How to Start an LLC in Illinois (2024 Guide)
To get started, you'll need to pick a suitable business name, choose a registered agent, and file your Articles of Organization with the Illinois Secretary of State ($150 processing fee).
You can do this independently, consult with a business attorney for specialized legal guidance, or join the other 65% of our readers and hire a specialized Illinois LLC formation service (recommended).
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How to Form an LLC in Illinois in 6 Steps
In order to form your LLC in Illinois, you will need to complete the following steps:
- Name Your LLC
- Choose a Registered Agent
- File Your Articles of Organization
- File Your LLC Operating Agreement
- Obtain an EIN
- File a Beneficial Ownership Information Report
Step 1: Name Your Illinois LLC
Before you get started, you will need to pick a suitable name for your Illinois LLC.
This will need to comply with all applicable Illinois naming requirements and be both succinct and memorable, as this will make it easily searchable by your potential clients.
1. Follow the naming guidelines:
- Your name must contain — apart from any other word or abbreviation — the words “Limited Liability Company” or the abbreviations “LLC. or L.L.C.”
- Your name cannot contain the terms “Corporation,” “Corp,” “Incorporated,” “Inc,” “Ltd,” “Co.,” Limited Partnership,” or “LP.”
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Your name cannot include improper names (i.e., names that contain any word or words that may be offensive to “good taste and decency.”).
- Your name must be distinguishable from any other Illinois limited liability company, corporation, limited liability partnership, or limited partnership.
There are additionally several “restricted terms” that you will not be able to include in your LLC’s name unless you have obtained written approval from the relevant state government body.
Examples of restricted terms include “Trust,” “Fiduciary,” and “Bank,” which require approval from the Secretary of Financial and Professional Regulation.
For a complete list of Illinois LLC naming guidelines, we recommend having a look at the Illinois naming guidelines.
2. Is the name available in Illinois?
Make sure the name you want isn't already taken by doing an Illinois LLC Search on the Secretary of State's Cyberdrive Illinois website.
If you’re not going to start your LLC right away, it might be a good idea to consider reserving your name for up to 90 days. You can do this by filing Form LLC-1.15 with the SOS and paying a $25 filing fee.
For more information, you can have a look at our Illinois LLC Name Search guide.
3. Is the URL available?
We recommend that you check online to see if your business name is available as a web domain. Even if you don't plan to make a business website right away, this is an extremely important step as it will prevent others from acquiring it — potentially saving you both time and money in the long term.
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Once you have verified your name is available, you may now select a professional service to complete the LLC formation process for you.
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FAQ: Naming an Illinois LLC
LLC is short for “limited liability company.” It is a simple business structure that offers more flexibility than a traditional corporation while providing many of the same benefits. Read our What is a Limited Liability Company guide for more information.
Or, watch our two-minute video: What is an LLC?
You must follow the Illinois LLC naming guidelines when choosing a name for your LLC:
- Include the phrase "limited liability company" or one of its abbreviations (LLC or L.L.C.).
- Do not use words that could confuse your business with a government agency (FBI, State Department, CIA, etc.).
- Receive the proper licensing when using the words such as lawyer or doctor.
If you are having trouble coming up with a name for your LLC use our LLC Name Generator. That will not only find a unique name for your business but an available URL to match.
Most LLCs do not need a DBA, known in Illinois as an assumed name. 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.
To learn more about DBAs in your state, read our How to File a DBA guide.
Step 2: Choose an Illinois Registered Agent
After you find the right name for your LLC, you will need to nominate an Illinois registered agent with a registered office in Illinois. This is a necessary step in your Articles of Organization, which is the document used to file and register your LLC with the Secretary of State.
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. You can think of your registered agent as your business's primary 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, an individual (e.g., yourself, etc.), or a business attorney – who is authorized to transact business in Illinois.
Note: Your registered agent’s registered office needs to be located at a street address – a P.O. box alone will not be accepted.
