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Key Takeaways
- Decide whether you want to form a limited liability company (LLC), corporation, partnership, or sole proprietorship in Louisiana. Consider the advantages and disadvantages of each business structure.
- Register your business with the Louisiana Secretary of State, the Internal Revenue Service (IRS), and the Louisiana Department of Revenue.
- Depending on the type of business you are operating, you may need to obtain a business license from the Louisiana Department of Revenue.
- Open a separate business checking account in Louisiana so that you can keep your business and personal finances separate.
- Depending on the type of business you are operating, you may need to obtain specific permits and/or certifications in order to legally operate your business in Louisiana.
The first step to starting a business is determining the type of business structure you want. LLC is an acronym for the term Limited Liability company, and it is a way of providing legal structure to the business. This business type combines the limited liability of an organization with the lack of formalities and flexibilities provided by a sole proprietorship or partnership. The other common business types, as mentioned, are sole proprietorship and partnership.
If you plan to set up a business in Louisiana, the process is usually straightforward, but there are a few crucial details you need to keep in mind. To get the right tips on starting a business in Louisiana, you are at the right place.
Choose A Business Structure
The first step to starting a business is to know which business type you want to start. The structure of a business helps determine its tax structure, how it is operated, and how easy it is to secure investment. Below listed are the most common business structures for you to have an idea of each.
i. Sole Proprietorship: Sole proprietorship is another name for a one-person organization. This business type is taxed at the personal income rate of the business owner. Similar to the sole proprietorship, you can also start a partnership business. However, a partnership business has two or more owners, which are also taxed through tax returns.
ii. Corporation: Corporation offers a great level of protection of personal assets but requires more effort and work for incorporation and maintenance. Taxation of corporations is also imposed on business revenue and personal income. You can choose to form either an n S corporation or a C corporation.
iii. LLCs: LLC is a formal business structure owned by the LLC members. This business type is prevalent as it offers some of the benefits of the sole proprietorship business type; for instance, the profits and losses pass through to the members while also offering the legal insulations afforded to the larger corporations. This business type provides protection of personal assets, meaning that the owner's personal assets will not be at risk if the company is in huge debt or is sued, ever.
Before Starting Your Business
The entire process of starting a business can be divided into two phases, before starting the business and you get started. First, before you begin filling out application forms for your business, you must take care of a few things. These steps will help your business thrive in the long run.
- Identify The Mode Of Application: Determine whether you want to apply online or offline. However, business owners from a few counties will have to file their applications online through the state's geauxBIZ portal. Some such counties include Lafayette, Bossier, East Baton Rouge, Rapides, Terrebonne, etc. Business owners from other places can file their applications online or offline. GeauxBIZ is a portal that enables registration for all different kinds of businesses.
- Availability Of Business Name: It would be very disappointing if you came to know that all your paperwork could have been better since the business name you applied for was already taken. Avoid this error by searching for your chosen name on the Secretary of State's website. If you are planning to apply to your business formation offline and want to make sure that the business name stays available till then, you can reserve it for 120 days by submitting a form for the same.
When doing it online, you will have to file a name reservation form and obtain a federal tax ID number before filing the business articles of the organization. The name of your business should contain the abbreviation of the type of business you plan to start. For instance, LLC should contain "LLC" at the end.
- A Registered Agent: As per the law, your business should have a registered agent. They will receive all official or legal documents for your business, such as the annual renewal forms. Either you or one of the members of your business can also take up the role if specific criteria are fulfilled. The criteria include the person should be at least 18 years old, being a Louisiana resident, and having a physical address in the state. Alternatively, you can also hire a company that offers registered agent services and is registered in Louisiana. They will charge some fees for the services provided.
Getting Started With Your Business
Now, let us go over the steps of getting started with your business.
Creation Of A Business Plan
A viable business is based on a solid business plan. Without a business plan, it is easy for business owners to get lost halfway. The business plan should include a brief description of the functions of a business, a market analysis of consumers and competitors in detail, an outline of the structure of the organization, points explaining the persona of target consumers, a description of the products or services, and layout of finances, marketing and logistics.
Obtain An Employee Identification Number
If you are planning to apply to form your business online, a name for your business needs to be reserved with the state. After this step, an EIN or the federal employee identification number is obtained from the IRS. Once you have the EIN allotted, you can submit documents for your business formation. Alternatively, if you are filing your articles of organization manually through paperwork, applying for EIN is optional until the business is formed officially.
The common EINs required by most businesses are easily available on the IRS website and are free. The single-member company does not require EIN; rather, they can obtain another identification number, the Social Security Number.
