Articles of Organization

Forming an Indiana LLC requires filing articles of organization with the Corporations Division of the Indiana Secretary of State. The new LLC's articles of organization must include:

• . The LLC's name
• . The street address of the LLC's registered office
• . The name of the LLC's registered agent
• . Whether the LLC will be perpetual or have a set dissolution date
• . Whether the LLC is to be member- or manager-managed

The articles can also list other items-even ones that are also in the operating agreement--if the members so designate, so long as the provisions don't conflict with state law. The filing fee is $90.

Your new LLC is officially considered "organized" after the original and one copy of the LLC's articles of organization are delivered to the Indiana Secretary of State's office (Corporations Division) with the filing fee, and that office then verifies that the articles are in compliance with state law.

The articles must be executed (signed) by at least one organizer, who does not have to be a member of the LLC at or after formation. The organizer may be a natural person or a legal or commercial entity. The signing organizer must sign the articles and indicate his or her name and title within the LLC -i.e., the capacity in which the person is signing).

Registered Agent and Office

Indiana LLCs must have a registered agent in the state-someone to receive state legal and administrative correspondence. An LLC registered agent may be an individual who resides in Indiana, or a business entity authorized to conduct business in the state. In both cases, the registered agent's business office must be the same as the LLC's registered office.

Operating Agreement

The LLC's second most important document is its operating agreement, which can be changed by the members as specified by the agreement itself or state statute. Having an operating agreement is not legally required by the state, but it's a vitally important internal document that sets forth how the LLC will run. The operating agreement needs to list the LLC's members, how much each one has invested, how any profits will be distributed, and how much relative weight each member has when voting.

The operating agreement may also include requirements for meetings (notice, quorum, voting rules, etc.) and similar functions, but it doesn't have to. Usually, though, it does include operating constraints and allowances already contained in state law and policy. It also may contain constraints on the members' authority to change or repeal the operating agreement or a provision thereof. If there is more than one member, the operating agreement must initially be unanimously approved in writing.

Membership in the LLC

LLCs in Indiana must have one or more members, and each member must be a natural person or a recognized business entity. A member can acquire an interest in the LLC when it is formed, or in a manner laid out in the operating agreement. Becoming a member usually requires a contribution of cash or property to the LLC (or taking on an obligation to do so), or it may take the form of services rendered to the LLC. If the operating agreement does not provide a procedure for becoming a member, however, a new member may acquire an interest in the LLC upon the written consent of all the members.

An LLC member can only resign as permitted in the articles of organization or operating agreement. In Indiana, there are significant differences in how members are allowed to withdraw or resign between LLCs formed on or before June 30, 1999, and those formed after that date.

For LLCs formed on or before June 30, 1999, a member may withdraw after giving 30 days' written notice (or the amount of notice specified in the operating agreement) to the members, unless a written operating agreement provides that a member does not have the power to voluntarily withdraw from the LLC.

If the withdrawal violates the operating agreement, or the withdrawal occurs as a result of the member's wrongful conduct, the LLC may recover damages for breach of the operating agreement, including the reasonable cost of replacing services that the withdrawn member was supposed to perform. The LLC may subtract the damages from any amount that would otherwise be distributed to the withdrawn member, in addition to pursuing any remedies provided for in the operating agreement or available under applicable law.

If the LLC has been formed for a specific time period or for a particular project or undertaking, a member's withdrawal before the expiration of the term is a breach of the operating agreement, unless otherwise stated in a written operating agreement.

For companies formed after June 30, 1999, members may not withdraw from the LLC before its dissolution and the winding up of the LLC's affairs, unless the operating agreement specifies otherwise. In fact, for these later LLCs, a member is allowed to withdraw from the LLC only at the time or upon the occurrence of events specified in the operating agreement, and in a manner in accordance with the operating agreement.

A specific membership vote to continue the LLC after the dissociation of a member is not required.

Unless specified otherwise in the LLC's articles or operating agreement, managers are elected, removed, and replaced by a majority in interest of members, and serve for an indefinite term. A "majority in interest" means members who have contributed more than half of the LLC's current capital.

Ongoing Requirements

Indiana LLCs must file a biennial (every two years) report with the Secretary of State that includes:

• The LLC's name
• The street or physical address of the LLC's registered office
• The LLC's registered in-state agent's name at that office
• The address of the LLC's principal office
• Any other information deemed necessary by the Secretary of State

The LLC's first biennial report must be delivered in the anniversary month of the LLC's formation in the second year after the LLC's organization. Following biennial reports must be delivered to the secretary of state during the same month every two calendar years thereafter. Biennial reports may be accepted up to two months early.

LLCs in Indiana must also keep available the following types of records ready for inspection at their office:

• The full name and last known mailing address of all current and former members and managers
• A copy of the articles of organization and all amendments
• Copies of the LLC's federal, state, and local income tax returns and financial statements, if any, for the past three
• Copies of all current and former written operating agreements, with amendments
• The amount of cash, if any, and a statement of the agreed value of other property or services contributed by each member, as well as the times or events that trigger any additional contributions agreed to be made by each member
• The events, if any, that would trigger the LLC's dissolution

It's also a good idea to keep copies of the minutes of the various proceedings and committees meetings of the owners or members.

