Do you want to invest or start a small business in Indiana? If YES, here is a detailed guide on how to start a profitable business in Indiana with no money.
Indiana is a U.S. state in the Midwestern and Great Lakes regions of North America. It is the 38th-largest by area and the 17th-most populous of the 50 united states. Its capital and largest city is Indianapolis.
The residents run businesses in manufacturing, agriculture, education and other industries. The terrain varies greatly from the sandy beaches of Lake Michigan to the rolling hills in southern Indiana and the lush farmland in between. In fact, Indiana is a well-balanced state that offers almost everything.
Starting a small business in Indiana isn’t as difficult as people make it to look. Once you have a plan for your business, you will need to obtain a tax identification number and register your business with the state. These are the processes to follow if you want to set up a small business in Indiana.
How to Start a Small Business in Indiana With No Money
Step 1: Choose the Right Business Idea
The first step toward business ownership is deciding what kind of business to start. I mean, for you to think about starting a business, you should have an idea in mind. Look for an idea that suits your interests, your personal goals, and your natural abilities. This will help you stay motivated when the going gets tough and will greatly improve your odds of success. When choosing the right business idea, there are other thing you have to take note of too and they include;
- Planning the Business: Successful businesses are built through careful planning. Before committing a significant amount of money and other resources toward your business, critically analyze your idea and create a game plan.
- Business Name: Naming a Business is one of the most important and challenging steps in getting started in a small business. You’ll want to choose brand name that follow Indiana naming rules, resonates with your customers, and is available in Indiana and as a URL.
- Product Development: What problem does your business solve? What will set your product or service apart from the competition?
- Sales & Marketing: Who are your potential customers? How will you get their attention and convert them into buyers?
- People and Partnerships: What roles will you need to hire and what professional relationships will you need to form in order to succeed?
STEP 2 – Pen Down Your Business Plan
Successful businesses are built through careful planning. Before committing a significant amount of money and other resources toward your business, critically analyze your idea and create a game plan. A lot of people only write a business plan because the bank won’t loan them money until a business plan is submitted.
That’s a valid reason, but there is a more important benefit. writing a business plan gets the ideas out of the entrepreneur’s head and helps to create a roadmap for where they want the business to go. Business planning is a critical element to creating a successful business.
Step 3. Choose a Unique Name
You need to check that your name is distinguishable from the names of other business entities already on file with the Indiana Secretary of State (SOS). You can check for available names by doing a business name search on the SOS website.
You can reserve an available name for 120 days by filing a name reservation application with the SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations).
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must file an assumed business name with the county recorder in the county where you will do business. Check the relevant county website for more details.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use.
STEP 4 – Choose Your Business Entity
For want of a better word, I would say this is one of the most important aspects of forming a business. The business entity is sometimes referred to as the business structure. This is how a business is legally organized to do business. The four primary business entities include the sole proprietorship, partnership, corporation and LLC. A brief description of each is below.
A Sole Proprietorship is an individual entrepreneur that decides to go into business for themselves. This is the easiest and least expensive of the four entities to set up. The owner is personally responsible for all debts and actions of the company.
General Partnerships consist of two or more people conducting a business together. Like the sole proprietorship, there is no formal filing. Also like the sole proprietorship, the partnership has unlimited liability. If the partnership were to be sued, each of the partner’s personal assets are potentially at risk.
A Corporation is a legal business entity that is separate from the individual. While corporations are more expensive and complicated than sole proprietorships and partnerships to form, the major advantage is that the corporation shields the owner’s personal assets should the corporation be sued.
There are multiple ways a corporation can elect to be taxed. Also, there is no self-employment tax with a corporation as income to the owner(s) will come from either a salary or dividends. The cost to form a corporation in Indiana is between $85 and $95. The Articles of Incorporation must be filed with the Indiana Secretary of State.
The Limited Liability Company (LLC) is a popular business entity choice. It provides the liability protection of a corporation with the ease of operation like a sole proprietorship.
In order to form an LLC in Indiana, you’ll need to file Articles of Organization with the Secretary of State. Indiana charges a $95 fee (or $100 if filed by mail or in person) to process this document. An additional fee will be incurred if you choose to work with a professional business formation service (recommended).
Step 5: Licenses and Permits
To start a business in Indiana, certain licenses and permits will be needed. Depending on the activities and location of the business, licensing may be needed from federal, state and local agencies. Some common registrations include:
- Business Licenses – The state of Indiana doesn’t have a general business license, however many cities require a business license in order to operate.
- Registered Retail Merchant Certificate – Businesses selling products and certain services will need to register for a Registered Retail Merchant Certificate with the Indiana Department of Revenue.
- Professional Licensing – Some services such as home inspectors, interior designers, manicurists, and plumbers in Indiana need professional licensing. While this isn’t a license on the business, licensing is required in order to operate.
