Indiana small business taxes, explained
Running a business in Indiana means dealing with the IRS, the state, and sometimes your county. Each has its own website, forms, and deadlines. This page explains every piece in plain English: what it is, whether it's federal or Indiana, who does the work, and when it's due.
Checked against IRS and State of Indiana sources on September 25, 2026. Numbers change every January, and we update this page when they do. Your CPA has the final word on your situation.
Your tax checklist
Answer a few questions. The list below changes to show only what applies to you, who does it, and when.
S corp owners have to pay themselves a reasonable salary through payroll, so the payroll tasks apply to you even with no other employees.
Once your payroll app has your account numbers, it does everything marked "your payroll app" for you. Here's what it needs.
Doing payroll yourself means every payroll task below is on you, math included. Late payments get IRS penalties, so most small businesses use an app.
Nothing on this list happens automatically. QuickBooks keeps your books and can send your 1099s, but you make the four yearly payments and your CPA files the return.
Once, when you start
- Get a tax ID number (EIN) Federal
It's like a Social Security number for your business. It's free from the IRS and takes about 15 minutes online at IRS.gov. You need one if you have employees, partners, or an S corp. Even if you don't, it keeps your own Social Security number off the W-9 forms you give clients. Never pay a website for one.
Who does it: you
- Form your LLC with the state Indiana
You do this on INBiz, the Indiana Secretary of State's website. Filing there is what legally creates your LLC. If it already exists, skip this.
Who does it: you
- Open a business bank account
Keep business money separate from personal money. It makes your books and taxes much simpler. Mixing the two can also weaken the legal protection an LLC gives you.
Who does it: you
- Become an S corp (Form 2553) Federal
A form that tells the IRS to tax your business as an S corp. It's due within 2 months and 15 days of the start of the year you want it to begin, so ask your CPA early. Already approved? Skip this.
Who does it: your CPA
- Open an Indiana withholding account Indiana
When you pay someone, you hold back part of their pay for Indiana and county income tax. This account is how you send that money to the state. Sign up on INBiz. The Indiana Department of Revenue then sends you a 10-digit tax ID and tells you how often to file.
Who does it: you
- Open an Indiana unemployment account Indiana
Businesses pay a tax on wages that funds unemployment benefits. Employees never pay it. Sign up on Uplink, the state's unemployment website, before your first payday. You get an account number and a tax rate, which is 2.5% for most new businesses. An S corp owner's own paycheck counts.
Who does it: you
- Set up your payroll app
Sign up for QuickBooks Payroll, Gusto, or similar. Enter your EIN, your Indiana withholding and unemployment account numbers, your unemployment rate, and your business bank account. Then give it permission to file for you: you e-sign IRS Form 8655 inside the app and approve the app in Uplink (Gusto also asks for an approval in INTIME). The app walks you through each step. After that, it does everything on this list marked "your payroll app." Anything due before setup is done is still on you.
Who does it: you
- Sign up for EFTPS Federal
The IRS's free website for paying federal payroll taxes. Your PIN comes in the mail, so sign up at least a week before your first payday. Indiana payroll taxes get paid in INTIME (withholding) and Uplink (unemployment).
Who does it: you
- Buy workers' comp insurance Indiana
It pays medical bills and lost wages if an employee gets hurt on the job. Indiana requires it from your first employee. You buy it from an insurance company, not the state.
Who does it: you
- Open an Indiana sales tax account Indiana
Only if you sell taxable things, like parts or products. This is how you send the state the 7% sales tax you charge customers. Sign up on INBiz for $25 per location.
Who does it: you
- Tell your county your equipment is exempt County
Indiana taxes the equipment, tools, and furniture a business owns. If yours cost under $2 million total in a county, it's exempt, but you have to claim it once. File Form 102 or 103 plus Form 104 with your county assessor by May 15, and check the exemption box. After that, there's nothing to file while you still qualify.
Who does it: you
Each time you hire
- Have them fill out their forms FederalIndiana
A W-4 sets their federal tax. A WH-4 sets their Indiana tax and lists the county they live in, which sets their county tax. An I-9 proves they can work in the US. You keep it in your files and don't send it anywhere. Most payroll apps collect the W-4 and WH-4 online.
Who does it: you
- Report the new hire to Indiana Indiana
Their name, address, Social Security number, and start date, sent to the Indiana New Hire Reporting Center within 20 days of hiring. It's a short online form at in-newhire.com.
Who does it: your payroll app on most plans, otherwise you
- Put up the required posters FederalIndiana
Federal and Indiana labor law posters, free to print from the state. Hang them where employees can see them.