Dissolution

An Indiana LLC formed on or before June 30, 1999, is dissolved when any one of the following events occurs:

• Event(s) or a time specified in the articles of organization or operating agreement
• Written agreement to dissolve by all members Event that makes it illegal for the LLC to continue
• When a member leaves the LLC, unless the remaining member agree to continue the LLC within 90 days, or the company continues under specifications set out in the operating agreement
• Upon a judicial decree ordering dissolution

For Indiana LLCs formed after June 30, 1999, dissolution is triggered when any of the following events occurs:

• Event(s) or a time specified in the articles of organization or operating agreement
• If there is only one class or group of members, upon written consent of two- thirds of the members in interest
• If there are more than one class or group of members, upon written consent of two-thirds of the members in interest of each class or group of members
• Upon a judicial decree ordering dissolution
• Upon the dissociation of the final member unless, under a provision in the operating agreement, not more than 90 days after dissociation, the personal representative of the last remaining member agrees in writing to continue the business of the LLC and to admit the personal representative or the personal representative's nominee or designee to the LLC as a member

Taxes

An LLC by its nature does offer some tax advantages over a corporation structure, including access to more deductions, since the LLC is not required to be a separate tax entity like a corporation. Instead, it is considered a "pass-through entity" for tax purposes, meaning LLC owners report business profits and losses on their individual tax returns.

Indiana tax rates vary based on income generated in the state.

Articles of Incorporation

New Indiana corporations must file articles of incorporation with the Indiana Secretary of State's office before they can start conducting business as a corporation. The articles must be delivered by at least one of the incorporators, accompanied by the filing fee of $90. The incorporator does not have to be a director, officer, or shareholder of the corporation.

The following information must be included in the articles of incorporation:

• The corporation's name
• The name and address of each incorporator
• The street address of the corporation's initial registered office
• The name of the new corporation's registered agent at that office
• The number of shares the corporation is authorized to issue

Indiana law allows a corporation to be formed for any lawful business activity. There is no requirement for a specific corporate purpose to be stated in the articles of incorporation.

Indiana law also allows (but does not require) optional items to be included in the articles of incorporation for those corporations who wish to formally specify additional information, such as:

• The names and addresses of the initial directors of the corporation
• The corporate purpose
• The powers and constraints of the corporation, its board of directors, and shareholders
• Provisions for or limitations on shareholder and/or director personal liability for corporate debts in certain situations

Since Indiana law does not use the concept of par value for stocks, you do not need to state a par value for your shares. The filing fee is a flat fee, rather than being based on your authorized shares, so you can authorize as many as desired.

Registered Agent and Office

Indiana corporations must have a registered agent in the state-someone officially designated to receive state legal and administrative correspondence. A corporation's registered agent may be an individual who resides in Indiana, or a business entity authorized to conduct business in the state. In either circumstance, the registered agent's business office must be the same as the corporation's registered office.

Bylaws

Bylaws describe the corporation's basic managerial and legal operating principles. An Indiana corporation must keep a copy of its bylaws at its main executive office, but is not required to file them with the state. At its initial meeting, the board of directors should adopt corporate bylaws, and then keep them updated as time goes on.

The board of directors of a corporation may adopt, amend, or repeal bylaws, unless the articles reserve this right to the shareholders. Bylaws normally address:

• Shareholders and directors meetings
• The authority, number, and tenure of directors
• Voting procedures
• The duties, responsibilities, and tenure of officers
• How stock is issued
• How and when annual financial information is provided to shareholders

Directors and Officers

The corporation must have at least one director. Director qualifications may be listed in the articles of organization or the bylaws, or both.

Officers are appointed or elected by the board in compliance with the corporation's bylaws, or elected by shareholders in compliance with the articles of incorporation. One officer has the responsibility of preparing minutes of director and shareholder meetings, and for authenticating corporate records.

It is permissible for an officer to hold more than one office in the corporation unless otherwise prohibited by law or by the corporation's bylaws. One person may hold all or any combination of offices when all of the issued and outstanding stock of the corporation is owned by this same person.

Required Reports

Indiana LLCs must file a biennial (every two years) report with the Secretary of State. The first biennial report must be delivered in the anniversary month of the corporation's organization in its second year. Subsequent biennial reports must be delivered to the secretary of state during the same month every two calendar years thereafter. Biennial reports may be accepted up to two months early.

• The corporation's name and the state or country of original incorporation
• The street address of the corporation's registered office
• The name of its registered agent at that in-state office
• The address of the corporation's principal office
• The names and addresses of the corporation's directors, secretary, and highest executive officer

The board must also report certain information about director indemnification and expenses, as well as future promises or promissory note issuance, to all shareholders with or before notice of the next shareholders' meeting.

Taxes

Indiana's corporate tax structure consists of a flat rate of 8.5 percent on all corporate income. Among states levying corporate income taxes, Indiana's top rate ranks 13th highest nationally.