FAQ: Nominating a Registered Agent
Yes; you can be your own registered agent, use a third-party LLC formation service (recommended), or appoint another individual (e.g., business attorney, LLC member, etc.).
Read more about being your own registered agent.
Using a professional registered agent service is an affordable way to manage government filings for your Illinois LLC. For most businesses, the advantages of using a professional service significantly outweigh the annual costs.
Step 3: File the Illinois LLC Articles of Organization
To register your Illinois LLC, you will need to file Form LLC-5.5: Articles of Organization with the Secretary of State. You can do this online or by mail.
Before filing, you will need to make sure that you have completed your Articles of Organization correctly. In order to do this, you will need to have the following information on hand:
- Your LLC’s name
- Your principal business address (this cannot be a P.O. box)
- The effective formation date of your LLC (you can delay this for up to 60 days post-filing)
- Your registered agent’s name and registered office address
- Your LLC’s business purpose
- Your LLC’s duration (if applicable)
- The names and business addresses of all LLC managers and organizers
File the Articles of Organization
OPTION 1: File Online With Cyberdrive Illinois
- OR -
OPTION 2: File Form LLC-5.5 by MailDownload Form
State Filing Cost: $150, payable to Secretary of State (Nonrefundable)
Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62746
For help with completing the form, visit our Illinois Articles of Organization
Note: If you're expanding an existing LLC to the state of Illinois, you will need to form a foreign LLC.
FAQ: Filing Illinois LLC Documents
Filing the Articles of Organization takes up to 10 days online or by mail but can be expedited for an additional fee of $150 for 24-hour service. Keep in mind that this process could take additional time depending on your specificities (e.g., whether you know your LLC name, etc.) and the state’s backlog.
To learn more, go to our How Long Does it Take to Form an LLC in Illinois guide.
An LLC is referred to as a "domestic LLC" when it conducts business in the state where it was formed. A foreign LLC must be formed when an existing LLC wishes to expand its business to another state.
Read our What Is a Foreign LLC article to learn more.
This will depend on several factors, including how you go about filing (e.g., independently, via a formation service, through a business attorney, etc.). Having said that, the cost of registering your LLC with the Secretary of State is $150.
To learn more, read our guide on the cost to form an Illinois LLC.
Step 4: Create an Illinois LLC Operating Agreement
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
FAQ: Creating an Illinois LLC Operating Agreement
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.
Step 5: Get an Illinois LLC EIN
You can get an Employer Identification Number (EIN) from the IRS for free. It is used to identify a business entity and keep track of a business's tax reporting. It is essentially a Social Security number (SSN) for the company.
Why do I need an EIN? An EIN number 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 get an EIN. Learn more here.
Get an EIN
Option 1: Request an EIN from the IRS
- OR -
Option 2: Apply for an EIN by Mail or Fax
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
FAQ: Getting an EIN
A Social Security number is not required to get an EIN. You can simply fill out IRS Form SS-4 and leave section 7b blank. Then call the IRS at (267) 941-1099 to complete your application. Learn more here about applying as an international applicant.
All LLCs with employees, or any LLC with more than one member, must have an EIN. This is required by the IRS.
Learn why we recommend always getting an EIN and how to get one for free in our Do I Need an EIN for an LLC guide.
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 the S corporation (S corp) status. To learn more, read our LLC vs. S Corp guide.
Step 6: File a Beneficial Ownership Information Report
Beginning January 2024, LLC owners will need to file a Beneficial Ownership Information (BOI) Report with the US Financial Crimes Enforcement Network (FinCEN). Existing LLCs can file their report any time between January 1, 2024, and January 1, 2025, while new LLCs will need to file their report within 90 days of formation.
This contains similar information to that of your Articles of Organization, such as your LLC name and member information, and can be filed online for free. Failure to file an accurate report on time can result in a $500 per day fine.
Note: There are certain filing exemptions, such as for large companies (i.e., more than 20 full-time employees), tax-exempt entities, and publicly traded companies.
