN during the application process.
Those forming a corporation must file Articles of Incorporation, while those forming an LLC must file Articles of Organization. You may file online with the Louisiana SoS after creating an account, or print the document and mail it in. However, business owners in many parishes are restricted to online-only filing. Check here for a list of these parishes. The fee for filing the Articles of Incorporation is $75, whereas the fee for filing the Articles of Organization is $100.
8. Open business banking and credit accounts
Opening a bank account for your business is crucial because it allows you to separate company assets from your personal assets, and makes filing taxes a lot easier. This is a recommended step, even if you are operating a sole proprietorship.
It’s also a wise idea to obtain a credit card for your business because it will help you isolate business expenses and build up credit for your company, which may help in securing investment in later stages.
Banks operating in Louisiana good for small businesses
We also recommend Novo Bank
9. Get the necessary licenses and permits
Depending on the type of business you are opening, you may need to apply for a number of permits and licenses to operate legally. For example, a restaurant will need a liquor license, and a pawn shop will need a reseller’s license. The paperwork may prove a hassle, but it’s a necessary ordeal that will protect you from fines, lawsuits, and other legal hazards.
You can learn more about the possible licenses and permits your business may need to operate in Louisiana through geauxBIZ, the same portal used for registering a business in the state.
Once you sign in, choose Getting Started, and then choose Produce a list of possible federal, state and local licenses and permits required for your business to bring up the business license checklist.
10. Choose a location
Whether you are running an online business or opening a restaurant, location is everything. Be aware of the demographics of the neighborhood or town that you are considering: Are the local residents likely to visit your business? Will nearby competitors take a share of your potential profits?
Many entrepreneurs are drawn to New Orleans, the state’s cultural and economic center. However, if “The Big Easy” proves too rambunctious for your tastes, Baton Rouge, the state capital, and Lafayette, the center of the state’s Cajun population, are suitable alternatives.
11. Get insured
No matter what type of business you form, buying insurance coverage to protect yourself in the case of property damage or legal action is a good idea. In fact, businesses with employees are required by the federal government to have two types of insurance, while others are strongly encouraged or required at the state level, depending on your business type. Consult with a licensed insurance agent to find out which types of insurance you should get.
Required forms of insurance:
- Workers’ compensation: Covers medical costs and disability benefits if an employee is injured or becomes ill on the job.
- Unemployment insurance: Provides benefits to workers after a loss of job through no personal fault.
Recommended forms of insurance:
- Professional liability insurance: Covers losses as a result of property damage, medical expenses, libel, slander, and negligence claims.
- Commercial property insurance: Covers property damage to business owned properties and possessions as a result of fire, theft, or storm.
- Disability insurance: Provides short-term benefits for employees suffering an illness or injury. Required in certain states such as California, New York, and Hawaii.
12. Develop an internet presence
Establishing an identity on the web is an important investment in a business’s future development. Here are some key steps in the process:
- Register a domain name for a company website (You can use domain.com, Bluehost, GoDaddy.com, Namecheap.com). Design the website and fill it with content.
- Create profiles on the popular social media services (Twitter, Facebook, Instagram)
- Register a Google profile for your business
- Create accounts on review sites such as Yelp, Google Reviews, and TripAdvisor
More than a website builder
Louisiana small business resources
- GeauxBIZ – The Louisiana Secretary of State’s portal where you can register your business, in addition to applying for any licenses or permits you may need to operate.
- Louisiana Department of Revenue – Register to pay state business taxes.
- SBA: Louisiana – The Louisiana District Office of the U.S. Small Business Administration. Located in New Orleans.
- Louisiana Economic Development – An organization focused on boosting the state’s economy and providing resources to local entrepreneurs.
- Louisiana Small Business Development Center – Provides educational resources and technical assistance to small business owners in Louisiana. The LSBDC has 7 regional centers located around the state.
- Louisiana Business Incubation Association – A state-sponsored network of Louisiana incubator programs.
- Louisiana Procurement Technical Assistance Center – Assists business owners in working with government agencies.
- The Propeller Incubator – A large New Orleans-based incubator and coworking space founded in 2009 that holds regular workshops, seminars, and other special events targeted at local entrepreneurs.
Louisiana SCORE branches
The nation’s leading business mentorship network has several regional branches in Louisiana: