How to Incorporate in Indiana (August 2024 Update)

Incorporating your small business is an important step towards establishing a formal, legal business entity and securing liability protection. When you incorporate in Indiana, you form a corporation - either a standard C corporation or an S corporation - that shields your personal assets from the company's debts and obligations. An Indiana corporation has many of the same rights and responsibilities as an actual person, from entering contracts to paying taxes.

While incorporating does come with administrative tasks and regulations, the benefits often outweigh the costs for small business owners. From tax savings to corporate financing opportunities, establishing an Indiana corporation places your company on solid legal and financial ground. This guide will walk you through the step-by-step process, from choosing a business structure all the way through staying compliant after incorporating.

Steps to Incorporate in Indiana

1. Choose a Business Structure

The first decision you need to make when incorporating in Indiana is whether to form a standard C corporation or an S corporation. While both structure types provide owners with personal liability protection, there are a few key differences:

• Taxation: C corporations are subject to "double taxation" - once at the corporate level and again if profits are distributed to shareholders. S corporation income, losses, deductions and credits pass through to owners' personal tax returns.
• Ownership Rules: C corps can have unlimited shareholders. S corps are limited to 100 shareholders maximum and can only have one class of stock.
• Filing Requirements: To become an S corp you must file special paperwork, called IRS Form 2553.

For small businesses with only a handful of shareholders, an S corp often makes the most sense thanks to pass-through taxation. Larger, more complex businesses may need a C corporation to accommodate more owners and classes of stock.

2. Check if Your Business Name is Available

The next step is making sure the name you want to operate under isn't already taken by another Indiana business. Your corporation's name must be distinguishable from other names registered with the Secretary of State. It's smart to search the state database before filing any paperwork.

You can also reserve an available business name for 120 days while you complete the incorporation process by filing a Name Reservation application. Just make sure to include the business entity designator at the end (Incorporated, Corporation, Corp., etc.) to identify that it is a corporation.

3. Appoint a Registered Agent

Before incorporating, you must designate a registered agent - an Indiana resident or business that can receive official mail, tax forms, lawsuits, and notices from the state on your company's behalf. Many business owners act as their own registered agents, but you can also hire a specialized registered agent service for convenience.

4. File Articles of Incorporation

To formally create your Indiana corporation, you'll need to file Articles of Incorporation paperwork with the Business Services Division of the Secretary of State. You can submit the articles by mail, in person at the state office, or through the SOS online portal.

The articles must include your corporation's name and entity designator, the number and type of stock shares, your registered agent's name and signature, as well as the business purpose. Filing fees are typically $100. Once filed, your corporation has legal existence.

5. Obtain an EIN from the IRS

You'll need an Employer Identification Number (EIN) from the IRS to handle payroll taxes, open a bank account, file corporate tax returns and more. The EIN acts as a Social Security Number (SSN) for your business and is required for Indiana corporations, regardless of whether you plan to have employees. Luckily, obtaining an EIN is free and easy through the IRS website.

6. Create Internal Governance Rules and Records

While not formally filed, you should create corporate bylaws, shareholder agreements, and other governing documents to run your Indiana corporation effectively. Bylaws establish operating procedures, director duties, stock policies, and more.

It's also vital to maintain detailed records such as shareholder meeting minutes, ownership ledgers, and director resolutions. Savvy business owners often use software to keep track of all governance documents and records in one secure, centralized company database.

7. Hold an Organizational Meeting

Once your corporation legally exists, you must hold an initial organizational meeting. Shareholders and directors attend to formally adopt bylaws, appoint officers, authorize stock certificate issuance, approve business licenses and bank accounts, and conduct any other startup business. You'll also want to keep official meeting minutes for the corporate records.

8. Open a Business Bank Account

A dedicated business bank account keeps your company finances separate and streamlines record-keeping, tax documentation, audits, and more. To open an account, you'll need your EIN and corporation paperwork like Articles of Incorporation. Be sure to set up appropriate financial controls and withdrawal/depository authorizations.

For more information, take a look at our article on the key benefits of business checking accounts.

9. Maintain Compliance

You'll have ongoing legal and tax filing duties to keep your Indiana corporation in good standing. This includes submitting state information returns, paying corporate income taxes, renewing business licenses, holding annual shareholder meetings, and keeping your corporate records complete.

The Secretary of State also requires corporations to file a biennial Business Entity Report to update your business details. Set calendar reminders for every filing deadline to avoid hefty fees or dissolution if filings are late. You can also use incorporation services that automatically track due dates and file renewal paperwork on your behalf.

Additional Incorporation Requirements

Depending on your business activities, you may need additional licenses or permits to legally operate in Indiana. Use the Business Owner's Guide licensing tool to determine if you need to register for a sales tax license, employer tax ID, or other regulatory approvals.

It's also essential to obtain appropriate insurance coverage for your new corporation. Common polices include general liability, professional liability, product liability, commercial property insurance, and directors and officers (D&O) insurance. An insurance broker can guide you on the best coverage.

As of January 2021, new corporations in Indiana must also file a federal Beneficial Ownership Information (BOI) report disclosing owners and executive officers to FinCEN. This helps law enforcement investigate financial crimes. Filing is free and information isn't public record.

Why Incorporate in Indiana?

Forming an Indiana corporation establishes a formal, legally recognized business entity separate from owners. It also ensures vital liability protection - only corporate assets can be pursued in lawsuits or bankruptcy, not your personal assets. This gives business owners and shareholders confidence to take reasonable risks and access more growth opportunities.

Incorporating also unlocks additional financing options, from issuing stock shares to institutional lending. Other advantages include potential tax savings, transferable ownership, and perpetual existence beyond original owners. Indiana offers favorable low corporate income tax rates to make incorporating even more appealing.

With the right preparation, incorporating your small business in Indiana is straightforward. Just remember to file your paperwork, follow governance procedures, and stay up-to-date on compliance duties. Refer to the Secretary of State website for additional new business resources. And don't hesitate to contact an Indiana business attorney for personalized guidance on corporation formation.