Submitting Documents For Business
Whether online or offline, you need to submit a few mandatory documents to set up your business. The filing fee is $100 for national companies. However, the out-of-state or foreign entities will have to fill up the Application of Authority and pay a cost of $150. The foreign entities must also submit a certificate of existence and good standing that is not 90 days older than the completed business application.
If required, there are provisions for expediting the filing process as well. For example, pay $30 to get your documents filed within a day and $50 if you want them processed within a few hours. Without expediting, the entire process takes time, and you can expect the documents to get processed within around one to three weeks.
Obtaining Required Permits And Business Licenses
Louisiana does not require all businesses to have a general business license issued by states. If you are in a business related to selling or leasing goods or services and are subject to sales tax, you will have to obtain a resale certificate. You can apply for the resale certificate, free of cost, from the Louisiana Department of Revenue.
Based on the county you operate in or the field of your business, you may also have to obtain some other licenses. For example, different businesses require different permits and licenses to operate. More specifically, if your business is into selling food items or liquors, some special type of license is to be obtained.
Financial Considerations
Getting started with business accounts for several different kinds of costs to be incurred. You may have to spend more money than you initially thought. To finance your business and ensure its smooth operations, you will have to explore options like loans, grants, lines of credit, investments, tax benefits to support you with costs, and much more. If you have a strong relationship with business banking at a credit union or a business bank, it will also help.
You may also have to consider other investment options to get your business in Louisiana off the ground. For example, you will have to hire lawyers, web developers and designers, accountants, and other contractors to help you. In addition, if you avail of the digital services, you will have to pay for them, such as hosting for the company's website, social media services, a physical store renting a space, etc.
The options may seem overwhelming initially, but slowly as you start figuring things out, you will gain better insights. You can also explore opportunities for flexible payments and fast funding.
Explore Business Insurance Options
Business insurance options help manage risks and offer some protection against liability. There are different standard insurance packages available in Louisiana.
- Worker's Compensation Insurance: This insurance covers all types of illnesses or injuries that an employee may sustain while working with an employer. According to the state law of Louisiana, every employer in the state will have to obtain this particular insurance, irrespective of the type of employee working with them. That said, insurance is mandatory for part-time, full-time, seasonal, or all other kinds of employees. However, a business may fall under the exemption if the employee owns at least 10% of the business.
- General Liability Insurance: The general liability insurance policy protects business owners from all legal damages, injuries on the business's property, or losses caused due to property damage. The same is not mandatory for Louisiana businesses, but most commercial leases ask for this insurance.
- Professional Liability Insurance: This insurance policy protects your business from all types of claims filed against your business. This may include the claims made as a result of any damage or harm caused by your services or personal advice to any client, customer, or patient.
Market Your Business The Right Way
After setting up your Louisiana business, marketing it to let people know about it, is critical. Marketers specify and hone the points of a business which makes it unique. Use of color schemes, logos, crafts, font, etc., should align with your company and its message. Furthermore, marketing includes finding ways to share the business's unique qualities in front of your target audience. Marketing includes a few aspects, as listed below:
- Research: Market research is critical to understand the behavior of your target consumers.
- Promotion And Advertising: Create awareness and get more people to know about your brand through paid advertising. You will have to create content in the form of blogs, videos, images, social media posts, etc. Search engine optimization is also critical to create a lasting impact on your business.
- Public Relations: Form relationships and foster them with media outlets to increase brand visibility.
- Social Media: Social media is the new search engine and the right platform to promote your products and services. Pick your business's most relevant social media channels and get started with promotion.
- Customer Retention: You should build authentic relationships with your customers to turn them into repeat customers. Also, they will spread the message to their friends and family when they keep returning for more.
Conclusion
Starting a business takes work. So many things go into a small business, more than the investment in money and effort. Therefore, choosing Louisiana for your business is excellent as it attracts the lowest labor costs. We have put up a simple guide with important business considerations above to help you get started with your business idea hassle-free. Furthermore, a local business resource will be of great help if you get stuck mid-way in your journey.
FAQs
- Is Louisiana a great choice of state for starting a business?
Louisiana is the best choice of state to start a business. Labor costs are pretty low, and the state also offers plenty of tax incentive programs for new companies.
- Is starting a business costly in Louisiana?
You will have to pay nominal charges for registration and obtaining essential licenses. For example, for the registration of a corporation, the fees paid are $75, whereas for LLC, it is $100. In addition, annual reports are to be filed for your Louisiana business which costs $30 annually.
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