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How To Start A Business In Indiana

How To Start A Business In Indiana

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How To Start A Business In Indiana

How To Start A Business In Indiana

Are you thinking about starting your own business in Indiana but don’t know how or where to begin? You’re in the right place. Our step-by-step guide simplifies the process to make it clearer and more straightforward. From picking out your business idea to putting together a business plan, choosing how your business will legally operate, and getting your business registered, we cover the major steps so you can get your business up and running.

Steps To Start A Business In Indiana

Step 1: Choose a Business Idea

The starting point for your business in Indiana is deciding on the type of business you want to run. Whether you have a clear idea or are still exploring options, we’ve prepared a detailed report of hundreds of different business ideas for you. These reports include an industry overview, what you might need to spend to get started, advice for newcomers, and a whole lot more.

Step 2: Write a Business Plan

After zeroing in on your business idea, the business plan is the next step in starting a business. While it isn’t a required step in starting a business, the business plan can have a positive influence on the success of your business.

Done right, the plan is your personal guide that helps you navigate through the maze of starting and running a business. By getting your ideas and plans out of your head and on paper, you can better plan where you want to head and what you need to do to get there. This plan is not just important for your own clarity and direction; it’s also necessary when you’re seeking funds from investors and lenders.

Related: How to write a business plan

Step 3: Find the Money

You have a great idea and have a solid plan of attack. Now it’s time to make sure you can access the money to make all of this happen. This stage is often one of the biggest challenges for entrepreneurs. If personal savings aren’t enough, let’s look into some common funding options:

  • Friends and family: Funding from friends and family is one option. While less formal than the others, if you choose this route, treat it as professionally as any other form of financing by providing them a business plan, agreeing on terms, and considering formalizing the agreement with a legal contract.
  • Bank loans: Traditional bank loans are a popular choice for small businesses. Banks offer a variety of loans, lines of credit, and equipment financing, among other options. To get bank funding for a startup, lenders will generally require a business plan, personal investment between 15% and 25% of the total startup costs, and a credit score above 650.
  • SBA loan guarantees: To help encourage banks to take on business loans, the U.S. Small Business Administration (SBA) offers loan guarantee programs, such as the 7(a) and 504 Loan Program. These programs help small businesses in Indiana obtain loans by guaranteeing a portion of the loan, thus reducing the risk to lenders.
  • Microloans: There are a number of local economic programs, such as those from Allies for Community Business and Community Action of Northeast Indiana, that offer small loans to startups that may not be eligible for bank loans. These vary in amount but generally range between $500 and $50,000 to help them get the funding they need to start.
  • Investors: Small businesses in Indiana can also seek funding from investors, such as angel investors, venture capitalists, or equity crowdfunding platforms. The Indiana Economic Development Corporation (IEDC) offers resources and programs to help connect businesses with potential investors.

Related: Understanding the different types of business funding

Step 4: Select a Business Structure

Now that there is a solid idea and the business plan is in progress, the next step in starting a business in Indiana is selecting a business structure to go with (which is also referred to as a business entity).

A business structure refers to how a business is legally organized to operate and impacts the extent to which owners are personally liable for the business, tax obligations, and management responsibilities. In Indiana, there are four common types of business entities: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

sole proprietorship is a business owned by one individual with no legal distinction between the owner and the business. While the sole proprietorship is the easiest and least expensive entity to start, the owner is personally liable for any legal actions or debts of the business.

While there is no registration required to start a sole proprietorship (and partnerships, too), it’s common to create an Assumed Business Name (sometimes called a DBA or “Doing Business As.” If the business will operate under a fictitious business name like John Smith’s Handyman Service, Mr. Handyman, etc., you will need to file an Assumed Business Name with the County Recorder’s office in the county where the business is located.

Related: How to start an Indiana sole proprietorship

In a general partnership, two or more individuals share the management, profits, and liabilities of the business. Like the sole proprietorship, partnerships are easy to form, but each partner is personally liable for the actions of the business.

corporation, on the other hand, is a separate legal entity that provides limited liability protection for its shareholders and can issue stocks. While corporations are more expensive and difficult to form than sole proprietorships and partnerships, the major advantage is that the corporation provides personal asset protection for the owners should the business face legal issues or be sued. The downside is the compliance requirements and administrative burdens of having a board of directors, annual meetings for directors and shareholders, taking minutes at the meetings, issuing stock certificates, assigning a registered agent (LLCs need one, too), and more.

Related: How to form an Indiana corporation

The Limited Liability Company (LLC) is a popular business entity choice because it provides the liability protection of a corporation with the ease of operation, like the sole proprietorship and partnership. The Limited Liability Company does not have as many burdens as the corporation in addition to the greatest tax flexibility of the four entities.

Related: How to form an Indiana LLC

Forming a corporation or LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular formation services include:


IncFile - Great service and free registered agent the first year.

Northwest - Privacy-Focused: Free registered agent and private business address for 1 year!

