Running a business is like a rollercoaster ride. It comes with excitement and moments of happiness. At the same time, there will be challenges that will test the strength of the Indiana LLC.
Doing Business In Indiana
The location of the company plays a big role in any business. Each state offers advantages that make it an appealing option for companies. Here are some of the benefits that Indiana provides:
- Tax Climate – Indiana is among the top ten states when it comes to tax climate. Compared to other states, it has lower tax rates that make it a good location option for many businesses.
- Enterprise Zones – There are various business incentives in Indiana. One of them is called Enterprise Zones. With this, a company situated in certain areas covered by this program could benefit from credit programs. Those include Employment Expense Credit, Gross Income Tax Exemption, Inventory Tax Credit, Investment Cost Credit, and Loan Interest Credit.
- Hoosier Business Investment Tax Credit – To help startups, the state offers this incentive program. It aims to help bring in capital investment, support job creation, and improve the overall standard of living for Indiana residents.
- Research and Development Sales Tax Exemption – Indiana companies involved in research and development can have a 100% sales tax exemption.
- Business Incentives – New Indiana businesses can also benefit from other incentive programs. These include Venture Capital Investment Tax Credit, Skills Enhancement Fund, Headquarters Relocation Tax Credit, and Industrial Development Grant Fund, and Economic Development for a Growing Economy.
Check with state and local governing agencies to find out more about the business incentives and programs in Indiana.
Challenges Of Running An Indiana LLC
Maintaining an Indiana LLC requires a company to understand the business formation process, state compliance obligations, and the common challenges that entrepreneurs in the state face. This way, a company can prepare and come up with plans on how to address those issues or even prevent them from turning into bigger problems.
Here are some of the challenges of running an Indiana LLC:
- Managing The Company Finances
Money plays a huge role in determining the survival of a company. Maintaining a business comes with expenses, so it is important to make sure that the LLC has enough to pay the bills. That is something a lot of companies struggle with.To ensure that the financial aspect of the business is good, it is necessary to create a solid budget plan. In doing so, think of all the expenses you may have to deal with. Take into consideration the company’s tax obligations and the necessary expenses for the daily operations.As for new businesses, it may be challenging to get enough capital to keep the enterprise running while it is still trying to establish its place in the market. Raising funds before launching the business may help. Some entrepreneurs even continue working for other companies until their company starts being profitable.
It may help to learn certain skills in handling business finances. Companies can also choose to hire professionals to take care of accounting and taxation. Doing this can ensure that the company records will always be in order.
- Finding The Right Employees
No matter the size of a company, finding the best employees can be challenging. Attracting skilled staff can be hard. When the company finally hires suitable candidates, the next big concern will be to ensure retention.Additionally, the team may be composed of people from different backgrounds who have various beliefs and personalities. The challenge for companies is to maintain office harmony. An LLC should be able to create a culture of empathy and find ways to deal with a range of personalities. Some companies address this issue by tailoring management styles depending on what drives the employees. It is also important to maintain good communication with the employees to prevent any misunderstandings.
- Proper Documentation
Many LLCs make the mistake of following a certain pattern when creating the company and copying the way other businesses manage their operations. The problem is that there is no one-size-fits-all method when it comes to running a company. Each entity has specific circumstances and needs.Copying the ways of other companies may lead you to forget certain requirements like proper documentation. Keeping the company’s records updated at all times is important. Here are some of the reasons why:
- Records let you maintain legal protection.
- They protect the limited liability feature of the LLC.
- They indicate membership percentages.
- They define the powers and duties of the management team.
- They help you keep track of the contributions and loans of LLC members.
- They help in buying or transferring certain assets into the LLC.
- Founder Dependence
Another common challenge for many companies is being too dependent on the owners. The problem here is that the LLC may not be able to operate without its founder. While it may seem easy, overcoming this challenge can be difficult.Entrepreneurs are expected to handle various responsibilities, but they should also know when it is time to delegate. Giving managers or employees more control can help prevent founder dependence. That does not mean the owner can leave everything in the hands of employees. Finding balance is a must.It may also help to train employees so that they learn the ropes of the business. Give them opportunities to develop their skills. Then, as they start becoming more knowledgeable and experienced, you can slowly give them more responsibilities. Finding reliable employees will allow LLC members to focus more on growing the business and making big decisions.
- Separating Company And Personal Finances
A major feature of the Indiana LLC is asset protection. That is one of the reasons why many new entrepreneurs choose this structure. The members of an LLC will not be personally held liable for the debts, liabilities, obligations, and actions of the company. That means their personal assets will not be affected by those matters in any way.However, to preserve that feature, it is necessary to make sure that the LLC remains a separate entity. That can be challenging for some companies.A common problem in many LLCs is that they tend to mix the finances of the company with the members’ finances. That may happen due to various reasons. For instance, a member may need some extra money to pay their bills. Because of that need, they may be tempted to use the LLC’s money. In some cases, it is the other way around. The company may be short on funds, so the members use their own money to keep the business afloat.
While doing those may seem to help, they could turn into an issue in the long run. They might tear down the corporate veil, which is what provides asset protection. As a rule of thumb, a company has to put all business income into its account to keep the corporate veil intact.
If an LLC is short on money, its members can deposit money into the company’s business bank account. Make sure everything is documented. Then, it would be best to consider this fund transfer as a capital contribution or a loan.
If a member needs cash and wants to use the company’s excess fund, the best thing to do is to treat that money as a form of payment. Reflect it as a return of capital, loan repayment, or profit distribution.
- Ensuring Business Compliance
Running an Indiana LLC comes with state obligations. The company has to ensure compliance all the time. However, for some companies, doing that can be a bit difficult. Because of all the responsibilities that come with running a company and managing business operations, it may be hard to focus on reporting and filing obligations.As a result, some LLCs end up missing their deadlines. That could lead to fines. Some companies even lose their good standing status with the state. In worst cases, the LLC may be administratively dissolved by the state.Indiana LLCs should also appoint and maintain a registered agent. Check this article out to learn more about Indiana registered agents.
Hiring a reliable business filing service provider like DoMyLLC can also help a company ensure compliance with the state. We can assist you in facing the challenges that may come with running an Indiana LLC. Contact us today to find out more.
Business Filing Section