Indiana is a great place to do business. With the third lowest cost of living in the US, it’s an affordable place to base a new company – and an easy place to attract talent. Plus, the state also has business-friendly regulations.
If you’re looking into joining the ranks of Indiana entrepreneurs, you’ve come to the right place. This guide will show you how to start a business in Indiana, from start to finish!
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Decide on a business idea
First and foremost, you’ll need to decide what kind of business you want to start. Chances are you already have something in mind, but if not, here are some things to consider:
- What are you talented or naturally skilled at? Could this talent make you well suited to a certain type of business?
- What business does your community need? Have you talked to people to find out?
- What are you interested in? Can you combine any of your passions with a business idea?
- Is this going to be a full time business, or more of a side hustle?
These are questions to ask yourself when deciding on a business idea. Once you have decided, move on to the next step.
Plan your Indiana business
Now it’s time to start planning. This means coming up with a business plan, naming your business, researching locations, and more. There’s a lot to cover here, so let’s break it down:
Select a business name
First off, you need to choose a new name for your business. Take your time with this process, as you will want to identify a name that is well suited to your business, and hopefully one that is memorable for your customers.
The name must also be unique, meaning distinguishable from the names of other businesses in the state of Indiana. You can search the Indiana business name directory to see if your desired name is available or not.
The unique naming requirement is specific to each business entity type; meaning that a new LLC must be unique from all LLCs in the state, while a new corporation must be unique from all corporations in the state.
There are various other rules to comply with, including:
- The name must be unique from other businesses already registered in the state
- LLC names need to contain “limited liability company”, or approved abbreviations like “LLC” or “L.L.C.”
- Corporation names need to contain “corporation”, or approved abbreviations like “corp” or “inc”
- To use certain restricted financial-related words, like “bank” or “trust”, you may need additional written permission
- Other rules may apply.
Once you have found a name that you like and that is available, you can move on to the next step.
Indiana Assumed Names
Indiana does allow businesses to use “assumed names”, otherwise known as trade names or Doing Business As (DBA) names. These are basically secondary names that you can register once your business is formed. You can then do business under the new assumed name.
This gives entrepreneurs more flexibility in how they brand and market their businesses. It also means that you’re not necessarily locked into using only the formal business name that you register when you form your LLC or corporation. Read more about Indiana DBA’s here.
Register a domain name
Once you choose a name, you should immediately register a domain name for your new business. In most cases, getting a .com domain name is ideal, but there are many other extensions (.biz, .net, etc.) that are worth considering.
You can use a tool like Namechk to search for an available domain name and find a great deal on the registration cost. You may find that your desired names are taken, so you may need to get creative.
Complete market research
Once you have an idea, you’ll want to do some market research. You want to gain a better understanding of who your customers – and competitors – are. You can achieve this by conducting online research, running focus groups, sending out surveys, and more. There are also companies that can help you complete market research, for a fee.
Select a business location
Unless you plan to run a remote/virtual business, you will need to find a physical location for your company. Research commercial property in your area, and take note of typical costs. For customer-facing businesses (retail and some services), location is very important, so take your time in selecting the right area for your business.
Create a business plan
You will now need to create a detailed business plan for your new venture. This plan is helpful for your own purposes, and will also be necessary in order to obtain funding from a bank. A good business plan should contain these elements:
- Finances: How much funding does the business need to get started? How many sales does it need each month to break even on expenses?
- Product: What do you plan to sell? Is it a product or a service? What problem does your business solve, and how is it distinct from your competitors?
- Marketing: How will you drive sales? What marketing and sales efforts do you plan to employ? How much money will you set aside to fund marketing efforts?
- Staff & Partnerships: How many people will you need to hire, and what skill sets do they need to have? Will you have any partnerships or arrangements with other local businesses?
If you need help, you can find business plan templates online that will help walk you through the steps you need to take to draft a detailed business plan. If you plan to seek funding, you may also wish to call your bank to see what they require in terms of business plans.
Decide on a business structure
Before you form your business as a legal entity, you will need to decide which business structure you will use. There are a few different types of businesses, each with its own pros and cons.
Sole proprietorship
Sole props are single-person operations. Examples include freelancers, gig economy workers, and consultants. A sole proprietorship business is very easy and inexpensive to form, and tax reporting is also fairly simple. As a sole proprietor, your business taxes are reported as part of your personal tax return.
The downsides to a sole prop are that you cannot hire employees, and you don’t have the legal liability shield that something like an LLC or corporation would provide. 100% of the debts and liability of a sole proprietorship go to the sole owner: you.
Partnership
A general partnership is an unincorporated business structure similar to a sole proprietorship, except with two active owners/participants. Partnerships do not have liability protection.
