Benefits of Opening a Business in Louisiana
The Bayou State has created a series of tax breaks that provide a pro-business climate. The Enterprise Zone, for example, gives companies a tax credit of up to $3,500 for every job created, while manufacturers who make a new investment can get property tax abatement for up to 10 years with the industrial tax exemption. Also, companies that shell out for research and development could see up to a 30% tax credit with the R&D tax credit.
Business owners and potential employees who live in the state also enjoy a low cost of living. Louisiana’s cost of living is about 5% less than the national average. Affordable home prices and some of the lowest utility prices in the country contribute to that status.
For new business owners who need office or commercial space, you’ll find inexpensive prices. To lease office space, expect to pay about $15 per square foot. To buy office space, prices hover around $80 per square foot. Industrial space and retail space are even cheaper.
Start an Entity in Louisiana
ZenBusiness offers the following formation services to our customers:
- Louisiana Limited Liability Company (LLC)
- Louisiana Professional Corporation
- Louisiana Corporation
- Louisiana Nonprofit Corporation
Louisiana Business Startup Checklist
- Create a business plan
- Choose a business structure
- Determine your business costs
- Create a business name
- Register your business and open financial accounts
- Market your Louisiana business
1: Create a business plan
To succeed, every company needs a business plan. Think of a business plan as a roadmap that explains how the company will go from an idea to a flourishing business.
As you may expect, a business plan is quite detailed. It should include a description of the business, an assessment of “SMART” goals, a deep-dive on competitors, a detailed description of your target customers, a sound marketing plan, and a look at the company’s current economic status.
Aside from listing revenue streams, it’s also important to list expenses. Mention the cost of your monthly lease, what you expect to pay in Louisiana taxes, and ongoing labor costs. Even mention smaller bills like what you’ll pay in utilities to Entergy New Orleans, for example.
Entrepreneurs with a solid business plan are 30% more likely to grow their business. Why? A business plan forces an owner to set goals, create a strategy, and work toward achieving them. Given its importance, a business plan is not a step you should skip.
If you aren’t sure where to start, check out our “Guide to Writing Your First Business Plan.”
2: Choose a business structure
How will you structure your business? There are several different types of businesses that you can establish in Louisiana. Your decision will impact how you’re taxed and how much personal liability an owner has if something goes wrong.
As a Louisiana business owner, you may explore a sole proprietorship, a general partnership, a corporation, or a limited liability company (LLC) as your designated business structure. With a sole proprietorship or general partnership, the business and the owner(s) are considered the same legal and tax-paying entity. It’s fast to start (you can start doing business immediately), and there’s no paperwork to file. The main drawback is the lack of liability protection for your personal assets; if someone sues the business, they can go after your personal savings, house, and possessions.
With a corporation, your personal assets will enjoy some level of protection. However, income for C corporations is taxed twice — once at the corporate level and once on personal tax returns. S corporations tax the money only once, but it’s harder to qualify for an S corporation.
With an LLC, the business and the owner are separate, which provides a layer of liability protection. The owner’s home and car, for example, are considered personal assets and are safeguarded if the business incurs debt or faces a costly lawsuit. Also, the business income is taxed only once, on the owner’s personal tax return. For those two reasons, LLCs are a popular choice among new business owners.
Since a business structure is tied to taxes, it’s a good idea to speak with an accountant or attorney about your specific business idea to weigh cost-effective options.
3: Determine your business costs
After working through a business plan, you probably have a lot of information needed to calculate business costs. There are ongoing costs and one-time, startup costs for things like equipment, inventory, and filing fees. If you plan to set up an LLC in Louisiana, you’ll have a one-time $100 filing fee to register with the Louisiana Secretary of State.
Start by crunching your startup costs. The Small Business Administration (SBA) has a good startup cost resource that can help.Next, move on to ongoing costs. Ongoing costs include things like rent, utilities, payroll, equipment maintenance, and marketing. Labor costs will likely be one of the higher costs on your lists. While Louisiana doesn’t have a state-set minimum wage, it uses the federal minimum wage of $7.25 per hour. Use this as a benchmark to calculate payroll. This tool can help crunch ongoing costs.
4: Create a business name
Some entrepreneurs come up with a business name instantly, while others ponder it over a few crawfish boils before committing. Either way, when you have a name in mind, you need to make sure it’s available. In the state of Louisiana, as in most states, no two businesses can have the same name. To check a name’s availability, run a business entity search at the Louisiana Secretary of State website. If the name is in use, you need to come up with a different one.
