Ready to turn your business idea into reality but unsure where to start? Our checklist is the perfect starting point for aspiring entrepreneurs in Louisiana by laying out the essential steps like crafting a business plan, getting your business officially registered, and much more.

Steps To Starting A Business In Louisiana

Step 1: Choose a Business Idea

Starting your own business in Louisiana begins with a simple but important question: What kind of business do you want to run?

Maybe you’ve already got a great idea, or perhaps you’re still thinking it over. Either way, we’ve got a huge collection of business ideas waiting for you. This collection gives you all the details you need about different industries, including how much it might cost to get started, some handy tips, and plenty of other useful information.

Step 2: Write a Business Plan

Once you’ve picked your business idea, the next move is to write a business plan. Think of this plan like a map for your adventure in starting a business. It helps you to plan and see clearly what your business will look like. This plan is also a tool to figure out how much money you’ll need to start and to check if your business idea can really work out. Plus, if you need funding, lenders and investors will want to see if you have done your homework.

Not sure how to get started on your business plan? Check out our guide on writing a business plan.

Step 3: Find the Money

Obtaining funding can be a major roadblock when starting a business, and that is why it’s here as the next step. Businesses can be expensive to start, and without a way to get the funds, it may not be worth pursuing the remaining steps.

The more common funding options available in Louisiana include:

Bank loans: Traditional bank loans are a common funding source for small businesses. To qualify for a bank loan, you’ll typically need a strong credit history, business plan, collateral, and personal investment of at least 15%-25% of the total startup costs.
Friends and family: Friends and family that believe in you and your idea may loan or invest in your business. Be sure to write down repayment expectations, as misunderstandings about money can ruin relationships.
SBA loan guarantee: The U.S. Small Business Administration (SBA) offers loan guarantee programs to help small businesses receive financing. The SBA doesn’t provide loans directly to small businesses but guarantees a portion of the loan made by approved lenders, so the lender’s risk is lower.
Investors: Another funding option is to seek investment from angel investors who invest in startups in exchange for equity. While these investors can provide substantial funding and valuable expertise, they often require a share of ownership and control in your business.
Microloan programs: Microloans are small loans for businesses with limited capital requirements or who cannot qualify for conventional lending. These loans are typically provided by nonprofit organizations, community development financial institutions (CDFIs), and specialized Louisiana microlenders such as LiftFund.

Step 4: Select a Business Structure

A business structure (also called a business entity) refers to the legal form that a business operation takes. This choice determines how the business is taxed, managed, and the personal liabilities of the owners.

In Louisiana, the primary business structures are sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC). New business owners should study the differences, so they are making the best choice.

Sole proprietorship: The business structure is where one person owns and operates the business. Here the business and individual are considered legally the same entity.

Pros: The easiest and least expensive of the four types of business structures to start as it requires minimal paperwork (which primarily consists of registering an Assumed Business Name). The owner has complete control over the business decisions.
Cons: The significant drawback is that the small business owner is personally liable for all business debts and legal claims, putting personal assets at risk.

General partnership: An information business structure where two or more people are conducting a business together.

Pros: In a general partnership, two or more individuals jointly own and operate the business. Partners share profits, losses, and decision-making responsibilities, enabling a collaborative approach to business management.
Cons: Similar to a sole proprietorship, partners in a general partnership have unlimited personal liability for the business’s debts and legal claims. Additionally, disputes among partners can disrupt business operations.

Corporation: This is a business structure that is a separate legal entity from the individual.

Pros: A corporation is a separate legal entity owned by shareholders, providing them with limited liability protection. This means that shareholders are generally not personally liable for the corporation’s debts or legal claims. Corporations can also raise capital by issuing shares, providing another avenue of funding the business.
Cons: Corporations are more complex and costly to set up, requiring extensive paperwork and adherence to strict regulations. Corporations can also be subject to double taxation, as both the corporation’s profits and dividends paid to shareholders are taxed.

Limited Liability Company (LLC): A popular business entity that provides the liability protection of a corporation with the sole proprietorship’s ease of operation.

Pros: An LLC offers the limited liability protection of a corporation while not having as many administrative requirements.
Cons: Setting up an LLC is more complex and costly than a sole proprietorship or general partnership, though easier than a corporation.

