Indianapolis offers an OpenCounter portal—an online tool that helps business owners complete regulatory requirements—to guide applicants through the business licensing process, and does not require many businesses to obtain a city business license, making the city’s process to start a business simpler than many of the others we studied. But officials should streamline permitting rules, add more information online for starting a business, reduce fees, and eliminate barriers that disproportionately impact those on the first rung of the economic ladder.
In Indianapolis, the cost, delays, and complexity imposed by the regulatory process for small businesses can make it very challenging for entrepreneurs to start the businesses of their dreams.
Based on our comparative analysis of five common business types, starting a business in Indianapolis is an expensive endeavor. For example, restaurant entrepreneurs must pay 13 different fees totaling $3,285 to get started in Indianapolis—nearly $800 of which is just in licensing costs—and barbers must pay $2,124.
Red tape often takes valuable time away from entrepreneurs. For example, getting a conditional use permit involves sending notices to neighbors, public meetings, and completing requirements in person—steps that bog down applicants in compliance and delay opening day.
The process for obtaining a building permit is especially onerous and confusing, in part due to the need for a construction design release from the state. This is reflected in the 69 and 62 steps it takes, respectively, to open a restaurant and barbershop.
Starting a Business in Indianapolis: By the Numbers
We calculated this metric by totaling the fees for all the licenses, permits, and registrations each business needs to get started.
Number of Fees
We calculated this metric by counting how many fees governments impose on each business for completing registrations and paperwork.
We calculated this metric by totaling the number of agencies entrepreneurs must work with in order to get up and running—whether in the form of submitting paperwork to an agency’s staff, or in terms of abiding by regulations that an agency has promulgated.
We calculated this metric by counting the number of compliance activities each entrepreneur needs to complete in person, rather than online or by mail.
Number of Forms
We calculated this metric by counting the various forms and applications each business needs to submit
Number of Steps
We calculated this metric by totaling the discrete tasks an entrepreneur must complete to start each of the business types.
Indianapolis forbids license and permit applicants from owing any amount of debt to city, county, or state government, regardless of the type of or reason for the debt—likely holding back lower-income entrepreneurs from starting a business. The state of Indiana also requires delinquent personal property taxes to be paid before barbers and other professionals can obtain state occupational licenses. Applicants for a barber and barber shop license must also submit any conviction records, which could lead to being denied the license.
Although fees to start our model home-based tutoring business are low, zoning restrictions limit home-based businesses to only 30%, or 600 square feet, whichever is less, of the home’s floor space, while capping the allowed number of non-resident employees at two.
Accommodations for New or Small Businesses
License terms last a full calendar year from the date of issuance, allowing applicants to renew on their own schedule rather than the government’s.
Officials and policymakers have the opportunity to make it cheaper, faster, and simpler to start a business in Indianapolis. City officials should:
Lower license and permit fees to ensure starting a business in Indianapolis remains accessible to all. Eliminate the “clean hands” requirement that disproportionately impacts those most in need of economic opportunity.
Consolidate existing websites and portals into a true one-stop shop for starting a business, with better step-by-step guides that cover requirements from all levels of government.
Simplify the process to obtain building permits by combining steps and paperwork, creating more guides for complying with agency rules, and lowering fees.
Relax restrictions on businesses well-suited for entrepreneurs seeking to start out small. For example, ease zoning restrictions on home-based businesses by allowing them to occupy more than just 30% or 600 square feet of the home.
Work alongside state officials to remove state barriers that single out returning citizens and low-income residents.
Entrepreneurs often must get approvals from multiple levels of government before opening their doors to the public. For Jesse Rice—a banker-turned-brewery-owner—that meant waiting nine months for paperwork from the federal Alcohol and Tobacco Tax and Trade Bureau before even starting the state and local permitting process. Jesse is the owner of both Black Circle Brewery and a bar called Loom on the north side of Indianapolis. After completing the federal requirements, Jesse remembers having to go in person to agency headquarters to carry out all the steps for getting alcohol permits. Jesse says these agency offices do not seem to talk to one another or work together, so entrepreneurs end up having to drive back and forth between offices to obtain clearances. City processes, too, for things like sign permits and property tax clearance forms are archaic, causing extra bureaucracy and delays. At one point, Jesse was even cited by an inspector because officials had mistakenly put the same address on the paperwork for Black Circle Brewery and Loom, forcing him to pay a fine and an attorney to resolve the situation. Because applicants with outstanding citations cannot receive permit approval, the tens of thousands Jesse had invested in a new distilling operation were put on hold because a clerical error prevented him from obtaining a distilling permit. While anecdotal, these kinds of experiences lead to serious delays, and tend to result from confusing regulatory processes that are inefficient and prone to agency or applicant error. To support aspiring small business owners just starting out, Jesse believes city and state officials should work together to digitize all their paperwork and processes. That way, applicants will not have to make stressful in-person trips to complete requirements.
Located in the town of Speedway on the edge of Indianapolis, B&W Heating and Cooling has been in Beth Rovazzini’s family since the 1960s. Today, the company’s 30 employees serve customers in multiple jurisdictions, contracting on residential and commercial projects throughout the region. When asked about her experiences applying for permits and licenses to complete work in Indianapolis, Beth notes that one of the biggest challenges is knowing the right person to call—an acute barrier for those who are just starting out and have fewer connections within city government. Indianapolis recently transitioned to a new online portal for building permits, which streamlined the process for submitting paperwork. But for trades licenses, B&W must contend not only with duplicative licensure, as some trades require registration at both the state and local level, but also with slow and frustrating approvals from the city. Beth finds that due to inconsistent information from officials, the only way to resolve an issue is to go in person to city headquarters with a blank check. Meanwhile in neighboring Hendricks County, only general contractors need a local license, significantly reducing the red tape that B&W must navigate to serve customers. According to Beth, Indianapolis city officials should work to establish a more accessible and transparent process, ensuring that small businesses have the resources they need when navigating the rules for opening up shop.