Entrepreneurship is exciting—the thrill of developing a winning product or service, bringing that idea to life, and making life better for your clients—it’s fun. But unfortunately, it’s not free. Long story short: starting a business has a price tag. LLCs are no exception.
If you’re hoping to start an LLC in Indiana, you’ll quickly learn that you’ll have a pretty long list of fees for forms, licenses, and applications that you’ll need to get started. Some of those are optional fees, and some are unavoidable. In this guide, we’ll walk you through all the costs you can expect when starting an Indiana LLC. By the end, you’ll have a clear picture of how your new business will impact your wallet.
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What’s the least amount I have to pay to form an LLC in Indiana?
If you’re crunching the numbers before diving right in, good on you! Planning ahead is a surefire way to start your business off on the right foot. But let’s make one thing clear: the phrase “cost to start an LLC” is a bit deceptive. That’s because you don’t want to get stuck focusing on the “day one” expenses of business.
That’s right—when budgeting for start-up costs, you need to account for the costs you’ll pay today and the costs you’ll pay a year or two down the road.
So let’s talk start-up costs and ongoing costs for your Indiana LLC. But to keep things simple, here we’ll cover the non-negotiable costs. Later on, we’ll talk about services that are nice to have (but you can live without if you have to).
IN LLC Start-up costs
There are two primary start-up costs in Indiana. The most important one is the Articles of Organization. At $100, the filing fee isn’t unreasonable, but it’s an unavoidable cost. After all, the Articles of Organization is what officially forms your business in the state. Without it, you’re not a recognized business.
Then there are licenses to consider. Fortunately, Indiana doesn’t require a general business license. But there’s a good chance that your business will need one or more professional and occupational licenses. Unfortunately, you’ll have to do a little research to learn which ones apply to you. Indiana’s Business Licenses page and the Indiana Professional Licensing Agency are good places to start your research.
Since there are a lot of different licensing boards, it’s impossible for us to list all of the different application fees you might encounter. But it’s reasonable to expect that you’ll need to pay something for your licenses.
Ongoing costs for an LLC in IL
If your business lasts (and we’re confident it will), then you’ll have several ongoing costs. These include license renewals, annual reports, and taxes. Let’s dig into those prices and fees.
License renewals
Thankfully, you don’t have to worry about renewing a state general business license. But if one of the state’s professional licenses applies to your business, you’ll need to renew it on a somewhat regular basis. Just as there are different application fees, there are a wide variety of different renewal procedures—including renewal periods and renewal fees. When you obtain your licenses, we recommend taking note of the renewal requirements for your industry so none of the fees surprise you.
Annual taxes
In Indiana, one of the biggest annual costs you’ll have will be taxes. Income taxes are one of the primary taxes you’ll have to worry about, but how much you pay depends on your taxation structure. LLCs taxed as corporations pay a 5.25% rate, but LLCs taxed as pass-through entities pay a 3.23% rate.
Indiana also charges a sales tax, so if you’re involved in sales, you’ll need to collect it. The rate is 7%, and you can read more about the tax here. The state also charges a wide variety of miscellaneous taxes: fuel, tires, and innkeeping, to name a few. If you think one of these taxes might apply to you, check out INtax, a portal that helps you manage your business tax obligations.
Annual report
Most states require LLCs to file some version of an “annual report,” or a document that informs the state about the current standing of your business. This document is usually required in addition to annual tax reports, since it usually includes information about your business address, members, your registered agent, and so on.
Technically, Indiana doesn’t have an annual report. Instead, it’s a biennial report. On the years you have to file, you’ll need to submit the form by the end of your LLC’s anniversary month. To keep your filing fees to a minimum, we recommend filing online. That way, your fee is just $32. That said, if you’d rather file by mail, you can do so. But it will cost you $50 instead.
What are the discretionary costs to form an Indiana LLC?
When you’re starting your business, your budget is usually pretty tight. Prioritizing costs can get tricky. The costs we listed above are unavoidable. Well, technically, you can avoid them, but you’ll be heavily penalized if you do. And there’s not much point to spending all that money on starting a business only to knowingly let it be dissolved because you didn’t pay your ongoing costs.
But if you can help it, doing the “bare minimum” is probably not the best way to start your business. There are plenty of discretionary costs you can pay for certain services that make life easier. Here, we’ll dig into those costs—and why you might consider paying them.
1. Name reservation application
Naming things can be a bit tricky; after all, sometimes inspiration is a little lacking! And since Indiana doesn’t allow you to use a name that someone else has already claimed, you have to work even harder to pick one that’s unique, memorable, and just right for your business.
It’s a multi-step process, really: you have to brainstorm name ideas, choose just the right words, meet state name requirements, and of course, ensure that the name isn’t already in use (you can check using an Indiana Business Search).
If you’re like a lot of people, you probably want to ensure that your hard work doesn’t go to waste once you’ve created the perfect name. So you have to lay claim to your new business name. You can do so either by filing your Articles of Organization, or by filing a Name Reservation form. You should only file this form if you’re not yet ready to file your Articles. Otherwise, you’d be wasting your hard-earned cash. Indiana requires a $20 fee for this application, but it protects your name for 120 days.
