Due to its favorable income and sales tax rates, Indiana is becoming a popular option for businesses. However, many entrepreneurs find the business licensing process in this state quite tricky thanks to the lack of a general Indiana business license.

This creates a situation in which it’s your responsibility — as a business owner — to research which of the 400 different business licenses you’ll need to operate legally in Indiana. To help simplify this step, this article will walk you through the process of identifying and obtaining all necessary licenses and permits.

Do I Need a Business License in Indiana

In Indiana, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

• Registered Retail Merchant Certificates: If your business intends to sell or lease tangible personal property, you’ll need to apply for a Registered Retail Merchant Certificate (RRMC) by registering your business with the Indiana Department of Revenue. This is what enables you to collect sales tax
• Professional Licenses: Your licensing requirements will vary based on the industry in which your business works. In order to offer plumbing services, for example, your business would first need to obtain a dedicated plumbing contractor license from the Indiana Professional Licensing Agency
• Environmental Permits: Your business will need one of these permits if its activities pose a potential threat to public safety or the environment. For example, most businesses will first need a specific permit from the Indiana Department of Homeland Security before they can undertake any kind of building

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within Indiana plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may require due to federal, state, and local licensing requirements:

• Local: The majority of the licenses and permits you’ll need likely will be at the city and county level. Any business with five or more coin-operated arcade machines in the city of Indianapolis, for example, is classified as an “amusement location” and must obtain a specific license in order to operate
• State: Your business licensing requirements also can vary at a state level, depending on its activities. Beyond the Registered Retail Merchant Certificate (which most businesses will require), for example, more than 40 different professions (e.g., medicine, law, and engineering) need separate licenses
• Federal: If your business operates within certain industries or does specific types of work, you might need a license from the federal government. These include the alcohol, aviation, firearms and explosives, radio and television broadcasting, and transportation industries, among others

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

How to Get a Business License in Indiana

In order to get your business license(s) in Indiana, you will need to complete the following steps:

• Form Your Business
• Obtain an Employer Identification Number (EIN)
• Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Indiana, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Indiana to register as a Limited Liability Company (LLC). Here are a few reasons for why:

• Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
• Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
• Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
• Ease of Formation: With the Indiana Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

• Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
• By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
• By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

• Local Licenses: The business licenses you’ll need also depend on the city and county in which you’re based. For example, you’ll need to follow the specific licensing requirements of the City of Evansville in addition to any state and federal obligations if you plan to base your business in this area
• Statewide Licenses: Most businesses also need to obtain professional licensing at a state level, depending on their industry. To work in professions like accountancy, medicine, and law, for example, you’ll need an appropriate license from a specific professional body. Visit the Indiana Professional Licensing Agency website to find the details of your profession’s licensing body
• Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: For more detailed information on the local, state, and federal licenses you may need, we encourage you to check the Indiana Small Business Development Center.

Step 4: Renewal of Licenses and Permits

Many business licenses require periodic renewal — typically every one or two years — in order to remain valid. Indiana’s RRMC is an exception to this general rule because it automatically renews for free. It will, however, expire if you don’t pay your business’s state sales tax liabilities within 60 days.

Beyond the RRMC, it’s best to check with the issuing agency of your business’s licenses because the renewal process and period can vary.

Alternatively, third-party services that handle this entire process are increasingly popular given the complexity of applying for and renewing business licenses.

How Much is a Business License in Indiana

While registering for the Indiana RRMC costs around $25, the total cost of getting your business licensed in this state will, ultimately, depend on the specific licenses you need. Some licenses can cost hundreds of dollars on their own.

Businesses offering specialized services that require a dedicated professional license, such as accounting or law firms, tend to incur extra licensing fees. The license application fee for a plumbing contractor costs $50, for example, while a dental license costs $250.

In addition, you’ll also need to maintain most licenses by renewing them on either an annual or biennial basis. The renewal process typically includes a fee.

To get an accurate picture of your total licensing costs, you’ll need to conduct detailed research on the specific requirements for your business type and location. While you can conduct this research yourself, many business owners decide to save time and money by hiring a specialized service to do this research for them.