Starting a Business in Indiana: Licenses, Permits & Requirements (2026)

Last updated: February 25, 2026

Indiana is one of the most business-friendly states in the Midwest, with low formation costs, a flat income tax rate of just 2.95%, and a streamlined one-stop registration portal called INBiz. You can form an LLC online for $95 and have it processed in one business day. The state’s biennial report is only $32 every two years – far cheaper than neighbors like Illinois ($75/year) or Ohio ($99 biennial).

That said, Indiana has a 7% sales tax rate (the highest flat rate in the Midwest), all 92 counties levy their own income tax on top of the state rate (adding 0.5% to 3.38%), and workers’ compensation is required as soon as you hire your first employee. There is no single statewide business license – licensing happens at the industry and local level. This guide walks you through every step using official Indiana government sources.

How to Start a Business in Indiana (Step by Step)

Step 1: Choose Your Business Structure

Your business structure determines your personal liability, tax treatment, and ongoing paperwork. The most common options in Indiana:

• Sole Proprietorship – Simplest to start, no state filing required (just a DBA filing with your county recorder if using a trade name). You are personally liable for all business debts.
• LLC (Limited Liability Company) – Most popular choice for small businesses. Protects personal assets, offers flexible tax treatment, and is affordable to form in Indiana ($95 online).
• Corporation (S-Corp or C-Corp) – More formal structure with shareholders, directors, and officers. Better for businesses seeking investors. Indiana’s corporate income tax rate is 4.9%.
• Partnership – For businesses with two or more owners. Options include general partnership (GP), limited partnership (LP), or limited liability partnership (LLP).

For most small businesses, an LLC is the right choice. Indiana’s $95 online filing fee and $32 biennial report make it one of the most affordable states in the country for LLC maintenance.

Step 2: Register Your Business with the State

LLC Formation via INBiz

Indiana business entities are registered through the Secretary of State, Business Services Division. All filings go through the INBiz portal – Indiana’s one-stop shop for business registration, tax registration, and professional licensing.

Item	Cost
Articles of Organization (online via INBiz)	$95 + processing fee (~$97 total)
Articles of Organization (mail/in-person)	$100
Business name reservation (optional)	$10 (120 days)
Biennial Business Entity Report	$32 (online) / $50 (mail) every 2 years
Assumed Business Name / DBA (via SOS)	$20 (online) / $30 (mail)
DBA for sole proprietors (County Recorder)	~$25-$35 (varies by county)

How to file:

1. Go to INBiz and create an account
2. File Articles of Organization online – choose a business name that includes “LLC,” “L.L.C.,” or “Limited Liability Company”
3. Check name availability through the Business Entity Search
4. Designate a registered agent with a physical Indiana address – must be at least 18 years old, reside in Indiana, and be available during normal business hours
5. Pay the $95 filing fee online (credit card, plus ~2.15% processing fee)
6. Online filings are typically processed within 1 business day

Biennial Business Entity Report

Indiana LLCs must file a Business Entity Report every two years (biennial, not annual). The report is due by the last day of the anniversary month of your LLC’s formation. The fee is $32 online or $50 by mail. Failure to file may result in administrative dissolution of your entity.

Operating Agreement

Indiana law does not require an LLC operating agreement, but having one is strongly recommended. It outlines member rights, profit/loss sharing, management structure, and what happens if a member leaves. Keep it with your business records – it does not need to be filed with the state.

Assumed Business Name (DBA)

If your LLC operates under a name different from its registered legal name, file a Certificate of Assumed Business Name with the Secretary of State via INBiz ($20 online / $30 by mail). Sole proprietors and general partnerships file with the County Recorder’s office in each county where they operate (~$25-$35 depending on the county).

Federal EIN (Employer Identification Number)

After forming your LLC, apply for a free EIN from the IRS at IRS.gov. You’ll receive it immediately when applying online. You need an EIN to open a business bank account, hire employees, and file taxes.

Step 3: Get Required Licenses & Permits

No Statewide General Business License

Indiana does not require a single statewide business license. Licensing is industry-specific, profession-specific, and location-specific. The Indiana Professional Licensing Agency (PLA) regulates over 40 professions including cosmetologists, plumbers, private investigators, and healthcare providers.

Local Licensing

Many cities and counties require local business licenses or permits. Indianapolis/Marion County requires business licenses through the Department of Business and Neighborhood Services. Zoning approval is typically required regardless of location. Contact your city clerk or county recorder for local requirements.

Registered Retail Merchant Certificate

If your business sells taxable goods or services, you need a Registered Retail Merchant Certificate (RRMC) from the Indiana Department of Revenue. The fee is $25 per business location (one-time, non-refundable). Register through INBiz using the BT-1 Business Tax Application. The certificate is valid for 2 years and renews automatically if all returns are filed.

Step 4: Register for State Taxes

Indiana State Income Tax

Indiana has a flat state income tax rate of 2.95% for 2026 (reduced from 3.00% in 2025). This rate applies to all individual income regardless of amount. Further reductions are scheduled, potentially dropping to 2.90% in 2027.

County Income Tax

All 92 Indiana counties levy their own income tax on top of the state rate. County rates range from 0.50% to 3.38% depending on your county of residence. Most counties charge between 1.00% and 2.50%. Combined state + county income tax rates typically range from 3.45% to 6.33%.

View all county tax rates at the Indiana DOR County Tax Information page.

Indiana Sales Tax

If your business sells taxable goods or services, register for a Registered Retail Merchant Certificate through INBiz.