Limited Liability Company (LLC)
A limited liability company, or LLC, is a popular choice for business owners because it provides liability protection to the owners. It separates the business from the owners, which means the personal assets of owners will not be at risk if the company gets sued or goes into bankruptcy.
LLCs are also a bit easier to form than corporations. Even so, there is definitely more work involved with an LLC than there is with a sole proprietorship.
Corporation
A corporation is owned by its shareholders and is a separate entity. There are a few different types of corporations (C-corp, S-corp, etc), with the main differences being the way they are treated tax-wise.
Corporations are more regulated than LLCs, which makes them more attractive to outside investors. For this reason, most large companies are corporations. The downside is that it takes more effort, and more paperwork, to form a corporation.
Nonprofit
A nonprofit is a legal entity that is set up with charitable status, meaning that its goal is not to make a profit, but rather to address a certain cause. Nonprofits are funded by donations, rather than investors, and are subject to many regulations. They are exempt from most forms of taxation, although tax returns must still be filed.
Register your business in Indiana
The next step is to formally register your new business with the state of Indiana. This process involves working with the Business Services Division of the Indiana Secretary of State. You can complete the necessary paperwork online, or through the mail.
There are two ways to go about this process:
- Doing the work yourself (see the steps below)
- Using a professional business formation service
Using a business formation service will save you a lot of time and hassle. These companies help walk you through the formation process, ensuring that every step is completed accurately and efficiently.
A service will cost you a bit extra, but the cost is well worth it for most entrepreneurs. Some recommended services include Northwest Registered Agent, ZenBusiness, and Bizee.
If you decide to do the work on your own, the basic steps include:
- Choosing a name for your business
- Choosing a Registered Agent for your business. The registered agent is tasked with receiving legal documents on behalf of your company.
- Filing formation documents with the Indiana Secretary of State (business services division)
- Applying for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS)
- Applying for other necessary permits or licenses
There will be slightly different steps, depending on which type of business you are forming. More details below:
Form an Indiana sole proprietorship
Follow these steps:
- Decide if you will operate under your legal name, or use a trade name
- If you use a name other than your own, you will need to register a trade name
- Apply for a business license and/or other necessary permits from local governments (city/county)
- Find more information on Indiana sole proprietorships here
Form an Indiana LLC
Follow these steps:
- Name your LLC
- Choose an Indiana Registered Agent (or use a service such as Northwest Registered Agent)
- File the LLC Articles of Organization online, and pay the $95 filing fee. The form can also be filed by mail (the filing fee is $100 if processes by mail)
- Draft an LLC operating agreement
- Apply for an EIN with the IRS
Form an Indiana corporation
Follow these steps:
- Decide on your desired corporate tax structure (S corp or C corp)
- Name your new corporation
- Hold an organizational meeting and appoint directors
- File the Indiana Articles of Incorporation online, and pay the $30 filing fee. This form can also be filed by mail (the filing fee is $50 for mail applications)
- Apply for an EIN from the IRS
Our picks of the best registered agent services
Apply for business licenses and permits
Registering your business and forming an LLC or corporation is an important part of starting your business – but in order to operate legally, you will likely also need to obtain certain permits and/or business licenses.
The specifics vary depending on the type of business you are running, as well as your location. For example, restaurants will need health permits, bars will need liquor licenses, and medical service providers will need various professional licenses and federal permits. You will need to research the specifics that relate to your business type.
There are different requirements at each level of government:
- Local: Cities and counties may require certain business licenses or permits. Contact your county clerk for details.
- State: Indiana may require certain permits or licenses. Check the Business Owner’s Guide on IN.gov, the Indiana Professional Licensing Agency, and local city/county government websites for details.
- Federal: Federal permits/licenses may be required for certain regulated industries, such as construction, medicine and legal services. Check the Small Business Administration (SBA) guide for more details.
At this time, you should also apply for an Employer Identification Number (EIN). An EIN is a federal tax ID that is required to hire employees. You can apply for an EIN online with the IRS – the application is free and quick.
Secure funding
For most businesses, some startup funding will be necessary in order to get started. In step #2, you should have calculated your funding needs while drafting a business plan. Use this information to determine how much funding you need to raise.
For bootstrapped companies, you may be able to get by with your own personal savings, or some seed investments from friends and family. If your funding needs are small, this is likely your best route.
If your business plan indicates that substantial funding is needed, you will likely need to apply for a loan and/or a grant.
- Small business loans are offered by banks, credit unions and other lenders. They can range from as little as a few thousand to hundreds of thousands. Specifics will depend on your business, as well as your personal creditworthiness. Most small business loans are issued in a lump sum, and paid back on a monthly basis, with interest.
