How to start a business in Louisiana in 8 steps
With 4 of every 1,000 Louisiana residents starting their own businesses, Louisiana ranks in the top ten states in the U.S. for entrepreneurialism. Is it the low taxes? The innovative arts scene? Or just the drive to start the best gumbo restaurant the South has ever known?
Whichever is correct, If you’re looking to join their ranks, you’ll be in good company. Starting your own Louisiana business means you’ll gain a flexible schedule and be able to pursue your passions.
Ask yourself these 5 questions about if starting your own business is right for you. If you’re still feeling confident, starting a business in Louisiana can be easier than perfecting your award-winning gumbo seasoning. Once you walk through this step-by-step guide, you can begin reaping the rewards of owning your own company.
1) Think about the type of business you want to start
Louisiana is known for its oil, gas, and maritime industries. But your own experience, the local market, and the kind of time and capital you have to invest should drive your new venture. You probably already have some idea of what kind of startup interests you.
Once you have a business idea, it is wise to research companies that might be your future competitors. Ask yourself the following questions:
- Who do they serve, and who is left unserved in this market?
- What is their unique selling position?
- Do they have a physical location in the community?
- What can you offer that is different and better?
- What are their prices?
Find out what companies are in your area and other parts of Louisiana. Find a way that you can offer more. Before doing anything else, write down what kind of value you add for in-demand services in your area. This mission should start to inform the other business decisions you will make.
The Louisiana Small Business Development Center (LSBDC) can help with business plan templates and training on marketing, human resources, and even international trade. Their training can uncover the best business resources and strategies for you. The Small Business Administration (SBA) can also provide a wealth of information on business loans available.
2) Set up your legal structure
Your first step is to decide the best business formation structure with the Louisiana Secretary of State. Business owners have multiple choices and should consult an accountant or attorney for advice on which is best for their business. Each is different as far as how federal and state tax work and their advantages and drawbacks. Some options are:
- Sole proprietorship: This small business entity treats the owner and business as the same. The advantage is this is simple to set up (there is no need even to file paperwork; simply pay taxes using your regular Social Security Number and file personal tax returns every year on your earnings). The disadvantage to this structure is that a business owner’s personal assets are unprotected. Liability for business debts is the primary reason why some lawyers discourage this structure.
- Partnership: This structure functions as a sole proprietorship for two. You can start a business with a co-owner using a contract, and both parties are equally liable for all business debts.
- Limited Liability Company (LLC): Many small businesses take the form of LLCs, which are registered with articles of organization with the Secretary of State in Baton Rouge. This structure lets businesses decide between tax formats. Another advantage is that owner assets are separate from business assets giving owners liability protection. In an LLC, one individual is a designated registered agent who can conduct business with the state. That individual must have a physical address in Louisiana. Your Louisiana LLC has its own financial presence, credit, debt, and business taxes. You’ll file articles of operation with the Louisiana Secretary of State to form your company using this structure.
- Corporation: Usually reserved for larger companies, a Louisiana corporation requires filing articles of incorporation, creating a business owned by shareholders rather than by its founder. There are C-Corporations and S-Corporations, with different tax obligations to explore.
Research all your choices. Some other options like a nonprofit business structure might be the right ticket for your goals. You’ll need to take into account how you’ll make a profit and reinvest in your mission.
3) Name and register your business
Laissez les bons temps rouler! For most entrepreneurs, naming their businesses is fun and creative and the step that makes their business come alive. Sit down and brainstorm business names. You may already have some ideas, so check the domains online to see if another owner has taken your favorites.
In Louisiana, you’ll have to make sure your LLC or corporation name is different from other businesses already registered. Search the Secretary of State’s website to make sure. A federal trademark search can also confirm that no one outside Louisiana uses your favorite name in your industry.
Suppose you are a sole proprietorship or partnership with a separate business name that is not your given name. In that case, you must file an Application to Registration of Trade Name in the parish where your business is located. A trade name will function as a “doing business as” or DBA name for your business. In addition, you may want to trademark the name to give your business some protection.
Once the Secretary of State accepts your name, you’ll have a registered business in Louisiana.
4) Apply for business licenses and permits
There may be more requirements for occupational licenses in your industry. Luckily, Louisiana has made it easy to see a business license checklist with the geauxBIZ portal. The Secretary of State in Louisiana maintains Geauxbiz as a spot to see all state requirements for local licenses.
When you’ve finished with licenses and permits, head over to the Louisiana Department of Revenue (LDR) if you intend on collecting sales tax. There is no fee for the license, which renews automatically as long as your business reports new sales. If you plan on hiring employees, you’ll also get registered so that you can withhold taxes. Registering for both types of taxes can be completed online.
