Starting a Business in Indiana
Indiana is not just known for the famous Indianapolis 500, it is also a great place for a startup company as well as for companies who would like to relocate there. Some distinct advantages Indiana has are a stable economic climate, strong and vibrant workforce, and low cost of living and doing business. Some of the largest industries in Indiana are Research Development and Design, Agriculture, Life Sciences, Auto Manufacturing, Food Products, Transportation, Health Care, and Information Technology. Many businesses within these industries are eligible for various benefit programs. There are different tax credits, business tax incentives, business grants and Sales Tax Exemptions available. Starting an Indiana business will come with some immediate administrative tasks such as FEIN registration and seeing what happens if you don’t get the right Business Licenses. Some other tasks that can be attended to are verifying the status of form ST-105, applying for business credit, and looking up an Indiana sales tax rate.
STEPS TO STARTING A BUSINESS IN INDIANAThe Indiana Department of Revenue regulates many of the policies and procedures related to the filings of sales tax returns. The Indiana Secretary of State handles most business activities related to incorporating a company. After you have setup a company with the Indiana Secretary of State, you will be able to register for an Indiana Seller’s Permit online. In order to satisfy your compliance requirements and make sure your company remains in good standing, you will need to see which Business Licenses that you must obtain.
There have been recent changes in legislature that have had a dramatic effect on many businesses like Amazon and Shopify. These are collectively known as Marketplace facilitator laws and they have to do with the collection of sales tax by shopping platforms. If you sell products or services to customers in other states and reach certain sales levels, you will need to register for multi-state SST streamlined sales tax. Below are some of the more favorable programs available to help you expand your Indiana business:
- The Certified Technology Park Program is a vehicle for companies in the high technology arena. It is made up of different tax revenue allocations for the buildup of the park where the business is located.
- Indiana has two research and development tax incentives given to institutions in order to compensate them for their R & D efforts. The first is an Indiana Sales Tax Exemption that can be taken against R & D equipment when purchased or a refund of the sales tax if the exemption was not given at the time of purchase. In order to be eligible for the exemption, you must first get your seller’s permit. The second research and development incentive is a tax credit offered against state tax liability. It is applied as a percentage of qualified R & D expenses. The credit equates to 15% of these expenses up to $1 million and may be carried forward up to 10 years.
- The Indiana Data Center Tax Exemption gives a Sales and Use Tax Exemption to a data center business that invests $10 million. If they meet that threshold they can qualify for a 100% exemption. Sales Tax Exemptions can be taken against the building and data center equipment, as well as the power costs to run it in daily operations. A data center business that invests up to $750 million can take the exemptions over a 50 year period.
- The Indiana Headquarters Relocation Tax Credit provides a state tax credit to businesses to relocate their head base operations into the state. The goal is to bring the majority of the company’s human capital to Indiana. The credit is taken against the company’s state tax obligation.
- Indiana offers a payroll tax credit incentive called the Economic Development for a Growing Economy Tax Credit. This tax credit provides benefits to a business that is able to create jobs and add to the quality of life to those workers. The credit is calculated as a percentage of the withholding tax of the newly created jobs and can be taken for a period of up to 10 years. Another job credit program is the Hoosier Business Investment tax credit. Like the EDGE program, this program also encourages businesses to create new jobs by making capital investment. The credit is taken as a percentage of this.