Many self-employed Indiana residents are eager to start their businesses. The simplest and most rational solution to this issue is to join the ranks of sole proprietors.
Organizing and managing a business in this format is the least difficult in America and has no service pitfalls. Although, future business owners will have to adhere to certain norms. Also, be prepared that you will have to face some restrictions regarding the functions of your sole proprietorship.
So, the main task of this manual is to help you answer the essential question – is the business format of an individual enterprise right for you? And, of course, we will tell you which aspects to pay attention to while opening a sole proprietorship and how to set up a business structure in this vein properly.
The Proper Way To Start Business As The Indiana Sole Proprietor
There is no algorithm for organizing the business work of an individual entrepreneur in Indiana as for LLC. In addition, the state does not charge additional service fees for the formation or management of this type of business or company. Are you looking to become an individual business owner and start a sole proprietorship in Indiana? – Just start working!
Though, you still have to go through several additional legal formalities. These service stages are optional. Although many sole proprietors prefer not to neglect them, compliance with these formalities guarantees the legal protection of their interests.
Applying For DBAs
Almost every company and business owner prefers doing business as a DBA. There are many benefits to running a business under an assumed name compared with an entity or LLC. We are talking primarily about creating the business image of your company. Potential clients and consumers will find this approach more professional and give you more confidence. It turns out that a company that uses the real name of its owner is often not competitive.
Let’s clarify that a company owned by sole proprietors can use the DBA to open and manage a business bank account. Customers will appreciate it as one more advantage in favor of the business owner, so they feel more comfortable.
To start an individual enterprise in the state of Indiana, you need to decide about the name. This fictional administrator must be available, otherwise, you can not take it.
To fill out a Certificate for a name, make sure it is available, and then register it with the County Recorder. You can send a request in the form of a PDF file by the postal service or send an application via the Internet using INBiz.
Clarification & Compliance with Tax Requirements
You can run your business in this format and not hire third-party employees. In this case, you do not need to obtain an EIN (Federal Tax Identification Number) because your Social Security number will replace it. Of course, it would be correct to take care of your confidentiality and still use the EIN and not the SSN.
The nature and the structure of the business activity of individual entrepreneurship determine the list of tax requirements that the state will put forward (as with LLC).
You will pay different tax fees when working as an individual entrepreneur in the state of Indiana, depending on the field of your activity. Everything is taken into account here: the presence of employees in your organization, the specifics of your activity, the social or medical orientation of your business, and many other factors.
The amount of tax will be different in each case. You need to know about the tax requirements that are relevant for your business at the moment. You can register with the state tax system to get all the necessary information, as well as pay taxes right at the INTax service.
Business Licenses & Permits
Fortunately, today in the territory of Indiana, entrepreneurs are not required to obtain a general license for everyone, and this greatly simplifies people’s work. But there are still other licenses and/or permits that any businessman should know about.
For example, individual entrepreneurs in the state of Indiana receive industry licenses to conduct their business legally. Entrepreneurs receive these licenses from special agencies. To find out the specific requirements for each type of license, you can use the Business Owner’s Guide, which is presented on the official website of the Indiana government.
Also, any entrepreneur can count on a full consultation on all current licensing issues by contacting the State Information Center at (317) 233-0800).
You should also keep in mind the local licensing requirements that are in effect in all cities of Indiana today. For example, in large cities of Indiana, such as Bloomington, Indianapolis, Fort Wayne, and Evansville, you will obtain several local business permits.
Indiana Sole Proprietor: The Notion & Essence
A sole proprietor is not a legal entity! But any corporation and limited liability company (LLC) has this status. As a sole proprietor, you run the business alone (register and manage it on your behalf). It is worth noting that this gives the business owner advantages, though, imposes additional obligations and responsibilities on him.
Make Sure to Pay Attention to the Following Three Aspects
There are obligations to pay taxes to the state
A business owner and an individual entrepreneur are the same people. It means that filing tax returns is not a requirement, as with an entity or LLC. You need to declare your income and expenses and fill out the declaration of an individual;
Business owners who are registered as sole proprietors have the right to enter into contracts on their behalf, unlike an entity. Also, receiving profit from clients, in checks they can indicate their name in the recipient column;
Flexible terms of business management
The advantage difference between individual entrepreneurship and any entity is the ability to combine work and personal assets. Whereas corporations and LLCs must separate personal assets from company assets. It has several positive and negative aspects. For example, if you have financial difficulties, creditors can seize or confiscate your personal property (house, car, etc.). In the case of corporations and LLCs (or any entity), creditors do not have this freedom, as their powers only apply to business assets.
Of course, the structure of doing legal business as a sole proprietor is greatly simplified while in Indiana. You don’t even have to pay any commission fees provided for the entity or LLC. At the same time, based on the nature and structure of the business activity that you conduct, you will all have to go through a series of entity stages.
The issues of taxation, obtaining licenses, and permits require more detailed consideration. Also, pay attention to the possibility of obtaining and using DBA. These aspects are vital, as their omission can result in unnecessary legal penalties for you.
We have prepared this manual so that you can think over the structure of your business to the smallest detail. Manage it correctly and get more legal profit!