Who does it: you
Every payday
- Take taxes out of each paycheck FederalIndiana
Part of every paycheck goes to federal income tax, Social Security (6.2%), Medicare (1.45%), Indiana income tax (2.95%), and county income tax. The amounts come from each person's W-4 and WH-4. That money isn't yours. You're holding it for the government, so never spend it.
Who does it: your payroll app, once it's set up
Every month
- Keep your books up to date
Sort every transaction into the right category and check it against your bank statement. Every tax on this list is based on these numbers, and your CPA works from them.
Who does it: you or your bookkeeper
- Pay federal payroll taxes Federal
Send the IRS the tax you took out of paychecks, plus the business's matching share of Social Security and Medicare. Most small businesses pay by the 15th of the next month.
Who does it: your payroll app, once it's set up
- Pay Indiana payroll taxes (Form WH-1) Indiana
Send Indiana the state and county tax you took out of paychecks, in INTIME. Due by the 30th of the next month, or the 20th if you withhold more than about $1,000 a month. File it even in a month with no payroll.
Who does it: your payroll app, once it's set up
- Pay Indiana sales tax (Form ST-103) Indiana
Send the state the sales tax you collected, in INTIME, usually by the 30th of the next month. File it even if you collected nothing.
Who does it: you
Every quarter
- Pay your income tax in four parts FederalIndiana
Nobody takes tax out of your profit, so you pay it yourself four times a year: April 15, June 15, September 15, and January 15. Each time you make two payments. One goes to the IRS for federal income tax and self-employment tax (Social Security and Medicare for owners), using IRS Direct Pay. The other goes to Indiana for state and county income tax, in INTIME. Your CPA can tell you how much.
Who does it: you
- Pay income tax on your extra profit FederalIndiana
Your paycheck already covers tax on your salary. Profit on top of that needs its own payments four times a year: April 15, June 15, September 15, and January 15. One goes to the IRS (IRS Direct Pay) and one goes to Indiana for state and county tax (INTIME). Your CPA can tell you how much.
Who does it: you
- Report payroll to the IRS (Form 941) Federal
Shows the IRS what you paid in wages and what you took out. Due April 30, July 31, October 31, and January 31.
Who does it: your payroll app, once it's set up
- Report and pay Indiana unemployment Indiana
A report of each employee's wages, plus the unemployment tax, filed in Uplink. Same four due dates as the 941.
Who does it: your payroll app, once it's set up
Every year
- Send 1099s to contractors Federal
If you paid someone who isn't an employee $2,000 or more for work in 2026, send them a 1099-NEC form and file a copy with the IRS by January 31. Ask for a W-9 form before you pay them, so you have their name, address, and tax ID ready. QuickBooks and Gusto can e-file 1099s for you, sometimes for a small fee.
Who does it: you
- Send year-end payroll forms FederalIndiana
All due January 31: a W-2 to each employee (with copies to the Social Security Administration), Form 940 for federal unemployment tax, and Indiana Form WH-3, which totals the year's Indiana withholding.
Who does it: your payroll app, once it's set up
- File your tax return FederalIndiana
Your business profit goes on your personal tax return: Schedule C with your federal Form 1040, plus Indiana Form IT-40. Both due April 15.
Who does it: your CPA
- File the business tax return FederalIndiana
The business files a return but doesn't pay income tax itself: federal Form 1065 by March 15 and Indiana Form IT-65 by April 15. Each owner gets a form called a K-1 showing their share of the profit, which goes on their personal return by April 15.
Who does it: your CPA
- File the business tax return FederalIndiana
Federal Form 1120-S by March 15 and Indiana Form IT-20S by April 15. You get a form called a K-1 showing your share of the profit, which goes on your personal return by April 15.
Who does it: your CPA
Every two years
- File the Business Entity Report Indiana
A short update with the Secretary of State that keeps your business active. It costs $32 online at INBiz, or $50 by mail, and it's due by the end of the month you formed the business. Skip it and the state dissolves your business.
Who does it: you
If you remember nothing else
- •Save 25% to 30% of your profit for taxes. Profit gets taxed four ways: federal income tax (10% to 37%), self-employment tax for Social Security and Medicare (15.3%), Indiana tax (2.95%), and county tax (0.5% to 3%).
- •Nobody takes it out for you. As the owner, you pay the IRS and Indiana yourself, four times a year: April 15, June 15, September 15, and January 15.
- •An employee costs about 8% to 11% more than their pay. On top of wages, the business pays its own share of Social Security and Medicare (7.65%) plus federal and Indiana unemployment taxes, before workers' comp insurance.
- •A payroll app does almost all the payroll work. QuickBooks Payroll or Gusto pays and files payroll taxes for you once you give it your account numbers. It doesn't pay your own income tax.
