If you’ve decided to form a Limited Liability Company in Louisiana, you’re in good company. LLCs are the most popular type of business entity, mostly due to their simple structure and lack of regulation. But how long does it actually take to get an LLC in the state of Louisiana? We’ll cover that and more in our comprehensive guide.
Discovering Louisiana
There’s a diverse range of environments in Louisiana. You can find marshes, hills, fields, wetlands, mountains and prairies. The wildlife in the state is just as beautiful and diverse: beavers, coyotes, muskrats, alligators, snapping turtles, Louisiana pine snakes (which are constrictors), and more. Louisiana is the nation’s top producer of salt, and it also boasts fertile soil, as well as oil and natural gas.
Economic Overview of Louisiana
Louisiana has a GSP (Gross State Product) of $219.1 billion, and the growth rate between 2018 and 2023 was 18.4k%. The largest industries in the state by revenue are Petroleum Refining, Oil Drilling and Gas Extraction, Plastic and Resin Manufacturing, Hospitals, and Public Schools. The 10 biggest companies by employment are the State of Louisiana, Jefferson Parish, Walmart Inc., Fort Polk and the City of Baton Rouge. And the industries that contribute the most to the overall GSP of the state are Manufacturing, Real Estate and Rental and Leasing, Healthcare and Social Assistance, Retail Trade, and Wholesale Trade.
Business Environment in Louisiana
Louisiana ranked #50 on Usnews.com’s list of the best states. It ranked #44 in business environment and #50 in growth. The state’s venture capital per GDP is $0.255 per $1k GDP, well behind the national average of $7.65. Job growth in the state is 0.1% (national is 0.2%), and net migration is -0.5% (national is 0.1%).
In terms of the workforce, Louisiana ranks #49 in higher education, so it’s a coin flip as to whether they’d have the skills you want. Their high school graduation rate is 82.9%, less than the national average of 86.5%.
In terms of the state economy, it ranks #40 in long-term fiscal stability. The state’s liquidity is far below the national average (2.7 and 3.6, respectively).
The infrastructure isn’t great, either. It scored #37 in energy because the state has a renewable energy usage statistic of 3.4%, which is 12.3% on average nationwide. And 23.2% of the roads in the state are in poor condition (national is 19.0%). It also ranks #47 for internet access.
The natural environment statistics from Usnews.com are alarming. Louisiana ranked #50 in the pollution category. The air quality isn’t the problem. The drinking water violation points for the state are 2.91 per 100k residents (national is 1.91), and it has a whopping 3,533 pounds per square mile of industrial toxins (national is 926). This could spell trouble for companies that thrive on green energy or environmental protection.
Under the category of Opportunity, Louisiana ranks #48, which seems confusing at first because it also ranks #9 in affordability. But it also ranks #50 in economic opportunity and #49 in equality. The cost of living index in the state is 91.3, which is nearly 9 points down from the national average of 100.0. But that’s because the median household income is $52,087 (national is $69,717) and the poverty rate is 19.6% (national 12.8%).
State-Specific Regulations and Incentives for Forming an LLC in Louisiana
Here’s a look at some of the regulations and incentives for forming a Limited Liability Company in Louisiana.
- LED FastStart: LED FastStart is a program that will help your company recruit employees based on its unique needs, screen them, as well as help to develop and provide training to employees. Qualifying businesses are engaged in advanced and traditional manufacturing, digital media, headquarters and business operations, research and development, or warehousing and distribution. They also have to commit to the creation of at least 15 new jobs in those industries.
- Industrial Tax Exemption: This allows you to receive an 80% property tax abatement for up to 10 years on new manufacturing investments, or annual capitalized additions. Not only is the program available to new manufacturers in the state, existing manufacturers making new investments on existing facilities can also take advantage of it.
- Quality Jobs: This program provides a cash rebate for businesses that create well-paying jobs in the state and encourage economic development. The rebate is up to 6% on annual payroll expenses for as long as 10 years, as well as a sales and use tax rebate on qualifying capital expenses or a project facility expense rebate of 1.5%.
- Enterprise Zone: This is an incentive program that supplies income and franchise tax credits to businesses that create jobs in one of the four groups targeted by the government in the state. The jobs must be permanent, full-time jobs, and 50% of them must fall into those four groups. Some of the incentives include one-time tax credits between $1,000 and $3,500, and a sales and use tax rebate on furniture, equipment or machinery, or a 1.5% refundable investment tax credit on capital investments, not to exceed $100,000 per new job.
- Digital Interactive Media Software Program: This is a refundable tax credit of up to 35% for labor in the state, as well as a refundable credit up to 25% for certain qualifying production expenses. It’s designed to give software development and digital media companies a competitive edge, no matter their size.
- Research and Development Tax Credit: This is a tax credit designed to encourage businesses in the state to create or expand research and development activities in Louisiana. The tax credit is up to 30%, and there isn’t a cap on it or a minimum requirement. To qualify, businesses must have incurred expenditures in research and development in the state, and the taxpayer is required to claim those expenses within a year after December 31st of the year the expenses were paid.
