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Indiana may be best known for corn and college basketball, but economists know it for much more than that. In fact, entrepreneurs researching how to start a business in Indiana may be pleasantly surprised to learn about its friendly business climate.
With a diversifying economy that puts a strong emphasis on technology and innovation, the state ranked fifth for the fifth consecutive year on a list of best states for business in Chief Executive magazine. So, if you’re wanting to start a business, Indiana might not be a bad choice. But to launch a company in the Hoosier State, you’ll need to follow a few basic steps.
Starting a business in Indiana can provide a newfound sense of control over finances, workflow, and income growth. The state boasts a well-established workforce and a competitive business economy that gives it an advantage over many other states.
Indiana also ranks 10th for best tax environments in the country and No. 1 in the Midwest, according to neindiana.com. Area Development magazine ranked it as seventh for the top states for doing business, based on factors like overall cost of doing business, access to capital, available real estate, and business incentive programs. Curious how Indiana stacks up compared to, say, Vermont or Ohio? The Indiana Economic Development Corporation offers a free cost comparison tool between Indiana and other states.
Although Indiana has the orthopedics capital of the world and a bustling automotive sector, there are opportunities in the state for all kinds of new businesses. Follow these steps to pursue your dream of owning a company here.
A strong business plan can help flesh out your business idea by creating a detailed approach to develop, operate, and grow. While the task may appear daunting, it’s a vital process that serves a purpose beyond just “getting your thoughts down on paper.”
Obvious components include things like what products or services your company will sell and your legal business structure, which will influence everything from taxes to liability protection. But sections of your plan like market analysis, funding, customer types, and competition will also help.
Rather than setting generic goals, aim for “SMART” goals to better position the business for success. Don’t be afraid to address potential problems and outline what you’ll do about them. The more detailed the plan, the easier it’ll be to attract funding because potential lenders will know you’re prepared.
The Indiana Small Business Administration or any of Indiana’s Small Business Development Centers throughout the state can serve as jumping-off points.
Choosing and filing your business structure with the Indiana Secretary of State isn’t just a formality. It’s a decision that can affect your personal assets if something goes wrong. It also plays a role in how taxes are determined, and sometimes the ability to get funding.
The simplest business entity choice is a sole proprietorship, which requires little more than filing a “doing business as” (DBA) form with the right Indiana County Recorder; if you’re doing business only under your own legal name, you don’t even need a DBA.
All business income and losses for a sole proprietorship are listed on the owner’s individual tax return. Because there’s no legal difference between you and the business, your own personal assets are at risk from business issues, such as lawsuits and debt.
Choosing an LLC provides more liability protection for your personal assets, should the company run into trouble. Like a sole proprietorship, you’ll still pay taxes through your personal taxes, but the business itself won’t first be taxed, as it would if it were a corporation; this avoids the “double taxation” that corporations face.
It also costs money to file for your LLC, which you’ll pay when you submit the LLC Articles of Organization. You’ll also be responsible for filing an Indiana Business Entity Report every two years.
Although one-time, ongoing, and fixed expenses will vary by industry and type, there are some common denominators. Whether you’ll run the business from home, office, or warehouse, you’ll need to account for expenditures for phone, internet, a website, and certain filing fees in Indiana. Even a business without employees may need to estimate costs for transportation, travel, marketing, and insurance.
If your business grows and requires additional employees, plan to include estimates for payroll, healthcare costs, unemployment insurance, and Indiana’s workers’ compensation costs.
Coming up with a name for your Indiana business may sound easy, but the name should be both clear and available. While “Terre Haute Ventures” may give you some breathing room to add products and services later, it doesn’t tell much about what you offer customers now. A better choice could be “Terre Haute Computer Repair” or “Terre Haute Landscaping.”
Before you fall in love with a name, check to see if it’s been taken already by another Indiana organization. A quick check on the Indiana Secretary of State’s business name search can save you time and money. But more importantly, it may prevent legal issues and confusion for potential customers or clients.
After the name is secured, consider registering a similar domain name for your website. Next, create social media profiles on the major platforms, including LinkedIn, Facebook, and Twitter. If it feels like all the best names are taken, a business name generator can help.
If you’ve chosen an LLC or corporation business structure, it’s time to apply for a federal employer identification number (EIN) with the Internal Revenue Service (IRS). You’ll also need an EIN if you have multiple business owners or plan to hire employees.
This federal tax ID number can be used to open a designated business bank account and apply for business credit cards (to potentially help with funding). A dedicated business bank account will help keep personal and business accounts separate. That helps in preserving the company’s status as an LLC.
Business licenses and permits vary by industry, which is why Indiana offers a state information center hotline (1-800-45-STATE). Hotline agents can explain requirements for permits and licenses based on the type of business. The Indiana Professional Licensing Agency offers a lengthy list of professions and industries to help get the ball rolling.
For example, licensing requirements to open a nail salon in Indiana will fall under the State Board of Cosmetology and Barber Examiners. Starting a home appraisal business in Indiana will require some research on the Real Estate Appraiser Licensure & Certification Board webpage.
Business licenses and permits can be needed on the federal, state, and local levels. Because there’s no central place to confirm whether your business has every license and permit needed to operate legally, you’ll have to do some research. Our business license report can do the work for you.
Consult a qualified insurance agent to see what business insurance you’re required to have and what could benefit your company. A business owner’s policy — an insurance bundle with a wide range of coverages — can provide valuable peace of mind. Businesses can tailor the coverage by weighing the risks and costs associated with a specific industry.
With a defined target market spelled out in your business plan, it’s time to lay out your marketing strategy. Think about in-person networking, such as opportunities to pass out brochures and business cards found at Indiana trade shows, or referrals, like those doled out to members of the Indiana Chamber of Commerce.
Beyond social media platforms, the internet can serve up a wealth of local and online directories and communities. You can start with a free business profile on Google My Business. Customers using the web will find you easier if your company’s blog or website uses search engine optimization (SEO).
Customizing your plan to your specific business is key. While a window repair business in Fort Wayne may only market to homeowners within a 60-mile radius, an Internet security company may serve customers all over Indiana and beyond.
With nine major industries booming in Indiana, the state’s economy relies on the global marketplace. Although aerospace/aviation and defense/national security are complicated and heavily regulated, that still leaves seven additional well-established industries with a track record of success.
Startups in the energy, logistics and transportation, technology, life sciences, advanced manufacturing, cybersecurity, and agriculture sectors may benefit from the state’s established business resources. From training and funding to mentorship and government contracting opportunities, new companies may have an easier time here following a well-trodden pathway to success.
Indiana offers a robust business climate, extensive resources for entrepreneurs, and a workforce partnership that can match the state’s talent pool with employers. With low taxes and multiple university initiatives that cultivate entrepreneurs, startups in Indiana from Gary to Bloomington have the right tools to succeed. Now that you know how to start a business in Indiana, you’re one step closer to working for yourself!
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Fees change over time, so check the Indiana Secretary of State website for the latest fee for LLCs to file Articles of Organization in Indiana.
Taking into account affordability, economic health, education and health, quality of life, and safety, Carmel, Westfield, and Fishers rank among the 2020 Best Small Cities in America.
Fort Wayne has the lowest cost of living of any U.S. city, which may make it cheaper to hire employees and do business in general. It’s also the second-biggest city in the state, behind the capital of Indianapolis.
The Indy Chamber’s Business Ownership Initiative allows entrepreneurs to apply for microloans ranging from $1,000 to $50,000+.