- Small business grants are offered by government agencies and some nonprofits. They are essentially business loans that don’t need to be paid back – but they usually have substantial fine print. It’s worth looking into, however, as there may be grants available, particularly for businesses serving an important social need, or for underprivileged entrepreneurs starting their first business.
Set up your business finances
Beyond securing funding, there are other routine tasks that you need to take care of to get your business’ finances in order. This includes:
- Opening a business checking account. You should have a separate business bank account that you use solely for business purposes. You can open this account at most banks, credit unions and financial institutions. Call ahead to see what documents will be required to open this account.
- Open a business credit card or line of credit. This is not strictly necessary, but most businesses can benefit from having a business credit card, and/or a business line of credit. This can be used for day-to-day expenses and purchases, and may also earn you some rewards.
- Set up your accounting system. As a business owner, you will need to keep very detailed records about all revenue and expenses. To do this, you’ll want to set up the proper foundation from day one. This could be investing in an account software such as QuickBooks or Xero, hiring a bookkeeper, or at the very least establishing a spreadsheet to track everything. If you do not have any accounting experience, it’s wise to hire a professional to help.
- Purchase business insurance. Most businesses should have some form of liability insurance, and potentially other forms of business insurance as well. Insurance policies can help protect your equipment and buildings from costly damage, and help shield your company from liability if a worker or customer is injured or otherwise harmed. Speak with a local business insurance provider to get started.
Create a business website
In this day and age, having a solid web presence for your business is very important. And social media profiles, while important, are no replacement for an actual website. You will want to build a professional business website that you can use to drum up business, inform your customers, and stay connected with your clientele.
The simplest way to build a website is to use a website builder from a web hosting provider. When you register a new domain name, look for a provider that also offers web hosting and a site builder, so that you can purchase everything at once and get your site set up quickly.
Our picks of the best website builders
Hire employees
Unless you plan to operate a solo business (with you as the only worker), you will likely need to hire employees. To do this, you will need a federal employer identification number (EIN), which is a free tax ID number issued by the Internal Revenue Service (IRS).
Once an EIN is obtained, you can legally hire employees. However, there are some tax and reporting requirements to tackle on the state side. You must report each new employee to the Indiana New Hire Reporting Center. And you should ensure that the people you are hiring are able to legally work in the state, and that they have all the required professional licenses required for their position.
Employers will also need to register for and pay unemployment insurance tax, as well as withholding tax. There may be other tax reporting requirements, as well – speak to your CPA for details.
At this point, you also should look into setting up your payroll system – whether you handle it yourself, or use a payroll service.
Run and grow your business
Now it’s time to get down to business and engage with the day-to-day activities that are sure to bring your business success. This means marketing your products and services, maintaining good relationships with your return customers, and setting yourself apart from the competition.
Indiana business FAQs
Still have questions about running a business in Indiana? Here are some answers to frequently asked questions.
What are some business resources in Indiana?
Indiana entrepreneurs have a variety of resources at their disposal. A great place to start is the Indiana Small Business Development Center (Indiana SBDC). This resource provides free business advisor services, webinars and training, and many other useful resources. Other good resources include the SCORE Indianapolis and the US Small Business Administration (SBA).
Entrepreneurs can also search for industry-specific resources that are designed to help firms in their industries. There are also some entrepreneur-specific resources, that aim to help certain types of entrepreneurs, including veterans, women, and more.
What is the minimum wage in Indiana?
The Indiana minimum wage is $7.25 per hour, which is the same as the federal minimum wage.
There are a few exceptions to this rule. Tipped employees may be paid as little as $2.13 per hour, if their tips plus their hourly wages add up to at least the minimum wage of $7.25 per hour. And there is a “training wage”, which allows employers to pay new workers under the age of 20 $4.25 per hour for the first 90 calendar days of employment.
Keep in mind that individual cities and counties are able to impose their own minimum wage laws. Check with your local city/county governments to ensure that you are compliant with all local laws.
What business taxes does Indiana have?
There are a variety of taxes that IN businesses must pay. Any business that sells taxable goods or services must pay the Indiana sales tax (currently 7%), and taxable goods that are used or consumed by the business may be subject to use tax.
Many businesses will also be subject to corporate income tax, unemployment insurance tax, withholding tax, and others. See the Indiana Department of Revenue’s Business Tax FAQs for details.
How do I dissolve an LLC or Corporation in Indiana?
If you close a business, you will need to “dissolve” it. The steps for this process include filing all outstanding tax returns, shutting down your tax accounts, and filing the Articles of Dissolution with the state of Indiana. There may be other steps as well. See this guide for more details.
Closing a business can be a complex process. To ensure that everything is handled accurately and efficiently, it’s a good idea to work with your certified public accountant (CPA) to close down your Indiana business.
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