- •Tax you take out of paychecks isn't yours. Never spend it. The IRS can come after you personally for it, even with an LLC.
Every account you might need, and what it's for
Most businesses need a few of these, not all of them. Each one below says who needs it and what happens there. Keep every login in one place, because you'll need them again.
IRS: your EIN
Federal- What it is
- The IRS is the federal tax agency. An EIN (Employer Identification Number) is your business's federal tax ID, like a Social Security number for the business.
- Who needs it
- Every LLC with partners, every S corp, and anyone with employees. A sole proprietor or one-owner LLC with no employees can use their own Social Security number, but a free EIN keeps it off paperwork you hand out.
- What you do there
- You apply once, for free. After that, the EIN goes on your tax returns, payroll forms, bank account, and W-9s.
- With a payroll app
- Your payroll app and your CPA both need this number.
- Link
- Apply for an EIN
IRS: paying federal taxes online
Federal- What it is
- Three free ways to pay the IRS: Direct Pay (no sign-up), EFTPS, and your IRS business tax account.
- Who needs it
- Owners paying quarterly estimated taxes. Employers paying federal payroll taxes without a payroll app.
- What you do there
- You make payments. Nothing gets filed here.
- With a payroll app
- The app pays federal payroll taxes for you. Your own estimated taxes are still on you.
- Link
- IRS Direct Pay
Social Security Administration: Business Services Online
Federal- What it is
- Where copies of W-2s go, so employees get credit toward Social Security.
- Who needs it
- Employers who file their own W-2s.
- What you do there
- Upload W-2s once a year, by January 31.
- With a payroll app
- The app files W-2s for you, so most businesses never log in.
- Link
- Business Services Online
INBiz: Indiana Secretary of State
Indiana- What it is
- Indiana's business registration website. It's also the front door for opening Indiana tax accounts.
- Who needs it
- Anyone forming an LLC or corporation, and anyone opening an Indiana withholding or sales tax account.
- What you do there
- Form your LLC, file the Business Entity Report every two years, and sign up for Indiana tax accounts. Once those accounts exist, the tax work moves to INTIME.
- With a payroll app
- Nothing here is handled by a payroll app.
- Link
- INBiz
Indiana Department of Revenue (DOR): INTIME
Indiana- What it is
- DOR is Indiana's tax agency, the state version of the IRS. INTIME is its website, where Indiana tax accounts live.
- Who needs it
- Anyone with payroll (withholding account), anyone selling taxable products (sales tax account), and owners paying Indiana estimated taxes.
- What you do there
- File and pay Form WH-1 (Indiana and county income tax taken from paychecks) and Form ST-103 (sales tax). Pay estimated taxes. Read letters from DOR, like the one telling you how often to file.
- With a payroll app
- The app files your WH-1 and WH-3. Sales tax, estimated taxes, and DOR letters are still yours, so keep your login.
- Link
- INTIME
Indiana Department of Workforce Development (DWD): Uplink
Indiana- What it is
- DWD runs Indiana's unemployment insurance, the benefits people get after losing a job. Businesses fund it through a payroll tax. Uplink is DWD's employer website.
- Who needs it
- Anyone who pays wages, from the first dollar. That includes an S corp paying its owner a salary.
- What you do there
- File a report and pay unemployment tax every quarter. DWD also posts your yearly tax rate here.
- With a payroll app
- The app files and pays once you approve it inside Uplink. You still read your rate notice.
- Link
- Uplink Employer Self Service
Indiana New Hire Reporting Center
Indiana- What it is
- A state program that collects basic info on every new employee. It helps Indiana enforce child support and catch unemployment fraud.
- Who needs it
- Every employer, for every new hire or rehire.
- What you do there
- Report the name, address, Social Security number, and start date within 20 days.
- With a payroll app
- Most apps do this for you, including QuickBooks Online Payroll.
- Link
- in-newhire.com
Your county assessor
County- What it is
- The county office that assesses property for property tax, including business equipment.
- Who needs it
- Businesses that own equipment, tools, or furniture.
- What you do there
- Starting in 2026, most small businesses file once to claim an exemption, by May 15, and never again.
- With a payroll app
- Not handled by a payroll app.
- Link
- Indiana personal property rules
Words you'll see
Tax paperwork is mostly jargon. Here's what it means.
- Withholding
- Income tax taken out of an employee's paycheck. The employee pays it. The business's job is to take it out, send it to the IRS and Indiana, and report it.
- Payroll taxes
- Every tax tied to paying employees. That's the withholding, plus Social Security, Medicare, and unemployment taxes the business pays on top.