- Angel Investor Tax Credit: This is a tax credit of up to 25% for investments in wealth-creating businesses in their early stages seeking start-up or expansion capital. Other incentives include a tax credit of 35% for investors investing in Louisiana Entrepreneurial Businesses with locations in Opportunity zones. Businesses can’t be involved in real estate, retail, professional services, gambling or gaming, financial services, or natural resource extraction or exploration to qualify.
- Louisiana Innovation Retention Grant Program: These grants are designed to provide additional support from the state specifically for research-focused small businesses in Louisiana who previously were granted a federal Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) grant. The goal is to help retain STEM startup companies and employees. Businesses that have received SBIR/STTR Phase I can receive up to $50,000 from the IRG program, while Phase II can receive up to $100,000 from the program.
- Federal Opportunity Zones: There are 150 different designated Opportunity Zones in Louisiana that were created to increase investments in low-income areas using federal tax incentives and foster long-term growth.
- Restoration Tax Abatement: This is up to a 5-year property tax abatement for 100% of property taxes for up to 10 years if you rehabilitate an existing structure with a location inside an economic development district, historic district, downtown development district or an opportunity zone.
- Motion Picture Production Program: This is a tax credit of up to 40% on expenses for production, including labor from both residents and non-residents of the state. There’s a 25% base credit for in-state production expenditures, a 10% increase on screenplay productions in Louisiana, and a 5% increase for expenses outside the New Orleans Metro Statistical Area. The minimum expenditure requirements for screenplay productions is $50,000, and it’s $300,000 for all other expenditures in-state. You can use the tax credits for personal or corporate income taxes in Louisiana.
- Live Performance Production Program: This is a tax credit of up to 25% for both musical and theatrical productions in the state. You can get a 7% credit for qualifying expenses between $100,000-$300,000, 18% for expenses over $1,000,000, 14% for expenses between $300,000-$1,000,000 and an additional 7% credit for payroll expenses for Louisiana residents.
- Entertainment Job Creation Program: This program provides a tax credit on the annual W2 wages of certain qualifying entertainment companies for creating well-paying jobs in Louisiana. You can get a 15% credit for every new job whose payroll is $45,000-$66,000 per year or 20% for jobs with a payroll between $66,000-$200,000 per year.
- Music Job Creation Program: This is a tax credit of 10%-15% on annual wages paid by companies in the music industry that create at least three new well-paying jobs for workers in Louisiana.
- Sound Recording Program: This is an 18% credit for production expenses.
Pros and Cons of Establishing an LLC in Louisiana
One of the benefits of starting a business in Louisiana is that the state definitely has the potential to prosper. In 2009 it was ranked #6 for economic quality.
Louisiana has low labor costs because workers are paid less in the state, which is good for business. And the workforce is highly flexible because only 6% of the state’s workers are unionized (the national average is 12%).
Improvements are being made to the state to make business more viable. The one-year startup survival rate in Louisiana was #42 in 2009, and jumped up to #12 in 2018. And it had less than 85% broadband internet coverage in 2008, whereas that number jumped to 95% in 2018.
The high affordability rating in the state is great for business owners. This means that it will be relatively cheap to own and operate a business in the state, and things like commercial leases will be lower than some other states.
There are some downsides to business ownership in Louisiana.
Louisiana is notorious for having strict and oppressive business regulations. When it comes to taxes, local sales tax is collected in each parish, rather than by the state government, and the sales tax rates vary by parish. It’s unnecessarily complicated. 77 out of 102 vocational occupations in Louisiana require state licenses. Even florists have to have one.
Thanks to government mismanagement, Louisiana has slipped 32 spots in ranking from #6 in the nation for economic quality to #50 since 2009.
Procedure of Establishing an LLC in Louisiana
In this section we’ll take you through each step involved in forming an LLC in Louisiana.
Necessary Documentation for Filing an LLC in Louisiana
You can make the formation process go more smoothly by having all your documents ready to go before you file. Here’s what you’ll need:
- Articles of Organization: Your company’s Articles of Organization is your application for a Limited Liability Company. It includes information about your business, including its name, purpose, address, duration, ownership and management, and your registered agent’s information.
- Name Reservation Application: Once you’ve chosen a business name that meets all of the legal requirements, in order to use it you need to file a Reservation of Corporate/Limited Liability Company/L3C/ Partnership Name form. This not only registers your name with the state government but also prevents other businesses from using it.
- IRS Form SS-4, or EIN: An Employer Identification Number (EIN) is necessary if you want to open a business bank account or to hire employees, but it can also qualify your business for certain incentives. You can get one for free yourself through the IRS website.
- Operating Agreement: This is an internal business document that you’re not legally required to have, but trust us when we say you’ll use it a lot your first year. It lists detailed instructions about how your business should run, as well as other information about your company.
- Initial Report: LLCs are required to file annual reports every year, and your first one is called the initial report. You file it with your Articles of Organization. After that, you’ll file an annual report, which is a way for the Secretary of State to keep the information they have about your company up-to-date.
