Starting an LLC in Illinois is easy, just follow these simple steps:
Choosing a company name is the first and most important step in starting your LLC. Be sure to choose a name that complies with Illinois naming requirements and is easily searchable by potential clients.
1. Follow the naming guidelines:
- Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
For a complete list of naming rules in Illinois, you can read the Illinois naming guidelines.
2. Is the name available in Illinois? Make sure the name you want isn't already taken by doing a name search on the Illinois Secretary of State "Cyberdrive Illinois" website.
3. Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don't plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.
FAQ: Naming an LLC
Do I need to get a DBA or Trade Name for my business?
Most LLCs do not need a DBA. The name of the LLC can serve as your company’s brand name and you can accept checks and other payments under that name as well. However, you may wish to register a DBA if you would like to conduct business under another name. Learn more here.
You are required to nominate a Illinois Registered Agent for your LLC.
What is a registered agent? A registered agent is an individual or business entity responsible for receiving important legal documents on behalf of your business. Think of your registered agent as your business' point of contact with the state.
Who can be a Registered Agent? A Registered Agent must be a resident of Illinois or a corporation, such as a registered agent service, authorized to transact business in Illinois. You may elect an individual within the company including yourself.
TIPRecommended: ZenBusiness includes Registered Agent Service with their LLC formation package ($49 for the 1st year + State Fees).
FAQ: Nominating a Registered Agent
Is a Registered Agent service worth it?
Using a professional Registered Agent service is an affordable way to manage government filings for your LLC. For most businesses, the advantages of using a professional service significantly outweigh the annual costs. Learn more here.
To register your LLC, you will need to file the Articles of Organization with the State of Illinois. This can be done online or by mail
When filing, you will need to state whether your LLC will be member-managed or manager-managed. We recommend learning more about these two options before you file.
File the Articles of Organization
If you’re expanding your existing LLC to the State of Illinois, you will need to form a Foreign LLC.
FAQ: Filing LLC Documents
What is the processing time to form my Illinois LLC?
10 days online or by mail, but may be expedited for an additional fee.
What is the difference between a domestic Illinois LLC and foreign LLC?
An LLC is referred to as a "domestic LLC" when it conducts business in the state where it was formed. Normally when we refer to an LLC we are actually referring to a domestic LLC. A foreign LLC must be formed when an existing LLC wishes to expand its business to another state. If you are filing as a Foreign Illinois LLC learn more here.
In Illinois, LLCs are not required to have an operating agreement, but it's a good practice to have one.
What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.
Why are operating agreements important? A comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.
For more information on operating agreements, read our Illinois LLC operating agreement guide.
Recommended: Use our free Operating Agreement Tool to draft a customized operating agreement for your LLC.
FAQ: Creating an Operating Agreement
Do I need to file my operating agreement with the state?
No. The operating agreement is an internal document that you should keep on file for future reference. However, many states do legally require LLCs to have an operating agreement in place.
What is an EIN? The Employer Identification Number (EIN), or Federal Tax Identification Number, is used to identify a business entity. It is essentially a social security number for the company.
Why do I need an EIN? An EIN is required for the following:
- To open a business bank account for the company
- For Federal and State tax purposes
- To hire employees for the company
Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.
FOR INTERNATIONAL APPLICANTS: you do not need an SSN to obtain an EIN. Learn more here.
FAQ: Getting an EIN
What tax structure should I choose for my LLC?
When you get an EIN, you will be informed of the different tax classification options that are available. Most LLCs elect the default tax status.
However, some LLCs can reduce their federal tax obligation by choosing S corporation status. We recommend consulting with a local accountant to find out which option is best for you.
Considering Using an LLC Formation Service?
We reviewed and ranked the top 5 LLC formation services.
Find out which is best for you.
Protect Your Business & Personal Assets
Business Banking for Personal Asset Protection
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
You can protect your business with these two steps:
1. Opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
2. Getting a business credit card:
- Helps you separate personal and business expenses.
- Builds your company's credit history, which can be useful to raise capital later on.
Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance are:
- General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
- Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers against claims of malpractice and other business errors.
- Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths. In Illinois, businesses with one or more employees, including corporate officers and LLC members, are required by law to have workers' compensation insurance. Get a free quote with ADP.