2. Obtaining an Assumed Name
Wait—didn’t we just cover business names? Yes. But there’s a distinction: your business name, which you’ll write in on your Articles of Organization, is the legal name of your business. An assumed name, sometimes called a trade name, a DBA, or fictitious name, is like a nickname for your business. For example, your legal name might Joseph Smith, but your friends call you Joe for short. Joe is a perfectly valid name, but you can’t put it on legal paperwork. You’d have to legally change your name to do so.
An Assumed Name acts kind of like a nickname for your business; some LLCs and corporations also use Assumed Names to establish new product lines or new “businesses” under the LLC “parent company.” But regardless of why you use an Assumed Name, if it differs from your legal name, you need to register it before you can use it.
Quick note: before you can register your Assumed Name in Indiana, you need to ensure that your name is available to use. You cannot have a name that’s an exact match to a name already on record in the state. To check availability, run a Business Name Search.
After that’s done, registering your Assumed Name is pretty simple; all you have to do is file a Certificate of Assumed Business Name form with the Secretary of State. The fee is $20 ($30 if you file by mail). And thankfully, Indiana doesn’t have any renewal requirements. You can keep using your Assumed Name indefinitely. But if you ever stop using it, you should file a withdrawal to free the name up for use.
For more information on this process, check out our guide to Indiana Assumed Names.
3. LLC formation services
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Paperwork is a massive hassle. And unless you’re starting an LLC to help other Indiana residents with their paperwork, odds are you don’t want to deal with much paperwork yourself.
The bad news? Paperwork is an unavoidable part of starting an Indiana LLC: the Articles of Organization, annual reports, license applications—the list goes on and on. The good news? You can hire an LLC formation service to do the pesky paperwork for you.
Of course, there’s some cost involved. And while there are a lot of great LLC formation services, they aren’t all created equal. And they all have different price points.
Many LLC formation services offer a wide variety of packages, with basic options starting at low prices like $39 from Zen Business (one company, Incfile, even offers a starter package for $0). But if you’re willing to shell out some serious cash for comprehensive assistance, you’ll find package prices going as high as $799.
These services are completely optional; you can DIY your Indiana LLC formation. But many entrepreneurs find the time saved is worth the money. If you do opt to hire a service, please make sure you take the time to understand what you’re buying. Some services charge one-time fees, and others tack on “free services” that will cost you next year. If you don’t read the fine print, you can get slapped with unexpected service fees. And surprise bills are never fun.
4. IN Registered agent services
Indiana law clearly states that every LLC must designate a registered agent to act as a middleman between your business and the state. Long story short, the registered agent accepts service of process (and any other official communication from the state) on your behalf.
Technically, this is another thing you can DIY; Indiana allows you to serve as your own registered agent. However, in our opinion, it’s worth the expense to hire a registered agent.
Why? For starters, a registered agent’s address becomes part of the public record; anyone in the state can find that address. That leads to spam mail (sometimes worse). Plus, a registered agent must be present at the registered address during all standard business hours. If you serve as your own, you’d be tied down to your location constantly. A registered agent service prevents those annoyances. A service will also help you keep track of annual filing requirements, license renewals, and more.
These services typically charge an annual fee. For example, annual fees for our top 4 Indiana registered agent services range from $99 to $299 per year depending on the service you choose. That said, some offer the first year free if you use them as an LLC formation service.
Quick Note: If you need to later down the line, you can always change your registered agent.
5. Business attorneys
Starting a business is a complicated process. And it’s a legal one. We do our best to make the process seem less daunting with guides like this one. But at the end of the day, we can’t write a guide that would cover every single question every business will ever face. That’s because your business is unique.
Business attorneys, however, can talk you through all the nuances of forming and running your business. In many cases, the advice of an attorney can save you thousands by helping you avoid expensive legal mistakes.
However, the upfront costs of hiring a business attorney can be pretty pricey. For example, many attorneys charge per hour, with rates ranging between $150-$350. Others offer “LLC formation packages” for flat rates that fall between $500-$2000. And of course, those fees vary based on the attorney’s experience, location, and so on.
If you’d like to hire one, we recommend checking out sites like Avvo.com. Their database is nearly comprehensive, so it’s a great way to search Indiana business lawyers. You can also narrow results by location, cost, overall satisfaction rating, and more. It’s the best place to look to find the right legal consultation for your business.
Conclusion
Long story short: starting an Indiana LLC can be a pretty pricey endeavor. If you look at each cost separately, it doesn’t seem too bad (even the $100 Articles of Organization fee is pretty manageable). But when you add them all up or tack on some additional services, the total price tag grows pretty quickly.
Thankfully, since you’ve read this guide, you know what you’re up against. And sometimes, knowing is half the battle—and now you’re armed with all the information you need to budget the start-up costs so you can start your Indiana LLC off on the right foot. We wish you and your new business the best!