How to Set Up a New Sole Proprietorship in Indiana

By Terry Masters

Sole proprietorships are owned by a single individual who operates the business as an extension of his personal affairs. In Indiana, sole proprietorships and general partnerships are classified as informal associations; they are not required to file formation documents with the secretary of state to obtain permission to do business. A sole proprietor, such as a professional photographer, can start his business and operate it within the state at his own discretion. However, if a sole proprietor wants to use an assumed business name, operate in a state-regulated industry, collect sales taxes, hire employees or is located in certain areas of the state, he may have to submit special registrations to conform with requirements in those areas.

Sole proprietorships are owned by a single individual who operates the business as an extension of his personal affairs. In Indiana, sole proprietorships and general partnerships are classified as informal associations; they are not required to file formation documents with the secretary of state to obtain permission to do business. A sole proprietor, such as a professional photographer, can start his business and operate it within the state at his own discretion. However, if a sole proprietor wants to use an assumed business name, operate in a state-regulated industry, collect sales taxes, hire employees or is located in certain areas of the state, he may have to submit special registrations to conform with requirements in those areas.

Step 1

Submit a Certificate of Assumed Business Name and an affirmation statement to the county clerk's office of the county where your business will be operating if you plan to conduct business under a name that is not your legal name. Sole proprietors are required by Indiana law to conduct business under the name of the business owner unless the owner registers an assumed business name. For example, a proprietor named John Smith could register to operate his business under a name such as ABC Flooring. Go to the business division section of the Indiana Secretary of State's website to download the Certificate of Assumed Business Name and the affirmation statement. You can also look up the contact information and instructions for the county in which your business is located on this website. Fill out both forms and file them with the county clerk's office in every county where your business will be operating.

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Step 2

Apply for any required professional licenses from the Indiana Professional Licensing Agency. Proprietors who engage in certain activities that are regulated by the state, such as dentists, veterinarians and lawyers, must have a professional license. You can submit an electronic license application through the IPLA website.

Step 3

Obtain an employer's identification number from the Internal Revenue Service if you plan to open a bank account for the business under an assumed name, collect state sales taxes or hire employees. Although the IRS does not require a sole proprietor to obtain an EIN, a business EIN is typically required by banks to open an account and by the state department of revenue as an account identifier. You can go to the IRS website to submit an online application for an EIN. Alternatively, you can download IRS Form SS-4 and submit it by fax, telephone or mail.

Step 4

Register with the Indiana Department of Revenue if your business will collect sales taxes or hire employees. Go to the department of revenue website to submit an electronic business tax application -- Form BT-1.

Step 5

Obtain local licenses and permits, as necessary. Certain Indiana localities, such as Indianapolis, require businesses that operate within their boundaries to obtain licenses and permits to conduct regulated activities. For example, some cities require street vendors to obtain a city license to operate. An ice cream vendor might also need a health department permit to operate. Likewise, a restaurant might need an occupancy permit from the building department and a liquor license from the city. Determine the licenses and permits you need by visiting the locality's website.

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References

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