Louisiana has its share of odd business names like Bourbon Cowboy (a bar on Bourbon Street with a famed mechanical bull) and Marie Laveau’s House of Voodoo (a psychic reading shop), so it’s perfectly acceptable to pick a memorable name that may seem a little strange. You may also consider using a “doing business as” (DBA) name, which you learn more about in our guide.
In a nutshell, many companies use DBAs to separate different lines of business. A lawn care company that also builds outdoor fireplaces might use a DBA to differentiate its services. Unless they have a DBA, sole proprietorships and general partnerships must do business under the first name and last name of the owner(s). For that reason, many sole proprietorships and general partnerships use DBAs to create a more professional-sounding and brandable company name.
Now is also a good time to look into a matching domain name. Most businesses want their website to match their company name. To make that happen, you need to see if the domain name is available and purchase it. If this sounds a little too technical, reach out to a business formation company for assistance.
5: Register your business and open financial accounts
If you plan to launch a Louisiana LLC, it’s time to file the paperwork to make it official. If you live in Louisiana, you can download the Articles of Organization, fill them out, and mail it or you can submit them online through Louisiana geauxBIZ. If you live in a certain county (Ascension, Bossier, Caddo, Calcasieu, East Baton Rouge, Jefferson, Lafayette, Livingston, Orleans, Ouachita, Rapides, St. Tammany, Tangipahoa, or Terrebonne), you’re required to file online. The fee to file a domestic (in-state) LLC is $100. You’ll also need to file an annual report.
Forming a corporation in Louisiana can be even more involved. A business formation and compliance company can offer assistance with either an LLC or a corporation.
You can use the same website, Louisiana geauxBIZ, to research the types of permits or business licenses your business may need to operate, too, though be aware that the site won’t necessarily tell you every conceivable license or permit you may need. You’ll need to conduct some research.
Most businesses need a federal employer identification number (EIN) from the IRS. You can get this nine-digit number, which is used to pay federal taxes, hire employees, and apply for a bank loan, from IRS.gov. Sole proprietors who don’t hire employees or pay specific taxes have the option of using their social security number instead, though this can expose them to identity theft.
You also need to register your business with the Louisiana Department of Taxation, and it’s a good idea to learn about insurance, too. The Louisiana Department of Insurance provides resources on health insurance and suggests other types of business insurance that small business owners may want.
Owners can also set up business bank accounts to keep personal and business assets separate. Many banks offer business checking accounts and savings accounts, some with more competitive rates. You can also consider opening a business credit card for making small purchases and for building your company’s credit.
6: Market your Louisiana business
Often, marketing budgets are small for new companies, but there are many efforts you can make that are free or low-cost.
To start, set up social media accounts for your company. Select the channels that correlate with your audience. For example, if your ideal client is a Mardi Gras-celebrating millennial, use channels like Snapchat and Instagram. If you’re targeting an older generation, a portion of the population that’s expected to significantly increase in the state over the next 15 years, set up a Facebook account. This small business guide to social media could help.
You can also consider buying some ads in one of Louisiana’s 38 publications or set a small daily budget for highly targeted Facebook ads that are shown to a specific geographic area, like Franklin or Covington.
Louisiana Business Connections offers several tips to market your business in the state.
Examples of Good Businesses to Start in Louisiana
Louisiana has many business opportunities, but to provide inspiration, here’s a list of industries that employ the most people in the state:
- Healthcare and social assistance
- Accommodation and food services
- Retail trade
- Professional, scientific, and technical services
Louisiana has a low cost of living, a welcoming business environment, multiple tax incentives, and affordable commercial space. As a result, the state could be an ideal location for your new company. Learning how to start a business in Louisiana will take some time, but there are many resources that can help.
Louisiana Business FAQs
How much does it cost to start a business in Louisiana?
The average cost to start a business is $30,000, but there are plenty of companies that have started with less. As you consider costs for your business, remember to factor in Louisiana business taxes, income tax, health insurance costs, and labor costs.
What is a good city to start a business in Louisiana?
Broussard, Stonewall, and Maurice are all listed as top Louisiana cities to start a small business. These cities were scored on population growth, amount of disposable income, income growth, and expenses like state taxes.
How much does it cost to open an LLC in Louisiana?
To start an LLC in the state of Louisiana, you’ll pay a $100 filing fee. The fee should be submitted to the Louisiana Secretary of State along with LLC formation paperwork. You will pay extra for expedited registration service. A business formation company can guide you through this process.
What is the cheapest city to open a business in Louisiana?
Many businesses look at establishing a business in one of three areas: Baton Rouge, New Orleans, and the Gulfport-Biloxi area. Of these areas, the Gulfport-Biloxi area has the cheapest office space, which is leasing at $14 per square foot. Baton Rouge and New Orleans are several dollars higher per square foot.