- Tax Registrations: You’ll need to register your company with the Department of Revenue if you hire employees, or if you collect sales tax. You may also need to register with the Louisiana Workforce Commission.
- Business Licenses: You’ll likely need a number of business licenses, both from state and local governments. To find out precisely which licenses and permits you need, head to the Secretary of State website.
Legal Requirements for Starting an LLC in Louisiana
Here are the steps to LLC formation in Louisiana.
- Obtain an Articles of Organization Form: Getting an Articles of Organization form is the first major step to forming your LLC. You can pick one up from the Secretary of State.
- Pick Out a Business Name: You might think that picking a business name should be easy, but it’s not. There are a lot of legal requirements involved with business names. You have to add “Limited Liability Company” or an abbreviation, like “LLC”. You also can’t choose a name that another business in the state is already using, or one that’s too close to a business name that’s already in use. You can search the business filings database on the Louisiana Secretary of State website to find out if your chosen business name is available. Once you choose one that’s available, you need to file your Reservation of Corporate/Limited Liability Company/L3C/ Partnership Name form.
- Select a Registered Agent: A registered agent is someone who will receive mail from government agencies and legal notices (like service of process) for your business during normal working hours. It’s a fancy legal position, and it’s a requirement for every LLC. You can choose a person you know or trust, but they must meet all of the requirements for a registered agent (like they have to have a physical address and can’t use a PO box), or you can choose a professional registered agent. Many business owners choose professional registered agent services because of the serious nature of the job.
- Choose Your LLC Address: Even if you conduct much of your business from your home, you probably don’t want to list your home address as your business address. This is because your company’s business address will be listed on the public record, so listing your personal address is a privacy and security concern. Sometimes you can use your registered agent address as your business address, or you could use a virtual address or office.
- Sign Your Articles of Organization and Submit the Form: Once you’ve completely filled the form out, it’s time to sign and file it. However, if you sign them yourself then you’ll be listed on the public record as your company’s LLC organizer. For privacy, you could consider a professional LLC formation service.
Once your Articles of Organization have been submitted, it’s time to play the waiting game.
Time Frame for Establishing an LLC in Louisiana
Congratulations! You’ve submitted your Articles of Organization to the Secretary of State. Now you’re probably wondering how long it will take them to get back to you.
How Long Does the Initial Paperwork Take in Louisiana?
If you’ve filed online, it can take 3-5 days. If you file by mail, you can expect approval times of 2-3 weeks. Processing times are the time it takes workers at the Secretary of State’s office to assess your paperwork and enter the data into their computer system. Approval time is the complete duration of your wait, including processing times.
Processing Times in the State of Louisiana
Processing times if you file by mail or online are 3-5 business days.
Common Delays in the LLC Formation Process in Louisiana
There are a few things that could delay your LLC formation.
- Errors on your documents: All of the information on your documents must be 100% accurate, otherwise the Secretary of State could reject your filing. If that happens, you’ll have no choice but to start the formation process all over again, which obviously will slow the process down.
- High-volume filing times: Every year, hundreds of businesses file to get LLCs either at the beginning or the end of the year. If you do, too, then you can expect longer processing times as the clerks process the backlog of filings.
- Weekends and Holidays: The Secretary of State’s office won’t process filings on weekends or holidays, so you shouldn’t file then. Instead, wait until the next business day to file.
Expedited Processing for LLC Formation in Louisiana
Expedited processing for LLC formation probably sounds like music to your ears if you want your LLC fast. Here’s what you need to know about expedited processing in Louisiana.
What Are the Expedited Options Available?
There’s a 3 hour expedited processing option available.
Additional Costs for Expedited Services in Louisiana
What you need to know about the fee for expedited processing is that you must pay the fee in addition to the standard filing fee. The three hour expedited processing option costs an additional $50.
Comparing LLC Formation Time Frame in Louisiana with Other States
In the business world, it’s always a good idea to check out the competition. Here’s how Louisiana’s time frames stack up.
Brief Comparison with Key States
As a refresher, Louisiana has 3-5 day processing whether you file by mail or online, and expedited processing in 3 hours.
A handful of states- Alabama, Alaska, Colorado, Kansas, Kentucky, Minnesota, Missouri, New York, South Dakota, Tennessee, Wisconsin and Wyoming- have immediate processing for online filings. For faster mail filings, Ohio and Kentucky have 1-day processing, while Alabama, Massachusetts and South Dakota have 1-2 day processing. And Delaware, Michigan, Montana, Nevada and West Virginia have 1 hour expedited processing and New York has a 2 hour expedited processing option.
In contrast, a number of states don’t even provide expedited processing options. And although Maryland and Arizona do, they take 7 and 5 days, respectively. Maryland also takes 2 weeks to process online filings and 5-8 weeks to process mail filings. And New York takes 8 whole months to process mail filings.
Why is Louisiana a Favorable Place for Forming an LLC?
Louisiana is a good place to form an LLC if you’re looking for a place with a low cost of doing business. Its labor costs are low, and the state has a great affordability ranking. The state is also working to become a more business-friendly environment for both new and existing businesses, and given its progress it seems to have a lot of potential in the future.
