How to Set up a Sole Proprietorship in Indiana
Create a plan for your Indiana business before filing documents., Decide if you want to use a creative business name., Apply for applicable business tax licenses with the Indiana Department of Revenue., Apply for a bank account, if you want to...
Step-by-Step Guide
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Step 1: Create a plan for your Indiana business before filing documents.
Many of the steps to starting a sole proprietorship require fees and yearly renewal.
Do not file until 1 to 2 months before you plan to begin operating your sole proprietorship.
A detailed business plan is an important step for any business, especially if you plan to attract funding, such as loans or investors.
Create a document that explains the business, marketing strategy, financial strategy, schedule and management plans. -
Step 2: Decide if you want to use a creative business name.
You can choose to operate your business under your full legal name and avoid filing paperwork.
If you plan to use any other name, you must file a Certificate of Assumed Business Name with the County Recorder, in the county where the business is located.
Visit your local County Recorder's office to request the certificate application or search online for your County Recorder website.
The assumed business name certificate may also be referred to as a "doing business as" (DBA), Certificate of Firm, fictitious business name or Indiana trade name form.
Fill out your personal and business information as well as your assumed business name.
Print the document on legal sized paper,
8.5 x 14 inches, if requested.
Submit it to your local County Recorder along with a fee of $11 to $100 for filing the document. , Not all businesses are required to file for this license and collect tax.
However, the following types of businesses should apply for the license by filing Form BT-1 at in.gov.
If you plan to sell any items, you must apply to collect Indiana sales tax.
If you plan to sell food and beverages, you must also apply to collect the food-and-beverage tax.
If you plan to sell gasoline, you must apply for the prepaid fuel tax.
If you have any employees, you must apply to collect federal and Indiana withholding tax.
If you plan to rent any properties or spaces for less than 30 days, you must apply to collect the innkeeper's tax.
If you plan to rent motor vehicles, you must apply to collect the motor vehicle tax.
If you plan to sell fireworks, you must pay a safety fee.
If you plan to sell tires, you must apply to pay a tire fee. , Although the business and personal income are reported together on taxes, this is the first step in ensuring safety of personal assets.
Bring your Certificate of Assumed Business Name and Employment Identification Number (EIN) to the bank, if you have them. , You must register with a number of federal and state agencies.
These are optional steps, if you currently have no plan to employ people.
Apply for an EIN with the Internal Revenue Service (IRS), at IRS.gov.
This will replace the use of your social security number on all tax documents, except your personal returns.
All employees will be listed as an employee under this number.
Some Indiana sole proprietors choose to apply for an EIN even if they don't have employees.
It can offer extra protection against identity theft, as it decreases the amount that you use your social security number.
Acquire worker's compensation insurance.
Indiana law requires that a business with any employees must have this coverage.
You can find worker's compensation insurance from both local or Internet-based companies.
Register all new employees with the State of Indiana and the IRS.
You can report them to the federal government directly at IRS.gov. , Research self-employment on the IRS website to see how often you will be required to file taxes and employee withholding forms. , You will contribute to the federal social security and Medicare taxes through the self-employment taxes rather than through employer withholding.
Itemize your expenses and deductions on the IRS Form
1040.
You are allowed to deduct half of the
13.3 percent self-employment tax when you figure out your adjusted gross income.
Self-employment tax and applicable business deductions and expenses change from year to year, so make sure to check the IRS website for updates. -
Step 3: Apply for applicable business tax licenses with the Indiana Department of Revenue.
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Step 4: Apply for a bank account
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Step 5: if you want to separate your business expenses and income from your personal assets.
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Step 6: File the appropriate paperwork if you plan to have employees.
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Step 7: File quarterly
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Step 8: semi-annual or annual tax returns for your sole proprietorship.
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Step 9: Report your earnings
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Step 10: business expenses and deductions on your personal federal and state tax returns.
Detailed Guide
Many of the steps to starting a sole proprietorship require fees and yearly renewal.
Do not file until 1 to 2 months before you plan to begin operating your sole proprietorship.
A detailed business plan is an important step for any business, especially if you plan to attract funding, such as loans or investors.
Create a document that explains the business, marketing strategy, financial strategy, schedule and management plans.
You can choose to operate your business under your full legal name and avoid filing paperwork.
If you plan to use any other name, you must file a Certificate of Assumed Business Name with the County Recorder, in the county where the business is located.
Visit your local County Recorder's office to request the certificate application or search online for your County Recorder website.
The assumed business name certificate may also be referred to as a "doing business as" (DBA), Certificate of Firm, fictitious business name or Indiana trade name form.
Fill out your personal and business information as well as your assumed business name.
Print the document on legal sized paper,
8.5 x 14 inches, if requested.
Submit it to your local County Recorder along with a fee of $11 to $100 for filing the document. , Not all businesses are required to file for this license and collect tax.
However, the following types of businesses should apply for the license by filing Form BT-1 at in.gov.
If you plan to sell any items, you must apply to collect Indiana sales tax.
If you plan to sell food and beverages, you must also apply to collect the food-and-beverage tax.
If you plan to sell gasoline, you must apply for the prepaid fuel tax.
If you have any employees, you must apply to collect federal and Indiana withholding tax.
If you plan to rent any properties or spaces for less than 30 days, you must apply to collect the innkeeper's tax.
If you plan to rent motor vehicles, you must apply to collect the motor vehicle tax.
If you plan to sell fireworks, you must pay a safety fee.
If you plan to sell tires, you must apply to pay a tire fee. , Although the business and personal income are reported together on taxes, this is the first step in ensuring safety of personal assets.
Bring your Certificate of Assumed Business Name and Employment Identification Number (EIN) to the bank, if you have them. , You must register with a number of federal and state agencies.
These are optional steps, if you currently have no plan to employ people.
Apply for an EIN with the Internal Revenue Service (IRS), at IRS.gov.
This will replace the use of your social security number on all tax documents, except your personal returns.
All employees will be listed as an employee under this number.
Some Indiana sole proprietors choose to apply for an EIN even if they don't have employees.
It can offer extra protection against identity theft, as it decreases the amount that you use your social security number.
Acquire worker's compensation insurance.
Indiana law requires that a business with any employees must have this coverage.
You can find worker's compensation insurance from both local or Internet-based companies.
Register all new employees with the State of Indiana and the IRS.
You can report them to the federal government directly at IRS.gov. , Research self-employment on the IRS website to see how often you will be required to file taxes and employee withholding forms. , You will contribute to the federal social security and Medicare taxes through the self-employment taxes rather than through employer withholding.
Itemize your expenses and deductions on the IRS Form
1040.
You are allowed to deduct half of the
13.3 percent self-employment tax when you figure out your adjusted gross income.
Self-employment tax and applicable business deductions and expenses change from year to year, so make sure to check the IRS website for updates.
About the Author
Kimberly Miller
Creates helpful guides on DIY projects to inspire and educate readers.
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