- Social Security and Medicare
- Federal taxes on wages: 7.65% from the employee plus 7.65% from the business. Sometimes called FICA.
- Self-employment tax
- The same Social Security and Medicare, 15.3% total, when you work for yourself and nobody splits it with you.
- Estimated taxes
- Income tax an owner pays four times a year on business profit, because nobody withholds it.
- FUTA and SUTA
- Federal and state unemployment taxes. Only the business pays these, never the employee.
- Sales tax
- A 7% Indiana tax the customer pays, mostly on physical goods. The business adds it to the bill and sends it to the state. Most services aren't taxed.
- W-2, 1099, and K-1
- Year-end forms. A W-2 goes to each employee, a 1099-NEC to each contractor, and a K-1 to each owner of a partnership or S corp.
- EIN
- Employer Identification Number, your business's federal tax ID. Free from the IRS.
- Payroll app
- Software like QuickBooks Payroll, Gusto, or ADP that runs paychecks and pays and files payroll taxes for you.
How your profit gets taxed
First, a mix-up almost everyone has. An LLC is a legal setup, not a tax type. The IRS taxes a one-owner LLC like a sole proprietor and an LLC with partners like a partnership. It only gets taxed as an S corp if you file to make it one.
Pick the one that matches you.
Just me, or a one-owner LLC
The business doesn't file its own tax return. Your profit goes on your personal return, and you pay these four taxes on it.
| Tax | Level | 2026 rate | How it gets paid |
|---|---|---|---|
| Federal income tax | Federal | 10% to 37%, based on your total income | You pay quarterly. Your CPA files the return. |
| Self-employment tax | Federal | 15.3% on about 92% of your profit | You pay it with your federal estimated taxes |
| Indiana income tax | Indiana | 2.95% | You pay quarterly. Your CPA files the return. |
| County income tax | Indiana | 0.5% to 3%, by county | Paid together with your Indiana tax |
Forms: federal Schedule C and Schedule SE with your Form 1040, plus Indiana Form IT-40. All due April 15, and your CPA files them. Self-employment tax is Social Security and Medicare for people who work for themselves. It kicks in once your profit tops about $400, and half of it is deductible.
LLC with partners
The business files its own return but doesn't pay income tax. It splits the profit between the owners on K-1 forms. Each owner then pays the same four taxes a sole proprietor does, on their share.
| Form | Level | What it is | Due |
|---|---|---|---|
| Form 1065 | Federal | The partnership's return, with a K-1 for each owner | March 15 |
| Form IT-65 | Indiana | The Indiana partnership return | April 15 |
| Form 1040 and IT-40 | Both | Each owner's personal return, including their K-1 | April 15 |
Each owner pays self-employment tax (15.3% on most of it) plus federal, Indiana, and county income tax on their share of the profit. That's true even if the money stayed in the business bank account, so plan quarterly payments around it.
S corp
An S corp splits what you take out of the business into two buckets. That split is the reason people choose it.
Your salary
Paid through payroll like any employee. That means Social Security and Medicare (15.3% total, half from your paycheck and half from the business), withholding, and both unemployment taxes. Indiana counts your salary for unemployment too.
The rest of the profit
Comes to you on a K-1. You pay federal, Indiana, and county income tax on it, but no Social Security or Medicare. That's where the savings come from.
The catch: the IRS requires a reasonable salary for the work you do before you take profit out. Pay yourself too little and the IRS can treat the rest as wages. Your CPA helps set the number.
| Form | Level | What it is | Due |
|---|---|---|---|
| Form 2553 | Federal | Makes your LLC or corporation an S corp. Filed once. | Within 2 months and 15 days of the year it starts |
| Form 1120-S | Federal | The S corp's return, with your K-1 | March 15 |
| Form IT-20S | Indiana | The Indiana S corp return | April 15 |
| Payroll forms | Both | Everything in the payroll section below, for your own salary | Monthly, quarterly, yearly |
Indiana also lets S corps and partnerships pay the state income tax at the business level, called the pass-through entity tax. It can lower your federal taxes. You choose it each year on the return, so bring it up with your CPA.
C corp
Few small businesses are C corps. The business pays its own tax on profit, and owners pay tax again on any dividends they take out.
| Form | Level | Rate | Due |
|---|---|---|---|
| Form 1120 | Federal | 21% flat | April 15 |
| Form IT-20 | Indiana | 4.9% flat | May 15 |
Need more time? Your CPA can file a federal extension, Form 7004 for the business or Form 4868 for you, which gives six more months. Indiana extends automatically when you have a federal extension, and for your personal return it gives an extra month past the federal date. An extension gives you more time to file, not more time to pay.
