Louisiana Tax ID (EIN) Number & Business RegistrationPublished:
Louisiana is home to more than 424,000 small businesses, with close to 900,000 people in the state employed by those small businesses. Approximately 97.3 percent of all employers in the state are small businesses. If you’re looking for guidance, resources, or networking opportunities, Louisiana’s Small Business Development Center can help you, or you can join one of the many entrepreneurial communities around major metropolitan areas like New Orleans, Lafayette, or Baton Rouge. Starting a Louisiana business is your opportunity to make a completely independent living for yourself, and a chance to build enough wealth to retire. But long before you start making substantive profits, you’ll need to make sure your business is legally registered.
Steps to Obtain a Louisiana Tax ID Number & Business Registration:
- Legal Formation of your Louisiana Business
- Obtain your Federal Tax ID (EIN) Number
- Louisiana State Tax ID Number
- Louisiana Licenses & Permits
You’ll have many options when forming your business, such as whether or not you hire employees, whether or not you move into an office, and which clients you take on. But one of the most important decisions is how you’re going to structure your business. There are a few variations to consider, but most entrepreneurs ultimately go with one of these main options:
- Sole proprietorships and partnerships. Sole proprietorships and partnerships are very similar, with the only difference being the number of members involved. These are the easiest business type to create, with few rules and regulations and limited ongoing maintenance. They’re also taxed very simply, with each business owner reporting income as appropriate on their personal tax returns. The downside is that these businesses offer little to no liability protection, which means you could take on personal debt on behalf of the business, or may be legally responsible for actions you take within the business.
- Limited liability companies (LLCs). LLCs take things to the next level. They’re a little more complicated, but not ridiculously so, and are treated as separate legal entities. LLCs keep track of their income and expenses separately from their individual owners, who then pay taxes on any income or profits they withdraw from the business. LLCs can be taxed as a corporation in some cases, but as a partnership in most cases. In Louisiana specifically, you’ll treat your LLC however you treated it at the federal level. As of 2017, you’ll also be responsible for paying a franchise tax. LLCs, as their name suggests, offer some liability protection, but not as much as a corporation.
- Corporations. Corporations offer the highest level of liability protection, and accordingly, are treated as distinct legal entities. They’re also the most complicated type of business to start and manage, because they’re so heavily regulated. The flip side is that corporations allow you to issue public shares as a way of raising funds, so they’re ideal for companies that have the intention of growing significantly over time. Corporations must pay income taxes on eligible revenue at both the federal and state level, sometimes resulting in double taxation at the individual level. In Louisiana, the corporate income tax rate is complex; you’ll pay 4 percent on the first $25,000, 5 percent on the next $25,000, 6 percent on the next $50,000, 7 percent on the next $100,000, and 8 percent on the next $200,000.
There are pros and cons to each business type, so it’s important to understand the ins and outs of your business long before you decide on a final structure. The best course of action is to make a business plan first, so you have all the numbers and the vision in front of you.
If you plan on hiring employees, opening a business bank account, or starting an LLC or corporation, you’re going to need a federal tax ID number. This number, sometimes referred to as an employer identification number (EIN) is like a social security number (SSN) for your business. It serves as a unique identifier, and registers your business at the federal level. Once you have it, you’ll use it to apply for new accounts, build credit, hire employees, and establish partnerships with other businesses.
It’s not complicated to get an EIN, but getting help from experts does make things much simpler and more convenient. Take advantage of our online federal Tax ID Number obtainment services if you want to get your business registered as quickly and easily as possible.
After you get a federal tax ID, the next step of the registration process is registering your business with the state of Louisiana. You’ll need a state tax ID number to register for Louisiana taxes, including the franchise tax. You’ll also need this state-level ID number to register for sales taxes, and excise taxes (which apply to certain products, like alcohol or tobacco products).
If you want to run a business in Louisiana, you’ll first need to obtain the right licenses and permits. Businesses in several industries, such as healthcare, gambling, and professional services, are required to be licensed at the state level. You can use the portal at Louisiana geauxBIZ to determine which licenses you may need.
It's also important to check with your specific city, as it may have different or additional licensing and permit requirements. You can visit your local Chamber of Commerce to find out more information, and determine exactly which types of licenses you may need.
Starting a business is a weeks-long process even for the simplest companies, but don’t let the time factor discourage you. If you rely on professional services to get your business registered at the federal and state level, you’ll be able to cut that time drastically, and start generating the revenue you need to grow.