Starting a Sole Proprietorship in Indiana
Starting a sole proprietorship in Indiana is a simple process. The company will have only one owner, and there are no forms that need to filed with the state.4 min read
Starting a sole proprietorship in Indiana is a simple process. The company will have only one owner, and there are no forms that need to be filed with the state. Also, your social security number can be utilized as your tax ID.
Write a Business Plan
Oftentimes, many people will write a business plan only as a requirement to secure a bank loan. Although this is a valid reason, writing a formal business plan has many important benefits. Creating a business plan can serve as a roadmap, helping an entrepreneur plan on where they want their business to go. It also allows for a business owner to get their ideas down on paper. Business planning is an important part of creating and establishing a successful business.
There are five sections that need to be included in every business plan:
- Executive Summary: The first part of a business plan is a summary of the entire plan. Putting the executive summary at the beginning of the plan allows for a lender or investor to quickly review what the business owner wants to do. If interested, they can dive deeper into the plan.
- Business Review: This section focuses on what the business sells and why there is a need for this company. Keep in mind that your plan will be audited by a review committee, so it's important to provide clear and relevant details.
- Management and Employees: This portion of the plan focuses on salaries, staffing requirements, and details of day-to-day operations. In addition, the owner's experience is described here, which is a big factor in getting a loan. Therefore, it's important to provide any relevant details.
- Marketing: The goal of a marketing strategy is to find enough business for the company so that it can financially support itself and continue to grow.
- Financial projection: The most important part of a business plan is the financial projection because it will help determine if there's a realistic opportunity for the organization to make a profit.
Select a Business Entity
The business entity is sometimes referred to as a business structure. It describes how a business is legally organized. The four most common business structures are:
- Sole proprietorship: A sole proprietorship is the most common and simplest structure selected to start a business. It's an unincorporated business that is owned and operated by one individual with no contrast between the business and you, the owner. You receive all profits and are responsible for all your business's losses, debts, and liabilities. There is no mandate to file as a sole proprietorship in Indiana.
- General partnership: This is an association of two or more people carrying on a business with the goal of earning a profit. A partnership is viewed as being one and the same as its owners. There is little formality involved in creating a partnership.
- Corporation: A corporation is a legal entity that is distinct and separate from its owners. Corporations enjoy many of the responsibilities and rights that an individual possesses. Corporations have the right to enter into contracts, sue and be sued, loan and borrow money, own assets, hire employees, and pay taxes.
- Limited liability company (LLC): The LLC business structure combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation, creating the best of both worlds for business owners.
Pick and Register an Effective Business Name
You can operate under your legal name or you can create a custom business name. Your name should be unique in the marketplace. You shouldn't use a name if it's already in use or if a similar name is being used. Search that the name you'd like to use is available by contacting the Secretary of State (SOS) of Indiana.
Obtain Required Permits and Licenses
Depending on your line of business, you may need permits and licenses before opening your doors. Verify the specific requirements by contacting the SOS of Indiana.
Obtain an Employer Identification Number (EIN)
Most sole proprietorships will use the owner's social security number as their tax ID number.
Register to Pay Indiana Taxes
If you have employees or sell goods to the public, you'll need to register to pay taxes with the SOS of Indiana.
Legally Hire Employees
New employees must be reported to the Indiana New Hire Reporting Center within 20 days of when they begin working.
Open a Business Bank Account
Many small business owners will open a business bank account with their local bank, but it's always a good idea to shop around to make sure you're getting the best rates.
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