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Whether you’re a Colts fan, Irish fan, or just want to watch NASCAR, Indianans can form LLCs to protect their personal assets from claims against their business.
4 EASY STEPS TO FORM YOUR INDIANA LLC
- 1: Name Your LLC
Indiana LLCs must include “limited liability company,” “LLC,” or L.L.C.” in their name. The name must also be distinguishable from all other business entities formed in Indiana or qualified to do business in Indiana.
- 2: Articles of Organization
Any person can file articles of organization for an Indiana LLC. These articles must include: the name of the LLC, the name and address of the LLC’s registered agent, the date when the LLC will dissolve (or if it will exist perpetually), and if the LLC will have managers. In addition, the organizer can add any other provisions that the LLC would like, although this will be public record.
Once the articles of organization are drafted, they are filed with the Corporations Division of the Secretary of State’s office, along with a $90 filing fee ($75 if filed online).
- 3: Operating Agreement
Indiana LLCs can adopt an operating agreement with the consent of all members to govern its internal affairs. This agreement doesn’t need to be written, and will not be filed with any government agency. Our recommendations for operating agreements are that they are written and executed by all members.
- 4: Ongoing Maintenance
EIN: If you’re going to hire employees for your LLC, or if you have multiple members, you need to request an EIN from the I.R.S. You can do this yourself, or a service like Incnow can obtain one for you.
Biennial Report: Every two years, an Indiana LLC must file a biennial report with the Secretary of State. This report must include the LLC name, the name and address of its registered agent, and the address of its principal office, and a $30 filing fee ($20 online).
WHY FORM AN LLC IN INDIANA?
The Benefits and Advantages of Creating an Indiana LLC
- Advantages of Forming an Indiana LLC
The Indiana LLC Act gives LLC members contractual freedom to customize their capital contributions and their shares of profits and losses. An LLC’s members can specify a method for allocating profits and losses in an LLC Agreement that is greater or lesser than their portion of capital contributions. This gives members contractual flexibility to tailor their income and risks of loss to further their big-picture asset management plans.
In addition, an LLC agreement may establish classes of membership interests with different rights, powers, and duties, including voting and non-voting interests. This facilitates everything from complex, multi-million dollar business deals to succession planning in family businesses and estate planning by gifts of non-voting interests.
The Indiana LLC Act does not require LLC members to be listed with the Department of State. A “person” may organize an LLC, and the person does not need to be a member of the LLC. The definition of “person” includes almost any kind of business or legal entity. An LLC’s members may therefore have an entity or person who is not a member file the LLC’s articles of organization with the Indiana Secretary of State.
The Indiana LLC Act provides for an LLC’s unlimited life. An operating agreement may specify that an LLC has a perpetual duration. An LLC’s existence can therefore outlive its members’ lifetimes.
Dealing with Business Partners
The Indiana LLC Act gives members contractual freedom to customize the duties each party to the LLC agreement owes to the other parties. The Act provides that “[u]nless otherwise provided in a written operating agreement, a member or manager is not liable for damages to the limited liability company or to the members of the limited liability company for any action taken or failure to act on behalf of the limited liability company, unless the act or omission constitutes willful misconduct or recklessness.” Furthermore, the Act provides that a written LLC agreement may “[e]liminate or limit the personal liability of a member or manager for monetary damages for breach of a duty.” This gives LLC members the most latitude possible to determine whether, and to what extent, each party to the LLC agreement will have duties to the other parties.
The Act also allows members to customize the duties each party to LLC agreement owes to the other parties in transactions between the LLC and members and managers. For example, the Act provides that “[e]xcept when prohibited in a written operating agreement, a member or manager may lend money to and transact other business with the limited liability company and, subject to other applicable law, has the same rights and obligations with respect to the transaction as a person who is not a member or manager.” This gives parties to the LLC agreement the ability to take advantage of mutually beneficial opportunities.
Preventing Unwanted Business Partners
The Indiana LLC Act protects membership interests from members’ creditors. An LLC agreement may specify the “rights of members to assign all or a portion of their interests in the limited liability company.” This means it may provide that a membership interest may not be assigned. In addition, an LLC agreement may specify the “circumstances in which an assignee of a member’s interest may be admitted as a member of the limited liability company.” This means it may provide that an assignee may not become a member.
Creditors Only Get Passive Rights, Not Control Rights
Even if a membership interest is assigned, the assignee may not participate in the management of the LLC or become a member unless otherwise provided in the operating agreement and upon the unanimous approval of all the non-assigning members, unless the LLC is a single-member LLC. In addition, if a judgment creditor gets a charging order against a member’s membership interest, the judgment creditor has only the rights of an assignee. This enables members to protect their control of an LLC.
- Indiana Registered Agent Services
An Indiana LLC must list an Indiana registered agent for service of process. An Indiana LLC cannot act as its own agent for service of process, even if it has an Indiana address. A commercial registered agent service may act as an Indiana registered agent and office.
- To Keep an Indiana LLC in Good Standing—The Biennial Report
The Indiana LLC Act requires LLCs to file biennial reports. The fee for filing the report is $20 online, or $30 if filing on paper. This fee is required whether an LLC is domestic (Indiana) or foreign (out of state).
Because of the advantages of forming an LLC in Indiana, over 20,000 new LLCs are formed in the state each year. Should you wish to have more flexibility and protection, you may instead form a Delaware LLC even if you operate in Indiana. What are the advantages of a Delaware LLC? (Delaware LLC Advantages). We can then help you file an application for registration to do business in Indiana with your Delaware LLC (Form Delaware LLC).
- Indiana LLC Act and Business Organization Statutory References
IC 23-18-1 “Definitions” IC 23-18-2-4 “Formation; Articles of Organization; Contents” IC 23-18-2-10 “Registered Office; Registered Agent” IC 23-18-4-2 “Acts and Omissions Liability; Trustee for Personal Benefits Derived Through Company; Duties of Member in Company Providing for Manager” IC 23-18-4-4 “Written Operating Agreement” IC 23-18-4-5 Operating Agreements; Objectives” IC 23-18-4-12 “Business Between Company and Member or Manager” IC 23-18-5-3 “Allocation of Profits and Losses” IC 23-18-6-3.1 “Assignment of Interest; Companies Formed After June 30, 1999” IC 23-18-6-4.1 Assignee Membership; Companies Formed After June 30, 1999” IC 23-18-6-7 “Judgment Creditors of Members; Rights” IC 23-18-11-8 “Registered Office; Registered Agent” IC 23-18-12-11 “Biennial Report”
Indiana vs. Delaware LLC's: Which State Is Better?
|States||LLC Filing Fee||Required to Name Members or Managers||Report Frequency||Annual Fee?||Reduce Fiduciary Duties?||Series?||Charging Order as Exclusive Remedy||Maximum Freedom of Contract||Separate Equity Court?|
|Indiana||$90||No||biennial||No ($30 Biennial fee)|