Louisiana Startup Businesses

A Louisiana startup business must be registered in the state to do business—but first, you need to select the best type of business in Louisiana for your unique position and priorities.

Take a look below: we've collected information about the different options you have for types of Louisiana startups so you can determine what kind of business is best for you.

Louisiana Sole Proprietorship

A sole proprietorship can be registered with the state as a trade name. This type of business is the simplest Louisiana startup you can form, consisting of one individual doing business under a name other than his or her legal name. A sole proprietorship trade name is considered a legal extension of the individual owner; if the sole proprietorship is sued or defaults on a debt, the owner is entirely accountable.

Because a sole proprietorship is such a simple structure, it does not have as many requirements placed on it as a corporation or LLC in Louisiana would. A trade name expires, and renewals must be filed with the state in order to continue conducting business as a Louisiana sole proprietorship.

Incorporate in Louisiana

At the moment a business incorporates in Louisiana, a new entity (a "legal person") is formed. This legal entity, which is by default a C corporation, is formed by filing Articles of Incorporation with the Louisiana Secretary of State's office and receiving a charter number for use in the state. Unless otherwise specified during filing, a Louisiana C corporation exists perpetually, or until dissolution paperwork has been filed.

A C corporation has many abilities that a sole proprietorship does not. It can have multiple owners, while by definition a sole proprietorship can only have one; in fact, there is no legal limit to the amount of owners (or shareholders) a C corporation can have, and it can issue multiple classes of stock. It can enter into contracts on its own, keeping its owners' finances and assets legally separate from those of the business (provided the C corporation abides by all of the corporate formalities required of it by law). It also allows owners to deduct health insurance premiums.

It will also experience something known as "double taxation." A Louisiana C corporation will pay a corporate income tax to the federal government, and the remaining income is then given to the individual owners. That income is then taxed again, this time at the individual level as a personal income tax.

Louisiana S Corporation

Louisiana startups that wish to avoid the double taxation of a C corporation might choose to form an S corporation; this entity type is taxed only at the individual level as personal income, but does not pay a corporate tax at all.

However, in return for the beneficial tax structure, a Louisiana S corporation has stricter limits in certain other areas—there can be no more than 100 shareholders, and unlike a C corporation, only US citizens and resident aliens are allowed to own a stake in an S corporation.

Louisiana LLC

Forming an LLC, or limited liability company, is a similar process as forming a corporation: Articles of Organization, rather than Incorporation, must be filed with the Secretary of State, and an LLC will also receive a charter number and be registered and searched in the same corporate database.

A Louisiana LLC, like an S corporation, avoids double taxation by taxing only the individual owners, but it is not limited to 100 owners like an S corporation (called "members" for an LLC), nor is there a citizenship requirement in order to own a portion of the LLC.

Nonprofit Corporation in Louisiana

A nonprofit corporation is a type of corporation in which assets are not distributed to owners as profit, but rather put back into the corporation to improve its services or otherwise used to further its mission.

Many nonprofit corporations are formed with the intention to accept tax-deductible donations under section 501c3 of the Internal Revenue Code. This is a two-step process: First, the organization must register as a nonprofit corporation in Louisiana with the Secretary of State, and then it must apply for tax exemption with the IRS. In order to be considered for exemption under section 501c3, the nonprofit corporation's Louisiana Articles must include specific language related to section 501c3, as well as specify that the organization is formed for one of the following purposes: scientific, educational, charitable, religious, literary, prevention of cruelty to children or animals, or amateur sporting competition.

Foreign Corporation in Louisiana

If a corporation or LLC registered in another state plans to do business in the state, it will most likely be required to register as a foreign corporation in Louisiana before beginning to transact business.

While the state does not define "doing business," if a foreign corporation is found to have been doing business in Louisiana prior to registering its foreign qualification paperwork, it may be punished with a fine; as that fine can vary based on how long the business has been improperly doing business in Louisiana, foreign corporations should pay close attention to the requirements and consult a lawyer if necessary.