Quarterly estimated taxes
When you have a job, taxes come out of every paycheck. When you own the business, nothing comes out of your profit, so the IRS and Indiana want you to pay as you go. This is always on you. No payroll app does it. Miss the payments and you owe a penalty on top of the tax.
FederalPaid to the IRS
- Form 1040-ES. Covers federal income tax and self-employment tax.
- Required if you'll owe $1,000 or more for the year.
- Pay at IRS Direct Pay, which needs no sign-up, or EFTPS. Both are free.
IndianaPaid to DOR
- Form ES-40. Covers Indiana's 2.95% and your county tax in one payment.
- Required if you'll owe $1,000 or more for the year.
- Pay in INTIME. Indiana's estimated payment page walks you through it.
| Payment | Covers income earned | Due, federal and Indiana |
|---|---|---|
| 1st | January to March | April 15, 2026 |
| 2nd | April and May | June 15, 2026 |
| 3rd | June to August | September 15, 2026 |
| 4th | September to December | January 15, 2027 |
How much? The simple way to avoid a penalty is to pay 100% of last year's total tax, split into four payments. If last year's income was over $150,000, make it 110%. The other option is paying at least 90% of what you'll owe this year, which is where up-to-date books help your CPA give you a real number.
County income tax: look up your rate
On top of the state's 2.95%, every Indiana county charges its own income tax. It's paid to the Indiana Department of Revenue along with your state tax, never to the county directly. Your rate is set by the county you lived in on January 1. Moved in March? You keep the old county's rate until next year. If you lived outside Indiana on January 1, it's the Indiana county where you mainly worked.
For employees, the payroll app uses the county they list on their Indiana Form WH-4. The rates come from DOR's Departmental Notice #1.
No match. Try the county name.
| County | County tax | Plus state 2.95% |
|---|---|---|
| Adams | 1.6% | 4.55% |
| Allen Fort, Wayne | 1.59% | 4.54% |
| Bartholomew Columbus | 1.75% | 4.7% |
| Benton | 1.79% | 4.74% |
| Blackford | 2.5% | 5.45% |
| Boone Zionsville, Whitestown, Lebanon | 1.71% | 4.66% |
| Brown | 2.5234% | 5.4734% |
| Carroll | 2.4733% | 5.4233% |
| Cass | 2.95% | 5.9% |
| Clark Jeffersonville, Clarksville | 2% | 4.95% |
| Clay | 2.35% | 5.3% |
| Clinton | 2.65% | 5.6% |
| Crawford | 1.65% | 4.6% |
| Daviess | 1.5% | 4.45% |
| Dearborn | 1.4% | 4.35% |
| Decatur | 2.45% | 5.4% |
| DeKalb | 2.13% | 5.08% |
| Delaware Muncie | 1.5% | 4.45% |
| Dubois | 1.2% | 4.15% |
| Elkhart Elkhart, Goshen | 2% | 4.95% |
| Fayette | 2.82% | 5.77% |
| Floyd New, Albany | 1.89% | 4.84% |
| Fountain | 2.1% | 5.05% |
| Franklin | 1.7% | 4.65% |
| Fulton | 2.88% | 5.83% |
| Gibson | 1.3% | 4.25% |
| Grant | 2.75% | 5.7% |
| Greene | 2.35% | 5.3% |
| Hamilton Carmel, Fishers, Noblesville | 1.1% | 4.05% |
| Hancock Greenfield, McCordsville, Fortville | 1.94% | 4.89% |
| Harrison | 1% | 3.95% |
| Hendricks Avon, Brownsburg, Plainfield | 1.7% | 4.65% |
| Henry | 2.02% | 4.97% |
| Howard Kokomo | 2.35% | 5.3% |
| Huntington | 1.95% | 4.9% |
| Jackson | 2.1% | 5.05% |
| Jasper | 2.864% | 5.814% |
| Jay | 2.5% | 5.45% |
| Jefferson | 1.03% | 3.98% |
| Jennings | 2.5% | 5.45% |
| Johnson Greenwood, Franklin, Whiteland | 1.4% | 4.35% |
| Knox | 1.7% | 4.65% |
| Kosciusko | 1% | 3.95% |
| LaGrange | 1.65% | 4.6% |
| Lake Gary, Hammond, Crown | 1.5% | 4.45% |
| LaPorte | 1.45% | 4.4% |
| Lawrence | 1.75% | 4.7% |
| Madison Anderson, Pendleton, Elwood | 2.25% | 5.2% |
| Marion Indianapolis, Indy, Speedway | 2.02% | 4.97% |