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How to Maintain Your Illinois LLC
After you’ve successfully formed your LLC, there are a couple of steps you’ll need to periodically take in order to maintain it, including:
- Filing an Annual Report
- Sorting out Your Taxes
We’ve broken down how to complete each of these steps in greater detail below.
File the Annual Report
Illinois requires all LLCs to file an annual report with the Secretary of State’s Department of Business Services in order to remain compliant.
This is meant to ensure that your LLC’s information and contact details (e.g., name, business address, registered agent, etc.) are up-to-date.
Note: Annual reports are 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, with a $100 penalty fee being levied on late filings.
Sort Out Your Taxes
LLCs in Illinois will need to pay a number of taxes at a local, state, and federal level. With that said, the taxes your LLC must pay will vary depending on the nature of your business (e.g., its industry, niche, and number of employees, etc.).
Below, we’ve broken down the most common taxes in Illinois that your LLC may be expected to pay:
As a small business owner based in Illinois, there are several statewide taxes for you to be aware of that may be levied on your income, including:
- Personal Income Tax: In Illinois, each member of your LLC will pay this tax at a flat rate of 4.95% on their share of the business's profits and submit their own individual tax return to the state using Form IL-1040 to declare their income.
- Corporate Income Tax: LLCs choosing to operate as C Corps are required to pay a 9.50% corporate income tax on their total net income. When filing a state income tax return in Illinois, these LLCs must complete and submit Form IL-1120 to the Illinois Department of Revenue.
Understanding the nuances of your state income taxes is crucial for individuals and corporations as they form a central part of your statewide tax responsibilities.
Sales and Use Taxes
In Illinois, there are a variety of taxes applied to the sale and use of different goods and services within the state. Depending on the type of goods or services being sold, these taxes are categorized into one of three different tax rate structures:
- General merchandise: In most cases, a sales tax of 6.50% is applied to the purchase of tangible personal items. This includes items like soft drinks, candy, food bought from restaurants, and products used for grooming and hygiene.
- Qualifying food, drugs, and medical appliances: A tax rate of 1% is applied to the sale of unprepared food, usually found in grocery stores, as well as on medicines and medical appliances.
- Items that need to be titled or registered: A uniform tax rate of 6.25% is applied to the sale of various types of vehicles, including all-terrain vehicles (ATVs), mobile homes, watercraft like boats and jet skis, and aircraft.
In addition to this, the rate of sales tax your LLC may face can increase by up to as much as 4.75% based on its location within the state. This is because localities in Illinois are able to impose their own sales tax rates that apply on top of the statewide sales tax rates.
Note: In order to pay sales tax for selling taxable goods or services, your business will need to get a sales tax permit. You can do this online using the MyTax Illinois platform.
Personal Property Replacement Tax
The Illinois state government introduced the Personal Property Replacement Tax (PPRT) to help local authorities make up for lost revenue after they could no longer impose local property taxes. This tax is levied on the net income of your LLC at a rate that varies depending on how your business is taxed:
- C Corporations: PPRT is levied at a rate of 2.5% of the company's net income earned in Illinois. This tax should be included when filing the Illinois corporate income tax return using Form IL-1120 (for LLCs that elect to be taxed as C Corps.)
- Partnerships, Trusts, and S Corporations: LLCs following the default tax setup – or those choosing to be taxed like an S corporation – are required to pay PPRT at a rate of 1.5%. This tax is included on your income tax return (which for partnerships is filed using Form IL-1065, for trusts using Form IL-1041, and for S Corporations using Form IL-1120-ST).
The tax payment deadline for PPRT is either the 15th day of the third or the fourth month after a business's tax year ends, based on when your LLC’s tax year concludes.
Steps After LLC Formation
After forming your LLC, you will need to get a business bank account and website, obtain all required business licenses, and get business insurance, among other things.
Visit our After Forming an LLC guide to learn more.