Obtain a Tax ID (EIN) Number and Register Your Business in Indiana

For millions of Americans, entrepreneurship is a calling, and when you come up with an idea for a business that truly resonates with you, you can turn that dream into a reality. Indiana is an especially welcoming state for entrepreneurs and small business owners, but there are some important steps you’ll need to take before you can start making money in the state.

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Steps to Getting a Tax ID (EIN) Number and Register Your Business in Indiana

1. Indiana Means Business
2. Forming a Business in Indiana
3. Federal Tax ID (EIN) Number Obtainment
4. Indiana State Tax ID Number
5. Localized Licenses and Permits in Indiana

1. Indiana Means Business

If you already live in Indiana, you might realize the number of resources and opportunities available for entrepreneurs there. If not, you won’t have to look far to find the stats. Roughly 97 percent of the businesses in Indiana are small businesses, which number more than 500,000 and collectively employ 1.2 million Indiana residents. That means more than 45 percent of employed Indianans work for small businesses- which is good news if you’re a startup entrepreneur.

Indiana’s economy is growing at a consistently rate, and the state is home to a number of organizations and resources available to entrepreneurs, including the Indiana Small Business Development Center. If you want to get the most out of your surroundings, you can set up shop in Indianapolis, Evansville, Fort Wayne, or another big city, or if you want less competition, you can head to a small- to mid-sized city in their outskirts.

2. Forming a Business in Indiana

No matter where you want to start your company in Indiana, your first order of business will be deciding what business structure to use. There are several options here, each with distinct advantages and disadvantages. There’s no single business structure that’s innately “better” than the others, but some structures will fit your business more appropriately than others.

There are several criteria you can use to make this decision. Perhaps most superficially, there’s the complexity of each business type. Sole proprietorships are the easiest to form, since they don’t require much paperwork or many regulatory hurdles to jump through. Partnerships are about as easy- they’re practically the same, with the only exception being the number of founding members. Limited liability companies (LLCs) are a little more complex, and in Indiana, LLCs are required to file a biennial report. Corporations are the most complex, with tons of rules and restrictions, and extra hoops to jump through. That’s mostly because corporations can issue public shares, and therefore must meet special requirements.

A better factor for your decision is taxation. Sole proprietorships and partnerships are taxed on an individual level, making them the simplest business to tax. LLCs and corporations are treated as legally distinct “pass-through” entities; they track their income and expenses separately, and owners can withdraw funds as salary, profits, or dividends, and pay taxes on those withdrawals as an individual. In Indiana, LLCs are also required to pay biennial report filing fees of $30, though there is no specific tax for LLCs. The corporate income tax rate for Indiana is 5.75 percent, and is set to decrease every year through 2021 until it reaches 4.9 percent.

You should also consider the liability protection afforded to you by each business type. Sole proprietorships and partnerships offer little to no liability protection; you’ll be liable for any legal issues or debts that come up during your business ownership. LLCs offer a bit more liability protection, but if you want the greatest degree of protection, you’ll need a corporation.

Before making the final decision, spend some time creating a business plan. That way, you can get a better feel for the strengths and weaknesses of your company, and make a better decision for your company’s future.

3. Federal Tax ID (EIN) Number Obtainment

Once you know what type of business structure you want to use, you’ll need to register your business with the federal government, and in the process, get a federal tax ID (employer identification number, or EIN). This is going to serve as your business’s unique identifier- think of it as your business’s social security number.

You’ll need this number if you plan on hiring employees, or if you want to build credit or open a business bank account. You may also need it for various business functions, like applying for terms with a new company.

Getting your federal tax ID number can be a lengthy process, but there are ways to accelerate it. By using our federal tax ID obtainment services, you can get your business registered with the federal government in a matter of hours- and get the signature number you need to begin operations.

Apply for an Indiana Tax ID Number

4. Indiana State Tax ID Number

Your federal tax ID number is a good start, but your business will also need to get registered at the state level. Indiana requires your business to register with the state and get a state tax ID number if you plan on selling taxable goods and services, if you need to register for excise taxes, or if you plan on hiring employees.

The process is similar to getting a federal tax ID number; it’s not prohibitively complicated, but it can be confusing. Take advantage of our Indiana state tax ID obtainment services if you want to make the process as smooth as possible, and get registered with the state in a matter of hours!

5. Localized Licenses and Permits in Indiana

You should also be aware that your business may be required to get a license or a permit to operate in the state of Indiana. There are many variables to consider here, and many industries that have complex rules on licensure (such as healthcare, transportation, and construction). Your best course of action is to use Indiana’s Business Owner’s Guide to licenses, which explains which businesses need what types of licenses and why.

However, you should also be aware that some cities and counties have different licensure requirements for businesses. In addition to using this state level search, you’ll want to contact your local Chamber of Commerce to ensure you’re in compliance.

This guide should help you understand everything you need to get a business up and running successfully. From there, it comes down to the strength of your idea and your personal resilience as an entrepreneur. Start things off right by utilizing our federal tax ID and Indiana state tax ID obtainment services, so you can get your business registered and operational faster!