| Marshall | 1.25% | 4.2% |
| Martin | 2.5% | 5.45% |
| Miami | 2.54% | 5.49% |
| Monroe Bloomington | 2.14% | 5.09% |
| Montgomery | 2.65% | 5.6% |
| Morgan Martinsville, Mooresville | 2.72% | 5.67% |
| Newton | 1% | 3.95% |
| Noble | 1.75% | 4.7% |
| Ohio | 2% | 4.95% |
| Orange | 1.75% | 4.7% |
| Owen | 2.5% | 5.45% |
| Parke | 2.65% | 5.6% |
| Perry | 1.4% | 4.35% |
| Pike | 1.2% | 4.15% |
| Porter Valparaiso, Portage, Chesterton | 0.5% | 3.45% |
| Posey | 1.45% | 4.4% |
| Pulaski | 2.85% | 5.8% |
| Putnam | 2.3% | 5.25% |
| Randolph | 3% | 5.95% |
| Ripley | 2.38% | 5.33% |
| Rush | 2.15% | 5.1% |
| St. Joseph South, Bend, Mishawaka | 1.75% | 4.7% |
| Scott | 2.16% | 5.11% |
| Shelby Shelbyville | 1.7% | 4.65% |
| Spencer | 0.8% | 3.75% |
| Starke | 1.71% | 4.66% |
| Steuben | 1.99% | 4.94% |
| Sullivan | 1.7% | 4.65% |
| Switzerland | 1.45% | 4.4% |
| Tippecanoe Lafayette, West, Lafayette | 1.28% | 4.23% |
| Tipton | 2.6% | 5.55% |
| Union | 2.75% | 5.7% |
| Vanderburgh Evansville | 1.25% | 4.2% |
| Vermillion | 1.5% | 4.45% |
| Vigo Terre, Haute | 2% | 4.95% |
| Wabash | 2.9% | 5.85% |
| Warren | 2.12% | 5.07% |
| Warrick | 1% | 3.95% |
| Washington | 2% | 4.95% |
| Wayne Richmond | 1.25% | 4.2% |
| Wells | 2.1% | 5.05% |
| White | 2.32% | 5.27% |
| Whitley | 1.6829% | 4.6329% |
Rates effective October 1, 2026. Indiana updates them each January and October.
A change is coming in 2029. State law will let cities and towns with 3,500 or more people add their own income tax on top of the county's. We'll update this table when those rates are set.
Payroll taxes, if you have employees or an S corp
Paying a W-2 employee creates two piles of tax. One comes out of their paycheck. The other comes out of the business, on top of what you pay them. Contractors you pay on a 1099 aren't part of this. For them, see our 1099 guide.
What "withholding tax" means, and who pays it
Withholding is the employee's own income tax, taken out of their paycheck before they get it. The employee pays it. The business's job is to take out the right amount, send it to the IRS and Indiana on time, and report it. When Indiana says "withholding tax," it means the state and county income tax you took out of paychecks.
No employees and no S corp? Then you have no withholding and don't need a withholding account. You pay your own income tax through quarterly estimated payments instead.
Taken out of their paycheck
The employee pays. You hold it and send it in.
- Federal income taxFederal Depends on their W-4
- Social SecurityFederal 6.2%, on the first $184,500
- MedicareFederal 1.45%, plus 0.9% over $200,000
- Indiana income taxIndiana 2.95%
- County income taxIndiana Their county's rate
Paid on top by the business
The business pays. It's part of what an employee costs.
- Social SecurityFederal 6.2%, on the first $184,500
- MedicareFederal 1.45%, no cap
- Federal unemployment (FUTA)Federal 0.6% on the first $7,000
- Indiana unemployment (SUTA)Indiana 2.5% on the first $9,500 for most new businesses
Example: one $50,000 employee
A new Indiana business pays about $4,100 in payroll taxes on top of the $50,000. The two unemployment taxes stop once someone earns $7,000 and $9,500, so a lot of that cost hits early in the year.
- Social Security, 6.2% of $50,000
- $3,100.00
- Medicare, 1.45% of $50,000
- $725.00
- Federal unemployment, 0.6% of $7,000
- $42.00
- Indiana unemployment, 2.5% of $9,500
- $237.50
- Business pays on top
- $4,104.50
Every payroll job, and whether an app does it
"App" means a full-service payroll app like QuickBooks Payroll, Gusto, or ADP, with automatic tax filing turned on.