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

Once the business structure is in place, the next step is to obtain the appropriate licenses and registrations for the business to operate legally. While this isn’t an exhaustive list, some common licenses and registration requirements in Louisiana include:

Business licenses: The state of Louisiana doesn’t have a general business license; however, many municipalities require business licensing to operate. Depending on your business type and location, you may need additional permits and licenses from your local government. These can include a local business license, zoning permits, building permits, and occupational licenses.
Federal Employer Identification Number (EIN): General partnerships, corporations, multi-member LLCs, or any business that has employees will need an EIN,. This is a unique identification number assigned by the Internal Revenue Service (IRS) and is free to get.
Business tax license: Businesses selling products and certain services or will hire employees will need to register for a business tax license with the Louisiana Department of Revenue.
Industry specific licenses: Some industries require additional licenses and permits to operate legally in Louisiana. For example, restaurants and food establishments need a health permit, while businesses selling alcohol must obtain an alcohol beverage permit.
Occupational license: Some services, such as physical therapists, interior designers, detectives, cosmetologists, barbers, architects, and massage therapists, require licensing in Louisiana.

Step 6: Open a Business Bank Account

After getting the business registered and set up, the next task is to open a business bank account. Separating business and personal funds is important as it allows for more straightforward bookkeeping, making it easier to track income and expenses and to prepare financial statements and tax returns.

Also, keeping personal and business finances separate is necessary for business structures such as corporations or LLCs to preserve limited liability protection. Commingling funds can undermine the legal distinction between the business and its owners, potentially exposing personal assets to business liabilities.

Step 7: Hire Employees

If your plans include hiring employees, this next step gets pretty involved. First off, you will need to be sure to have your Employer Identification Number from the IRS, in addition to a withholding account number from the Louisiana Department of Revenue and Unemployment Tax Account from the Louisiana Workforce Commission.

Employers are also 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.

Step 8: Obtain Business Insurance

The next step in starting a business in Louisiana is to research whether insurance is needed for your business. Insurance can not only play an important role in safeguarding a business’s financial stability, but some types of insurance policies may be required. Here are a few types of insurance to consider.

General liability insurance: This type of insurance protects your business from claims related to bodily injury, property damage, and personal injury caused by your business’s operations or products.
Property insurance: Property insurance covers your business’s physical assets, such as buildings, equipment, and inventory, against loss or damage caused by events like fire, theft, or natural disasters.
Workers’ compensation insurance: In Louisiana, most employers are required by state law to carry workers’ compensation insurance. This coverage provides benefits to employees who suffer work-related injuries or illnesses, covering medical expenses and a portion of lost wages.
Professional liability insurance: Also known as errors and omissions (E&O) insurance, professional liability insurance protects your business from claims related to negligence, errors, or omissions in the services you provide.
Commercial auto insurance: If your business owns or uses vehicles for work purposes, commercial auto insurance is necessary to cover potential damages and liabilities arising from accidents.

Step 9: Set up a Bookkeeping System

The next step is more operational, but setting up your bookkeeping system should be taken care of before launching. While having organized and accurate financial records to stay on top of taxes is what often comes to mind first when discussing bookkeeping, good records also provide a clear picture of your business’s financial health and help track trends.

Common Questions When Starting a Business in Louisiana

What are the steps to starting an LLC in Louisiana?

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

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

To get the details on how to set up an LLC, check out our guide on how to start an LLC in Louisiana.

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

The cost to file the Articles of Organization with the Louisiana Secretary of State, which creates an LLC in Louisiana, is $100.

Does a sole proprietor need a business license in Louisiana?

In Louisiana, business license requirements depend on where the business operates and what it does, and not the business structure. Generally, all entities, including sole proprietors, will need various licenses and registrations to legally operate their business.

Louisiana Small Business Resources

There are 464,681 small businesses in Louisiana, which is 99.5% of all businesses in the state,¹ and almost 900,000 Louisiana residents work for a small business.² Because of the economic impact of small businesses, there are a number of small business resources to help Louisiana businesses start and grow. Some of these include:

Emerging Small Business Development Program: Offered by the Louisiana Economic Development, this resource provides technical assistance and training to aid small businesses.
geauxBIZ: This resource provides a comprehensive checklist for entrepreneurs, detailing federal, state, and local licenses and permits required to operate a business in Louisiana.
Louisiana Business Hub: A platform for entrepreneurs and business owners seeking resources to start or expand their businesses in Louisiana.
Louisiana Small Business Development Center: The SBDC offers business advising and access to training, tools, and resources.
Louisiana Technology Transfer Office: LTTO supports small, technology-oriented businesses, university faculty, and entrepreneurs by providing guidance on identifying, preparing for, and competing for federal R&D grants.
Pathway to Assist Veteran Entrepreneurs: PAVE provides Louisiana veterans with the opportunity to acquire the knowledge and skills necessary for effectively starting or managing a business.
SCORE Louisiana: A team of volunteers offers mentorship to individuals looking to start or grow a small business.