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The basics of forming a business in Indiana

On Behalf of | Jul 1, 2024 | Corporate & Business Law

Small business owners are foundational to Indiana’s economy. Over 1.2 million employees in the state work for small businesses, according to the United States Small Business Association.

If you are planning to start a small business, reviewing the legal steps you must take before you form your company is beneficial.

Business structures

When forming a business in Indiana, you must determine the type of organization you want to establish and choose the appropriate legal structure. Your choice can impact various aspects of your business, including taxation, liability and operational flexibility.

A sole proprietorship might be the right choice if you are a solo entrepreneur looking for simplicity. It is the easiest business structure, and you have full control over operations. However, keep in mind that your personal assets are at risk in case of business debts.

If you plan to co-own the business with others, consider a partnership. There are LPs, or limited partnerships, as well as LLPs, or limited liability partnerships. LPs have one general partner with unlimited liability, while LLPs provide limited liability to all owners.

A limited liability company, or LLC, combines the benefits of both a corporation and a partnership. It shields your personal assets from business liabilities while allowing you to pass profits and losses through your individual income tax.

Corporations come in two forms. C corps offer strong personal liability protection but are subject to corporate taxes. S corps avoid double taxation, passing profits directly to owners. Your choice depends on your long-term goals and tax considerations.

Naming and registration

Once you have determined your business structure, you can select a name for your venture. Select something unique and distinguishable from existing businesses in Indiana by conducting a thorough search on the Secretary of State’s website.

Registering your business name is necessary to start an LLC or corporation. This requires filing the appropriate documents with the Indiana Secretary of State. For sole proprietorships or partnerships with a name different from the owner’s name, you can file an assumed business name with the county. Finally, if you plan to operate primarily online, consider registering your business name as a domain to establish an online presence.

A solid legal foundation for your small business can enable long-term success and growth within Indiana’s vibrant entrepreneurial ecosystem.