Indiana LLC for Consultants — Low Tax, Low Maintenance

Indiana's combination of 2.95% flat income tax, biennial reporting ($32 every 2 years), and no franchise tax makes it an ideal state for consulting LLCs. Once income grows past $50,000-$60,000, S-corp election provides additional savings. For formation, see how to form an Indiana LLC. For all industries, see our overview.

Why Consultants Choose Indiana LLCs

• Low effective tax rate: 2.95% state + county (total 4%-6.4%) is competitive with zero-tax states once you factor in their other costs
• Minimal compliance: One report every 2 years ($32)
• No franchise tax: Unlike Tennessee ($300/year) or California ($800/year)
• S-corp savings: At $100K net income, save ~$6,000-$8,000/year in SE tax

Tax Strategy

Phase 1 (Under $50K): Default single-member LLC. Simple. Schedule C + IT-40.

Phase 2 ($50K-$150K): Elect S-corp. Pay reasonable salary, take distributions without SE tax. Net savings: $3,000-$12,000/year.

Phase 3 ($150K+): S-corp + maximize retirement (Solo 401k or SEP-IRA). Reduce taxable income significantly.

County Tax Planning

Your county of residence determines your county tax rate. This creates a planning opportunity:

• Living in a lower-rate county (Vanderburgh 1.25%, Allen 1.48%) vs. higher-rate county (Jasper 3.38%, Pulaski 3.13%) can save hundreds to thousands annually
• The county tax is based on residence, not where you perform services

FAQ

Do I need a PLLC for consulting?

Only if you're providing services that require a state license (CPA, PE, attorney). General management/IT/strategy consulting uses a standard LLC.

Do I charge sales tax on consulting?

Almost certainly not. Professional services are generally not subject to Indiana's 7% sales tax.

When should I elect S-corp?

When net income consistently exceeds $50,000-$60,000 and you can justify splitting between salary and distributions.