• Sales tax rate: 7% statewide (no local add-ons)
• Taxable: Most tangible goods, prepared food, some services
• Exempt: Most services, unprepared groceries, prescription medications
• Registration: BT-1 application via INBiz ($25 per location)
• Note: Must file $0 returns even in periods with no sales activity

Food and Beverage Tax

Over 45 Indiana counties and cities levy an additional Food and Beverage (FAB) Tax of 1-2% on prepared food and drinks. Marion County (Indianapolis) charges 2%. Food businesses must register for FAB tax in each adopting jurisdiction where they operate.

Employer Taxes (If Hiring Employees)

Register for employer tax accounts through the BT-1 application on INBiz.

• Unemployment Insurance (UI) Tax: New employers start at 2.50% on the first $9,500 of each employee’s wages per year. Experience-rated range: 0.50%-9.40%.
• Withholding Tax: Register to withhold both state and county income taxes from employee paychecks.

Report new hires electronically to the Indiana New Hire Reporting Center within 20 business days of the hire date. Electronic filing is mandatory as of July 2024.

Step 5: Get Business Insurance

Workers’ Compensation Insurance

Indiana requires workers’ compensation insurance for employers with one or more employees. There is no minimum employee threshold – coverage is mandatory as soon as you have any employees (full-time, part-time, or seasonal).

Status	Requirement
1 or more employees	Workers’ comp is mandatory
Sole proprietor with no employees	Not required (may opt in voluntarily)
Independent contractors	Can file a certificate of exemption ($15)
Farm/agricultural laborers	Exempt
Domestic/casual workers	May elect optional coverage

Penalties for non-compliance: Fines up to $100/day for operating without coverage. Willful failure is a misdemeanor (up to 1 year imprisonment and $5,000 fine). Uninsured employers may also be liable for double compensation to injured workers. Coverage is available through private carriers or through the Indiana Assigned Risk Pool for high-risk businesses.

General Liability Insurance

While not always legally mandated at the state level, general liability insurance is practically essential. Many clients, landlords, and government contracts require proof of coverage. Industry standard: $1 million per occurrence / $2 million aggregate.

Indiana Business Guides by Industry

Every industry has different licensing, permit, and insurance requirements. Choose your business type for a detailed breakdown of everything you need in Indiana:

• How to Start a Cleaning Service in Indiana – Insurance, bonding, sales tax exemptions, and cost breakdown
• How to Start a Food Truck in Indiana – County health permits, CFPM certification, commissary requirements, and new statewide license coming in 2027
• How to Start a Daycare in Indiana – FSSA licensing, staff ratios, background checks, training requirements, and updated 2025 ratios
• How to Start an HVAC Business in Indiana – No state license required, local licensing by city, EPA 608 certification, and insurance
• How to Start a Hair Salon in Indiana – PLA cosmetology license, salon permit, 1,500-hour education, PSI exam, and costs
• How to Start a Landscaping Business in Indiana – OISC pesticide licensing, fertilizer certification, stormwater permits, and workers’ comp
• How to Start a Private Investigation Business in Indiana – PLA firm licensing, experience requirements, recording laws, and insurance

Indiana Business Resources & Official Links

Resource	What It’s For
Indiana Secretary of State – Business Services	LLC/Corp formation, entity search, biennial reports
INBiz – Indiana Business Portal	One-stop shop for business filings, tax registration, and licensing
Indiana Department of Revenue	Sales tax, income tax, withholding tax, employer tax registration
DOR – Sales Tax Information	Sales tax registration, rates, and filing requirements
Indiana Department of Workforce Development	Unemployment insurance, employer registration
Indiana Workers’ Compensation Board	Workers’ comp requirements, compliance, employer resources
Indiana Professional Licensing Agency (PLA)	40+ regulated professions – cosmetology, plumbing, PI, and more
Indiana New Hire Reporting Center	Report new employees within 20 business days
DOR – County Tax Rates	All 92 county income tax rates
IRS EIN Application	Free federal tax ID number

Frequently Asked Questions

How much does it cost to start an LLC in Indiana?

The filing fee for Articles of Organization is $95 online (plus ~2.15% processing fee, so ~$97 total) or $100 by mail. After that, the biennial report costs $32 every two years online. Combined with a free federal EIN, your total first-year formation cost is around $100-$130 – making Indiana one of the cheapest states for LLC formation and maintenance.

Does Indiana have a state income tax?

Yes – Indiana has a flat state income tax of 2.95% for 2026. On top of that, all 92 counties levy their own income tax, ranging from 0.50% to 3.38%. Your combined state + county rate is typically 3.45% to 6.33% depending on where you live. Indiana’s flat rate is simpler than the graduated systems used by neighboring states.

What is the sales tax rate in Indiana?

Indiana has a flat 7% sales tax statewide. There are no local add-ons to the state rate – 7% is uniform everywhere. Most services are exempt, while tangible goods and prepared food are taxable. Over 45 counties and cities also charge a separate Food and Beverage (FAB) Tax of 1-2% on prepared food and drinks.

Is workers’ compensation required in Indiana?

Workers’ compensation is required for businesses with one or more employees. Full-time, part-time, and seasonal workers all count. Penalties for non-compliance include fines up to $100/day, misdemeanor charges (up to 1 year imprisonment and $5,000 fine), and potential double compensation liability to injured workers.

What is the biennial report fee for an Indiana LLC?

Indiana LLCs pay a biennial (every 2 years) report fee of $32 online or $50 by mail. The report is due by the last day of your LLC’s anniversary month. This is one of the lowest recurring fees in the country – compare to Maryland’s $300/year or Illinois’s $75/year.

Do I need a business license in Indiana?

Indiana does not have a single statewide general business license. However, many industries require state-level professional licenses through the Professional Licensing Agency. Most cities require local permits or zoning approval. Indianapolis requires a business license through the Department of Business and Neighborhood Services. Use the Indiana Business Owner’s Guide to determine what you need.