Properly Sign Legal Documents
Improperly signing a document as yourself and not as a representative of the business can leave you open to personal liability. When signing legal documents on behalf of your company, you could follow this formula to avoid problems:
- Formal name of your business
- Your signature
- Your name
- Your position in the business as its authorized representative
See the image below for an example.
This ensures that you are signing on behalf of your LLC and not as yourself.
Keep Your Company Compliant
Illinois Business Permits and Licenses
Do I need business licenses and permits?
To operate your LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.
The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.
Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.
Find out how to obtain necessary licenses and permits for your business or have a professional service do it for you:
Recommended: If you are a first-time entrepreneur, consider having a professional service research your business’ licensing requirements. Our friends at Startup Savant have reviewed and ranked the top five license research services.
Idaho LLC Tax Requirements
Depending on the nature of your business, you may be required to register for one or more forms of state tax.
If you are selling a physical product, you’ll typically need to register for a sellers permit through the MyTax Illinois website.
This certificate allows a business to collect sales tax on taxable sales.
Sales tax, also called "Sales and Use Tax," is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.
Read our sales tax guide to find out more.
If you have employees in Illinois, you will need to register for Unemployment Insurance Tax and Employee Withholding Tax on behalf of your employees. You can pay both these taxes through the MyTax Illinois portal.
Federal LLC Tax Requirements
File Your LLC Annual Report
Illinois requires LLCs to file an annual report with the Illinois Secretary of State. This can be done online, by mail, or in-person.
FILE YOUR LLC ANNUAL REPORT
OPTION 1: File Online with the State of Illinois
- OR -
File by Mail or In-Person
Fee: $150 Online, $75 By Mail (Nonrefundable)
Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62756
Due Date: Due each year prior to the first day of the month in which the LLC was formed. Reports can be filed starting 60 days prior to the due date.
Late Filings: Illinois charges a late fee of $75 by mail and $125 online. In addition, LLCs will be dissolved after 180 days for failure to file an annual report.
Avoid Automatic Dissolution
LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.
Get Help Starting a Business in Illinois
We understand that creating an LLC and getting your business up and running comes with many challenges. To help you succeed, we compiled the best local resources in every major metro area in Illinois. You can get free assistance in the following areas:
Make Running Your Business Easier
After starting a business, two of the most important things you can do are get professional accounting and hire the right employees. Streamlining these processes can save you time and money as your business grows.
If you plan to hire employees, stay compliant with the law by following these steps:
Recommended: A payroll service saves you time and makes it easier to follow these requirements.
FAQ: Hiring Employees
What is the minimum wage in Illinois?
The minimum wage in Illinois is $8.25 per hour. However, certain areas such as Chicago can have higher minimum wages of up to $12.00 per hour.
How often do I need to pay employees?
Illinois requires wages to be paid at least twice per month, except for wages of executive, administrative and professional employees, as defined in the Federal Fair Labor Standards Act of 1939, which may be paid once a month according to the Employment Statutes of Illinois.
Accounting For Your LLC
It’s critical to get your books in order-- even if you haven’t officially opened for business. A well managed accounting system will help you:
- Track your business finances, including bills, expenses, and income.
- Simplify your annual tax filings.
The right software makes accounting easy. Look for software that:
- Syncs with your bank automatically.
- Matches transactions to invoices, bills and purchase orders.
- Can be accessed from your phone.
Forming a foreign LLC allows your company to operate as one entity in multiple states. If you have an existing LLC and want to do business in Illinois, you will need to register as a foreign LLC. This can be done by mail.
Register as a Foreign LLC in Illinois
File by Mail with the Illinois Secretary of State
Fee: $150 (Nonrefundable)
Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62756
Note: A request must be accompanied by a Certificate of Good Standing from the state in which the LLC was formed.
How to Obtain a Certificate of Good Standing
A Certificate of Good Standing verifies that your LLC was legally formed and has been properly maintained. Several instances where you might need to get one include:
- Seeking funding from banks or other lenders
- Forming your business as a foreign LLC in another state
- Obtaining or renewing specific business licenses or permits
You can order a Certificate of Good Standing online.
Dissolve Your Illinois LLC
If at any point in the future you no longer wish to conduct business with your LLC, it is important to officially dissolve it. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. To dissolve your LLC, there are two broad steps:
- Close your business tax accounts
- File the Articles of Dissolution
When you are ready to dissolve your LLC, follow the steps in our Illinois LLC Dissolution Guide.