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I came across an interesting post by another lawyer which stresses the point that it is almost always more efficient and less expensive to involve a lawyer earlier in the process than later. Excerpt:

Clients bring me projects all the time that will either require legal remodeling or a tear down. Here is a typical scenario: The client begins discussion of a business transaction with another company. The client chooses not to involve a lawyer until after the business deal is struck. The client has often been presented with a draft contract from the other side. The client may already have gone back to the other side with the client’s own revisions. Finally, it dawns on the client that this is a serious transaction and that the document should be reviewed by a lawyer. That is when they call.

When the client emails me the contract or brings it by the office, the client will often say: “I think we have this one pretty much done. I just want to make sure it is generally OK and there are no legal landmines in it. Just take a quick look and get back to me.”

A quick look usually determines that the document is an unmitigated disaster. If the document has been prepared by the other side’s legal counsel, every term will be skewed to the other party’s benefit. If the document is “home made,” or written by a person with no legal training (whether by the client or someone with the other party), it will almost always be a mishmash of undefined terms, incomplete thoughts, and key omissions.

For the full post, check out The Attorneys of Chorey, Taylor, & Feil, A Professional Corporation blog.

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What is an LLC?

A Limited Liability Company (“LLC”) is a business entity which combines the advantage of a corporation’s limited liability and the flexibility and single taxation of a general partnership.

“Limited liability” means that an LLC member is protected from personal liability for business debts and claims. If the business owes money or faces a lawsuit, the assets of the business will be at risk but not the personal assets of the LLC member.

Forming an LLC in Indiana can be done relatively quickly and with limited expense.  This post will detail the main steps you’ll need to take to form a limited liability company (LLC) in Indiana:

  • Select an available business name that complies with Indiana’s LLC rules (and federal and Indiana trademark law).
  • Create an LLC operating agreement, which sets out the rights and obligations of the LLC members.
  • File formal paperwork, usually called Articles of Organization, and pay the filing fee

Choose a Name for Your LLC

The name that you choose for an Indiana LLC must be distinguishable from any other registered or authorized Indiana business entity or any reserved names on record.

The name of the LLC must also contain one of the following words as a company identifier: “Limited Liability Company”, “LLC” or “L.L.C.” (You will subsequently file a simple “doing business as” form without the company identifier. For example, the formal name will be , but the d/b/a would be …)

Besides following Indiana’s LLC naming rules, you’ll want to conduct a trademark clearance search to make sure that your name won’t violate another entity’s trademark.  (At this stage, you should also register relevant domain names and consider a federal trademark application for your LLC’s name. For general information about federal trademarks, click here.)

File Articles of Organization

After settling on a name, you must prepare and file “Articles of Organization.” You may also see this document referred to as a “certificate of formation” or “certificate of organization.”

Filing Fees

One disadvantage of forming an LLC instead of a partnership or a sole proprietorship is that you’ll have to pay a filing fee when you submit your Articles of Organization. The current filing fee in Indiana is $85. If you would like to compare this to other states filing fees, click here.

Required Information

Articles of Organization are short, simple documents. You can find a template here. You must provide the LLC’s name, address, registered agent, dissolution and management information.

Members are not required to be listed in the Articles of Organization. However, be aware that Indiana has the following membership requirements for an LLC:

Indiana does not require a specific purpose to be listed in the Articles of Organization.

Registered Agent

You will be required to list the name and address of a person, usually your business attorney or one of the LLC members, who will act as your LLC’s “registered agent,” or “agent for service of process.” The agent is the person designated to receive legal papers in any future lawsuit involving your LLC.

You can now file all documents online at the Indiana Secretary of State’s website.

Create an LLC Operating Agreement

Even though operating agreements are not required to be filed with the Indiana Secretary of State and are not required by Indiana law, it is essential that you create one. In an LLC operating agreement, you set out rules for the ownership and operation of the business (much like a partnership agreement or corporate bylaws).

Optimally, the operating agreement will include:

  • each member’s percentage interest in the business
  • members’ rights and responsibilities
  • members’ voting power
  • how profits and losses will be allocated
  • how the LLC will be managed
  • rules for holding meetings and taking votes, and
  • “buy-sell” provisions, which determine what happens if a member wants to sell his or her interest, dies, or becomes disabled.

Once you’ve completed the above steps, take a moment to congratulate yourself. You have a new Indiana LLC. However, note that Indiana requires most businesses to obtain a business license and pay a fee if operating in the state, so check to make sure your business is complying with the license requirements for your particular industry.

Annual Filing Requirements:

Looking forward, be aware that a Business Entity Report must be received by the state of Indiana by the anniversary month, and it must be filed every two years. The year of filing depends on whether the LLC was filed during an even or odd numbered year. The fee for this filing is $30 every 2 years.

Taxes:

For more information on taxes, visit: State of Indiana Tax Information Website.

Before filing for an LLC, you may want to discuss with your business attorney whether an LLC is the appropriate entity type for your company. An attorney can also assist in drafting your LLC’s Operating Agreement.

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