If you want to start and run an Indiana limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Indiana LLCs.
The State of Indiana requires you to file a biennial report for your LLC. You can file the report online at the SOS website or file a form (State Form 48725) by mail. The report is due every other year in the anniversary month of your LLC's formation. For example, if your LLC was formed on July 15 of an odd-numbered year, then your report would be due in July of each subsequent odd-numbered year. The current filing fees are $30 for filings by mail and $22.44 (including $2.44 credit card fee) for online filings.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay income taxes, only their members do. Some states impose a separate tax or fee on LLCs for the privilege of doing business in the state. Indiana, though, is not one of those states.
However, in some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Indiana, like almost every other state, taxes corporation income. Indiana's corporation income tax rate is set to become progressively lower in the coming years. Through July 2015 the rate is a flat 7% of adjusted gross income. Then, from July 1, 2015 through June 30, 2016, the rate is 6.25%, and it goes still lower after that. The tax is payable to the state's Department of Revenue (DOR). Use the state's corporation income tax return (Form IT-20) to pay the tax. For more details, check the DOR website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Indiana employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOR. Begin by registering your business with the DOR either online or on paper (Form BT-1, Business Tax Application). Once you've registered, you'll need to file withholding taxes on a periodic basis (for example quarterly) using Form WH-1. You'll also need to use Form WH-3 each year to reconcile your LLC's tax withholding. For more information, including regarding required electronic filings, check the DOR website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through Indiana's Department of Workforce Development (DWD). You can register for these taxes online or by using State Form 2837, Report to Determine Status. Then, each quarter, use State Forms 251 and 54256 to report on wages and pay the UI taxes. For more information, including regarding online filings, check the DWD website.
If your LLC will sell goods to customers in Indiana, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue and then make periodic sales tax payments for goods sold. You can register online or mail in Form BT-1. You must submit a $25 fee with your application. After you've registered, you'll be sent a Registered Retail Merchant Certificate (RRMC). Then, on a periodic basis, you must submit sales tax returns to the DOR. You can do this online through the INTax website. For more information, including online filing requirements, check the DOR website.
If you will be doing business in states other than Indiana, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Indiana, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.