| Job | Level | Goes to | When | App does it? |
|---|---|---|---|---|
| Send in federal payroll taxes | Federal | IRS | Monthly by the 15th for most new employers | Yes |
| Form 941, the federal payroll report | Federal | IRS | Apr 30, Jul 31, Oct 31, Jan 31 | Yes |
| Form 940, federal unemployment | Federal | IRS | Once a year by Jan 31 | Yes |
| W-2s to employees | Federal | Social Security Administration | Once a year by Jan 31 | Yes |
| Form WH-1, Indiana withholding | Indiana | DOR, in INTIME | Monthly by the 30th (20th for bigger payrolls) | Yes |
| Form WH-3, Indiana year-end report | Indiana | DOR, in INTIME | Once a year by Jan 31 | Yes |
| Unemployment report and payment | Indiana | DWD, in Uplink | Apr 30, Jul 31, Oct 31, Jan 31 | Yes |
| New hire report | Indiana | in-newhire.com | Within 20 days of hiring | Usually. Check your plan. |
| Workers' comp insurance | Indiana | An insurance company | Before your first hire | No. Some apps sell a policy. |
File even when it's zero. Once your Indiana accounts are open, DOR wants a WH-1 for every filing period and DWD wants an unemployment report every quarter, even with no payroll. A payroll app files these zero reports for you.
Bigger payroll, faster deposits. Most new businesses send federal payroll taxes monthly. Once your yearly payroll taxes top $50,000, the IRS moves you to twice a week. A payroll app adjusts on its own.
Your unemployment rate changes. Most new Indiana businesses pay 2.5% for about four years. After that, DWD sets a yearly rate between 0.5% and 7.4%, based on how many former employees have collected unemployment. Construction companies start at a different rate. Indiana has no disability or paid leave payroll tax.
Doing payroll by hand? Federal amounts come from IRS Publication 15-T. For Indiana, each WH-4 exemption takes $1,000 a year off the wages you tax ($1,500 for most dependents), and you multiply what's left by 2.95% plus the county rate. A payroll app is worth the money.
What a payroll app does, and what's still on you
QuickBooks Payroll, Gusto, and ADP work about the same way. They handle payroll taxes start to finish. They don't do your income taxes, sales tax, or state paperwork that isn't about payroll.
What the payroll app handles
- Figures out federal, Indiana, and county withholding on every paycheck
- Figures out your share of Social Security, Medicare, and both unemployment taxes
- Pulls the tax money from your bank account when you run payroll and pays each agency on time
- Files the federal 941 and 940, plus Indiana's WH-1, WH-3, and quarterly unemployment report
- Files W-2s with the Social Security Administration and Indiana
- Usually files new hire reports too. QuickBooks Online Payroll does.
What's still on you
- Opening your IRS, DOR, and DWD accounts. The app needs those account numbers before it can file anything.
- Your own estimated taxes, federal and Indiana
- Your business income tax return (that's your CPA)
- Sales tax returns, unless you pay for a QuickBooks add-on that files them
- The Business Entity Report every two years
- The personal property tax exemption, once
- Workers' comp insurance
- Reading letters from the IRS, DOR, and DWD
What the app needs from you first
A payroll app can run paychecks the day you sign up. It can't pay or file taxes until it has everything below. Any tax that comes due before then is yours to pay by hand.
| What | Level | Where you get it | What it looks like |
|---|---|---|---|
| Your EIN | Federal | IRS.gov, free | 12-3456789 |
| Your Indiana withholding account | Indiana | DOR, after you sign up through INBiz | 10-digit tax ID plus a 3-digit location number |
| How often Indiana wants your WH-1 | Indiana | Your DOR welcome letter, or INTIME | Monthly, early (the 20th), or yearly |
| Your Indiana unemployment account and rate | Indiana | DWD, after you sign up on Uplink | Up to 6 digits, and 2.5% for most new businesses |
| Permission to file for you | Federal and Indiana | You e-sign IRS Form 8655 inside the app, then approve the app in Uplink. QuickBooks is Agent ID 111559 at the Wage Records level. Gusto also needs your approval in INTIME. | A one-time step |
| Owner and business details | You | Legal name and address, plus the owner's Social Security number and birth date | |
| Your business bank account | Your bank | Verified in the app | |
| Payroll you already ran this year | Your old app or records | Only if you switch mid-year | |
| Each employee's W-4 and WH-4 | Federal and Indiana | Your employees, when they start | The WH-4 lists their Indiana county |
No payroll? Then QuickBooks Online on its own pays and files nothing. It keeps the books, tracks sales tax, gives a rough federal estimate of what you owe, and can e-file your 1099s. Your quarterly payments and yearly returns stay with you and your CPA.
QuickBooks specifics. The Uplink approval step is the one people get stuck on, and Intuit has a walkthrough with screenshots. The Elite plan adds penalty protection that covers up to $25,000 a year in payroll tax penalties, as long as automatic taxes are on and you send Intuit the notice within 15 days.