- Tax Registration. If you will be selling goods in Indiana, you must register with the Department of Revenue (DOR) to collect sales tax. If your businesses will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax, as well as other business taxes, by submitting Form BT-1, Business Tax Application, online through the Business Tax Application section of the DOR website.
- EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so.
Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Some of the main categories covered by these licenses and permits are:
- health and safety
- contractor services
- day care services
- financial services
- transportation, and
- professional licensing.
The state publishes a comprehensive Business Owner’s Guide that you can view online or download and print out. Check the Specific Occupational Business Licenses section of the Guide for more details on state licenses and permits. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The state’s Professional Licensing Agency (PLA) oversees many—though not all—of the state’s regulatory boards and commissions. Those boards and commissions are in turn responsible for regulating the various licensed professions and occupations. The Professions section of the PLA website lists the many professions and occupations that the PLA oversees.
Step 6. Business Location and Zoning
If your small business is in the wrong location, you may not see a lot of foot traffic and this can even close down the business. So before you start, you must first research on the best place to set up your business. You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking municode.com.
STEP 7 – Sort Out Your EIN
The Employer Identification Number or EIN (sometimes referred to as the Federal Employer Identification Number or FEIN) is a nine-digit tax identification number from the Internal Revenue Service (IRS). This number identifies a business operating in the U.S, tracks tax returns and is used to open a bank account.
Much like what a social security number is to a person, the EIN is a social security number for a business. While most businesses will need to get an EIN, some do not. Partnerships, corporations and many LLCs OR sole proprietorships with employees must file for an EIN.
Sole proprietorships or a single-member LLC with no employees is not required to get an EIN. In these instances, the owner’s social security number is used. Filing the EIN online takes only a few minutes and the number is available immediately.
STEP 8 – FIND FINANCING
To run your business efficiently, you are going to require a seamless accounting process, but before you come to that, you need to have an avenue from which you can finance your business.
Obtaining financing for a small business can be a stressful and time-consuming process. Similar to getting a home loan, the bank is going to want lots of documentation on your personal finances in addition to a solid idea and the business plan.
As a rule of thumb, banks will want to see the owner invest 15%-25% of their money (equity) into a start-up business. That can include cash but also any buildings, tools, vehicles, inventory and equipment that will be used in the business.
It is likely that the bank will want a lien on those items. Credit score is going to play a large part in getting a loan approved. Start-up business loans are largely based on the owner’s personal credit and their personal financial statement.
Step 9. Taxes and Reporting
Indiana taxes every kind of business. Sole proprietorships pay state taxes on business income as part of their personal state income tax returns (Form IT-40).
- Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Indiana partnerships also must file Form IT-65, Indiana Partnership Return.
- LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Indiana LLCs also are required to file a biennial report with the Indiana SOS.
- Corporations. Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Indiana corporation taxes. And, finally, corporations must file a biennial report with the Indiana SOS.
If you have employees, you must also deal with state employer taxes. And, apart from Indiana taxes, there are always federal income and employer taxes.
Step 10: Get Some Appropriate Insurance
Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance you should consider are:
It is recommended that all small businesses, including home based businesses, purchase a general liability policy. Businesses selling professional advice or services such as consulting and accounting firms, should also consider a professional liability policy. In Indiana, businesses with one or more employees, excluding business owners, are required by law to have workers compensation insurance.
STEP 11 – Hire the Right Employees
Hiring employees is a complex and often intimidating process for a new business owner as there are multiple agencies to register with and labor laws to understand. In Indiana, a business will register with the IRS, Department of Revenue, Department of Workforce Development and U.S. Immigration and Customs Enforcement.
- Businesses are responsible for reporting new hires, verifying employees are eligible to work in the U.S., and withholding state and federal taxes.
- Employers will also pay federal and state unemployment taxes, Social Security and Medicare in addition to staying on top of state and federal labor laws.
Step 12: Define Your Brand
The strongest and most memorable businesses are built on a solid brand. If your business is not properly branded, you will find it difficult to draw in customers. When developing your brand, think about what your business stands for.
What are the core values that drive your business? Customers and clients are looking for companies that have a compelling brand, as much as they are shopping for high-quality products and services. So even if it costs you money, but solidify your brand name in the minds of people.
Step 13: Establish a Web Presence
A professional website is critical to the long-term success of your business, regardless of what industry you are in. A website allows potential customers to find your business online and discover the products or services you offer, and it also enhances your business’s credibility.
In addition to a website, you should also consider other avenues for promoting your business online:
- Setting up social media profiles (Facebook, Twitter, etc)
- Creating accounts on review sites (Yelp, Google Reviews, etc)
- Registering for a local Google profile
Step 14: Create Business Banking and Credit Accounts
Using dedicated business banking and credit accounts is essential for personal asset protection. When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued.
You can protect your business by opening a business bank account. This will separate your personal assets from your company’s assets, which is necessary for personal asset protection.