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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Compared to some other states, starting an LLC in Indiana is a relatively straightforward process and entrepreneurs shouldn’t run into any major issues founding their business in the Hoosier state. To avoid a misstep in the filing process, follow these steps to start an LLC in Indiana, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Indiana step-by-step
1. Select a name for your Indiana LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the state of Indiana:
- An LLC’s name must be distinguishable from the names of existing business entities on file with the Indiana Secretary of State.
- An LLC is required to contain one of the following phrases or abbreviations at the end of its name: “Limited Liability Company”, “LLC”, or “L.L.C.”
Reserve your LLC name with the Indiana Secretary of State
After selecting a name for your LLC, you may reserve it with the Indiana Secretary of State to ensure that another business entity doesn’t use the name before your LLC is legally formed.
First, use the Indiana Secretary of State Business Search to confirm that your chosen name is available. Then, file a Reservation of Business Name online at the Secretary of State website. A name may be reserved for 120 days and the filing fee is $20.
2. Designate a registered agent
As in every U.S. state, forming an LLC in Indiana requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in Indiana OR if the individual or business is based out-of-state, they must have a business office in Indiana.
3. File Articles of Organization
An LLC is created in Indiana by filing Articles of Organization with the Indiana Secretary of State Corporations Division. Filing the articles can be done online or by postal mailing. The filing fee is $100 and payment can be made by credit card.
Your Indiana LLC’s Articles of Organization should include the following details:
- LLC name and address
- Registered agent name and address
- A statement specifying whether the LLC is member-managed or manager-managed
- A statement specifying the LLC’s intended duration (perpetual or temporary)
- LLC organizer signatures
LLCs formed in a state other than Indiana that plan on doing business in the state must register with the Indiana Secretary of State.
Follow these steps to legally do business in Indiana as a foreign LLC:
- Comply with Indiana LLC naming guidelines and confirm that the business name is available for use in the state by searching the Indiana Secretary of State Business Search.
- Appoint an Indiana registered agent to handle service of process in the state.
- File a Foreign Registration Statement with the Indiana Secretary of State. You can file the statement online or through the mail. The filing fee is $125.
- Along with the Foreign Registration Statement, you must include a Certificate of Good Standing or Certificate of Existence from the state in which the LLC was formed. The certificate must be dated from within 60 days or less of its filing with the Secretary of State.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Indiana, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Indiana LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
All LLCs active in Indiana, including those formed in the state and foreign LLCs, are required to file a Business Entity Report with the Secretary of State once every two years. The report is due every other year within the anniversary month of the LLC’s formation (i.e. the month when its Articles of Organization were filed). The Business Entity Report can be filed online or through the mail. The online filing fee is $32 and the mail filing fee is $50.
Obtain necessary business licenses and permits
Some LLCs in Indiana may be required to obtain one or more state or locally-issued business licenses, permits, or certifications depending on the nature of their business and location.
Read through the Business Owner’s Guide provided by the Indiana Department of Business and Agriculture for detailed information on state business licenses, and consult with a city clerk in the city or county where your LLC is based for information on local licensing regulations.
Register with the Indiana Department of Revenue
Many Indiana LLCs, including those that collect sales tax and those with employees, must register with the Indiana Department of Revenue. Registration can be completed online or through the submission of a completed paper application through the mail or in person at the DOR office.
Indiana LLC checklist
An Indiana LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing business entities on file with the Indiana Secretary of State.
- Must contain one of the following phrases or abbreviations at the end: “Limited Liability Company”, “LLC”, or “L.L.C.”
Required formational documents and filing fees:
- An LLC is created in Indiana by filing Articles of Organization with the Indiana Secretary of State.
Additional legal obligations:
- Filing Biennial Reports – Required for all LLCs doing business in Indiana
- State and local business licenses – Required for certain types of LLCs
- Indiana DOR registration – Required for certain types of LLCs