Sales tax: if you sell services, you can usually skip it
Sales tax is a 7% Indiana tax that the customer pays. The business adds it to the bill, holds it, and sends it to the Indiana Department of Revenue. Indiana taxes mostly physical goods, not services, so plenty of service businesses never collect it.
When it might apply to you: you charge customers for parts, materials, or equipment, or you sell products on the side. Contractors, installers, and repair companies are the usual gray area, because the parts can be taxable even when the labor isn't. Check DOR's sales tax page, then ask your CPA before opening an account. Once it's open, you file a return every period, even when you owe nothing.
| Rate | 7% everywhere in Indiana. No city or county sales tax. |
| The account | Open it through INBiz for $25 per location |
| The form | Form ST-103, filed and paid in INTIME |
| When | Usually monthly, by the 30th. Once a year if you collect under $1,000 a year. DOR tells you which. |
| Who files | You. Payroll apps don't touch sales tax. QuickBooks can file it only with its paid Sales Tax Essentials add-on, and only for monthly or quarterly filers. |
Other Indiana paperwork
None of these are handled by a payroll app.
| What | Who needs it | When | The details |
|---|---|---|---|
| Business Entity Report | LLCs and corporations | Every two years, in the month you formed | A short update to the Secretary of State on INBiz that keeps your LLC active. $32 online, $50 on paper. Skip it and the state dissolves your LLC, and getting it back takes weeks. |
| Personal property tax | Businesses that own equipment, tools, or furniture | May 15 | Starting in 2026 it's exempt if it all cost under $2 million. Claim it once with your county assessor on Form 102 or 103 plus Form 104. After that there's nothing to file while you qualify. |
| Workers' comp | Businesses with employees | Before your first hire | Insurance that pays for on-the-job injuries, bought from a private company. Sole proprietors, partners, and LLC members are exempt. S corp owners are covered unless they file an opt-out notice. Almost all employees have to be covered. |
| Beneficial ownership (BOI) report | Nobody formed in the US | Never | A federal ownership report that made headlines in 2024. FinCEN dropped it for businesses formed in the US, so ignore letters saying you owe one. They're scams. |
| Workplace posters | Businesses with employees | Before your first hire | Free to print from the state. Indiana's minimum wage is $7.25 an hour. |
The whole year on one calendar
For a business that runs on a normal January to December year. Skip the payroll lines if you don't have payroll. When a federal deadline lands on a weekend, it moves to the next business day, so the January 31, 2027 deadlines are due February 1. For Indiana deadlines, don't count on the extra day.
Every month, if you have payroll or sales tax
- 15th Federal payroll taxes for last month Federal
- 20th Indiana withholding and sales tax, for bigger businesses Indiana
- 30th Indiana withholding and sales tax, for everyone else Indiana
-
January
- 15 Last quarter's estimated taxes Federal + Indiana Who does it: you
- 31 W-2s to employees, Form 940, and Indiana WH-3 Federal + Indiana Who does it: your payroll app
- 31 Form 941 and Indiana unemployment for the last quarter Federal + Indiana Who does it: your payroll app
- 31 1099s to contractors you paid $2,000 or more Federal Who does it: you
-
March
- 15 S corp (1120-S) and partnership (1065) returns Federal Who does it: your CPA
-
April
- 15 Personal returns with Schedule C, plus Indiana IT-40, IT-20S, and IT-65 Federal + Indiana Who does it: your CPA
- 15 First quarter estimated taxes Federal + Indiana Who does it: you
- 30 Form 941 and Indiana unemployment for the first quarter Federal + Indiana Who does it: your payroll app
-
May
- 15 Personal property forms, if you haven't claimed the exemption yet County Who does it: you
-
June
- 15 Second quarter estimated taxes Federal + Indiana Who does it: you
-
July
- 31 Form 941 and Indiana unemployment for the second quarter Federal + Indiana Who does it: your payroll app
-
September
- 15 Third quarter estimated taxes Federal + Indiana Who does it: you
- 15 Extended S corp and partnership returns Federal Who does it: your CPA
-
October
- 15 Extended personal returns Federal Who does it: your CPA
- 31 Form 941 and Indiana unemployment for the third quarter Federal + Indiana Who does it: your payroll app
-
Every other year
Business Entity Report for LLCs, in the month you formed Indiana Who does it: you
Want someone to keep the books?
We keep your books in QuickBooks Online, categorized and reconciled every month. We don't file taxes. We hand your CPA tax-ready books, so they ask fewer questions and bill you for less time. Quotes usually land between $300 and $400 a month, and the pricing page has the details.