After registering your business with the Secretary of State and applying for the sales tax certificate (also known as a seller’s permit), you’ve completed the state-wide requirements for doing business in Louisiana. Next, you’ll tackle parish and local requirements. For example, New Orleans requires all companies to have a municipal general business license.
Finally, get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This federal number works like a Security Number for your LLC or corporation. It will let you pay income tax for your business, open bank accounts, and handle finances. Even if you’re a sole proprietorship or partnership, you’ll need one to hire employees.
5) Choose a location
If your business model relies on a physical location, it’s time to start shopping for the perfect spot. Before you say “yes” to the ideal storefront, consider these elements:
- Zoning laws: Is the location zoned for business? For your type of business? Can you meet the requirements for zoning?
- Costs: While your business is still growing, can you meet the costs of this location? A lease is a long-term commitment for a brand-new business, especially in a more expensive area or a historic district.
- Amenities: More than just perks, some of the factors you may be looking for in a property will be integral to doing business. For instance, will your business meet its need for traffic without a location full of tourists and walk-ins? Do customers need parking? Do you require a loading zone or access to a nearby highway?
- Home occupancy: Some businesses operate out of the owner’s home. For example, New Orleans permits some businesses in homes provided you don’t conduct retail sales and meet other qualifications such as signage. Will your business qualify?
Finding what works for your fledgling business means thinking about what you need to get started versus what can wait until you’re more established in your market, keeping costs low, and maximizing the benefit to your business that comes from a fabulous space.
6) Open a business bank account and prepare for future taxes
With your EIN in hand, you can begin rocking the accounting side of your business. Open a bank account and keep profits and expenses together. It will help you track and monitor where you could be earning more to optimize your business and meet your goals. Consult an accountant so that your financial statements are in order from the very beginning.
Paying your bills on time is one way to start building business credit. A credit card is another way. You can establish a record of paying off your debts and extend your cash flow in case of an emergency.
When it comes time to pay taxes, a new Louisiana LLC will find its required annual report on the Secretary of State’s website. You can file online and pay the $30 filing fee. Because an LLC is a pass-through entity, members will pay federal taxes annually. There are also special LLCs that can opt to pay tax like a corporation. You’ll apply through the IRS for this status. In that case, the company will file a separate tax return. Additionally, vendors who collect sales tax will find they must file taxes monthly or every 3 months.
7) Purchase business insurance
With the bulk of paperwork behind you, it’s time to protect your business with small business insurance. Congratulations!
Small business insurance is a safety net as you move forward in your business. Like your personal or health insurance, small business insurance in Louisiana protects your business from disasters you can’t predict or avoid.
You could bundle multiple protections in one Business Owner’s Policy (BOP) or purchase various coverages separately as needed. Some options are:
- General liability coverage: This insurance can help when someone makes a claim against your company for injury or property damage.
- Business property coverage: Coverage that can include both the business’s physical property and the business contents inside.
- Business interruption coverage: Can you survive an extended period without business income? Most small businesses can’t, and that’s where business interruption coverage can help bridge the gap.
If you hire workers, you’ll almost certainly need workers’ compensation insurance. This coverage provides for lost wages, medical bills, and rehabilitation to protect you and your employees if a worker becomes sick or injured on the job.
8) Create a marketing plan, hire employees, and more
This last step may be optional, depending on your type of business. Maybe you’re ready to open your doors, put on some calliope music, and welcome visitors while handling most of the day-to-day business tasks yourself. It’s all up to you.
Others may still be wondering how to get customers in the door. Return to your research on the competition and incorporate it into a marketing plan that takes into account the following gears that all need to turn together to move your business ahead:
- Social media
- Local advertising
The best ideas will be specific to your business. Some businesses thrive online and with visual content, while others fall flat. Word of mouth, asking for reviews, and pursuing referrals is the best place to start for small businesses. For others, digital advertising lets them target their ideal audience better.
Just as there is no one-size-fits-all for marketing, there are multiple ways to handle hiring. For many small, sole proprietor businesses, being the CEO, secretary, marketer, and tradesman makes sense--at least at first. For others, hiring employees right away is part of the key to success. For example, a plumber may need someone to answer phones and keep the books while on the job. A restaurant certainly requires multiple roles right away to serve up success.
At some point, all growth requires tackling the issue of employees. You’ll need to make sure you prepare for withholding tax and purchase workers’ compensation insurance and that you’ve thoughtfully considered the roles employees will play in your growth.
After taking a step back to admire all you’ve accomplished, make sure you visit Huckleberry to take care of your small business insurance needs. It takes about 5 minutes so you can get back to building your dream.