ZenBusiness - Easy to use and free registered agent for 1 year!

Step 5: Register the Business

After setting up the business structure, we can start registering the business. In Indiana, the business licenses and permits needed will vary depending on the type of business, its location, and the specific activities it engages in. Some of the most common licenses and permits are listed below:

  • Business licenses: The state of Indiana doesn’t have a general business license; however, many cities require a business license to operate.
  • Employer Identification Number (EIN): If your business has employees or is a separate legal entity like a corporation or an LLC (unless it is a single-member LLC without any employees), you will need to apply for an EIN from the Internal Revenue Service (IRS). This number is used for tax identification purposes.
  • Registered Retail Merchant Certificate: Businesses selling products and certain services or have employees will need to register for a Registered Retail Merchant Certificate with the Indiana Department of Revenue, which will allow the business to collect sales tax or set up a withholding account
  • Professional licensing: Some occupations and professions such as home inspectors, interior designers, manicurists, and plumbers in Indiana.

Related: What business licenses and permits are needed in Indiana?

Step 6: Open a Business Bank Account

The next step to cover after getting the business set up and registered is to get a business bank account. There are a few reasons to do this instead of using your personal bank account.

First, it helps maintain accurate financial records and simplifies bookkeeping, as your personal and business transactions aren’t mixed together. Second, by keeping personal and business expenses separate, the likelihood of errors during tax filing and reporting is much less, which will reduce penalties and audits. Finally, it protects personal assets by establishing a clear boundary between personal and business finances, which is especially important for limited liability companies and corporations to maintain their liability protection.

Step 7: Hire Employees

The next step won’t be needed for everyone, but if you plan to hire employees, there are a number of things to know before becoming an employer.

First, employers will need to have their Employer Identification Number from the IRS, in addition to submitting their Withholding Tax Registration to the Indiana Department of Revenue and the Unemployment Insurance Registration to the Indiana Department of Workforce Development.

In addition, besides being familiar with the federal and state labor laws that apply to your business, such as minimum wage, overtime pay, record-keeping, and other employment standards, employers are responsible for reporting new hires, verifying employees are eligible to work in the U.S., income tax withholding, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.

Related: Steps to hiring your first employee in Indiana

Step 8: Obtain Business Insurance

Another step to take as a business owner is researching whether you need insurance and, if so, what types to get. Insurance may seem like an unnecessary expense, but having the right insurance coverage can safeguard your business, employees, and assets, ensuring your company’s long-term stability and success.

Most types of business insurance are optional, except for workers’ compensation insurance which is required for any business in Indiana with employees. In some cases, the state will require professional liability insurance when offering certain services.

Even if insurance isn’t required, and there is a fire, theft, or personal injury lawsuit, the business owner may have to pay out-of-pocket damages and legal fees. Home-based businesses and side businesses may also want to consider business insurance as personal home and vehicle policies may not cover a business loss.

Related: Types of insurance your business may need

Step 9: Set up a Bookkeeping System

Bookkeeping is essential to any business, and setting up a system is the next step. In Indiana, small businesses are subject to various taxes, including sales tax, income tax, and payroll taxes, and by having a system in place, you will be able to calculate and remit these taxes correctly and avoid penalties and interest.

Related: Setting up accounting for a business

This material is property of StartingYourBusiness.com

Common questions when starting a business in Indiana

What are the steps to starting an LLC in Indiana?

There are three main steps to starting an LLC in Indiana. These include:

1. Making sure the LLC name is available
2. Appointing an Indiana Registered Agent
3. Filing the Articles of Organization

To learn more about setting up an LLC, check out our guide on how to start an LLC in Indiana.

How much does it cost to start an LLC in Indiana?

The state fee for filing the Articles of Organization with the Indiana Secretary of State, Business Services Division, which is the paperwork for starting an LLC in Indiana, is $95.

Does a sole proprietor need a business license in Indiana?

In Indiana, whether a sole proprietor needs a business license depends on the type of business they are running and where it’s located, not the type of business structure.

There isn’t a one-size-fits-all business license for all businesses. Instead, the requirement for a license varies by the specific activities of the business and the local regulations of the county or city where the business operates.

For example, certain professions may require a state-issued license, such as those in healthcare, legal services, or construction. On the local level, you might need a permit or license to operate out of a physical location, handle food, or offer certain services. It’s important to check with both the city or county government and the Indiana Professional Licensing Agency to understand the specific licenses or permits required for their business.

Indiana Small Business Resources

There are 537,058 small businesses in Indiana, which is 99.4% of all businesses in the state,1 and 1.2 million people are employed by these small businesses.2 Because of the economic impact of small businesses, there are a number of small business resources to help Indiana businesses start and grow. Some of these include:

Sources

  1. Small Business Administration ↩︎
  2. Census Bureau ↩︎

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

How To Start A Business In Indiana

How To Start A Business In Indiana

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