An Indiana LLC offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like a limited partnership or a Subchapter S Corporation, are generally prime candidates for a business just starting. The state of Indiana gives public support to an Indiana LLC.
Should I form an Indiana LLC?
An Indiana LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Indiana to your LLC. Your Indiana LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Indiana LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.
Advantages and Disadvantages of a Indiana LLC
Advantages of LLC
Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of LLC
Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By Indiana and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial Indiana LLC members, the name and address of your Indiana registered agent, the details of which will be introduced into the body of your LLC operating agreement and related Indiana LLC formation documents assembled for application to the state of Indiana.
Indiana's 2011 Business Tax Climate Ranks 10th
Indiana ranks 10th in the Tax State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property.
Indiana's Individual Income Tax System
Indiana's personal income tax system consists of a flat 3.4% rate on federal adjusted gross income. That rate ranks 41st highest among states levying an individual income tax.
Indiana's Corporate Income Tax System
Indiana's corporate tax structure consists of a flat rate of 8.5% on all corporate income. Among states levying corporate income taxes, Indiana's top rate ranks 11th highest nationally.
Indiana Property Taxes: Comparatively High
Indiana is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Indiana's localities collected $1,337.60 per capita in property taxes in fiscal year 2006, the latest year for which the Census Bureau has published state-by-state data.