Having an Illinois LLC is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in Illinois.
On this page, you’ll learn about the following:
- How to Start an LLC in Illinois
- After Starting your Illinois LLC
- Illinois Foreign LLC
- Why an LLC in Illinois
- Leading Businesses in Illinois
- Illinois LLC Formation Review
How to Start an LLC in Illinois
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on how to start an LLC in Illinois.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In Illinois, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the Illinois business naming requirements. Once you pass through them, you can successfully name your business.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
- You can only get the EIN number when you have your name registration certificate with you.
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, Illinois. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below address by mail to reserve your LLC name in Illinois. The cost of a name reservation is $25.
Important Quick Links:
Department of Business Services
Limited Liability Division
501 S. Second St. Rm. 351
Springfield, IL 62756.
Get Business Domain: To have a proper online identity for your business you need a website (domain + hosting) and custom email ID. With Bluehost, you will get everything at a cheaper price. We recommend you get this amazing offer from Bluehost which comes with a free domain. You can easily set up your website and custom email id without any hassle with Bluehost. Needless to say, Bluehost has been rated #1 web hosting by most major reviewers. Their price range is affordable compared to all other popular hosting providers.
Step 2: Assign a Registered Agent in Illinois
A registered agent (also known as an agent for service of process or a resident agent) is a person/business entity responsible for working on your behalf. This person provides things like filing services. He will receive significant tax forms, legal forms, formation documents, any internal document, a notice of lawsuits, and other official government correspondence in Illinois. Choosing an Illinois registered agent for your LLC is required.
Make sure that when you request services that your registered agents for service are residents of Illinois. These professional service providers must have a physical street address in Illinois. It could also be a business. Here are the recommended agents and employees for you:
Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Illinois. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years.
Step 3: File Articles of Organization in Illinois
A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate with the Illinois Secretary of State. LLC cost of Illinois includes filing fees, other taxes, and fees. You may file them online or by submitting a paper form by mail.
This Illinois Certificate of Formation is a legal document that forms your business officially. It will indicate details about your LLC in Illinois, like if it is a member-managed or managers-managed.
Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of each professional service that your Illinois LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county. To know more about online filing, visit the Illinois Certificate of Formation.
How to File by Mail
If you prefer filling in paper forms for your Illinois LLC registration, then you can download the Illinois Limited Company Certificate of Formation. Read the form thoroughly and fill it out. It will have to fill, among others, your name, city, state, zip code, and signature.
Mail To: Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62746
Step 4: Create Your Illinois LLC Operating Agreement
An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC. This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to an LLC operating agreement Illinois does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve Illinois LLC later.
Step 5: Filing an Illinois LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter. If you hire employees in your LLC, you must obtain the EIN.
EIN is needed when the LLC hires employees. Hiring employees in Illinois LLC requires specific rules and regulations. One should know about them before hiring employees. EIN for Illinois foreign LLC should be obtained if your LLC is based in other states.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
And that’s all! Congratulation, you are now done with all the necessary steps to form your Illinois LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
After Starting your Illinois LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File Illinois business permits & licenses
- Get liability for business and professional liability insurance with coverage for employees
- File a Illinois LLC annual report or biennial report
- Already existing LLCs that wish to operate in Illinois must register as Illinois foreign LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Illinois Foreign LLC
To register an Illinois foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, Illinois. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check Illinois Foreign LLC to know more about having a foreign LLC.
Cost of Illinois LLC
The Cost of Illinois LLC includes the one-time cost of the name reservation ($25) and the filing fee ($150). Business owners have to bear the cost of registered agent service along with the fees for government filings. As far as the taxes are concerned, LLCs do not have to pay any income taxes directly, though the members have to pay the income taxes to the federal government. LLCs with employees may have to pay the employer tax. It depends on the tax classification options available while forming an LLC.
While evaluating the LLC cost in Illinois, you will find a bare minimum fee for LLC filing and tax filing. LLC is a type of legal business entity that is easy to form and takes a bare minimum price compared to other forms of business.
Why an LLC in Illinois
With the Gross State Product worth $336 Million, Illinois has gained a position in the Top 10 business states by Forbes. LLCs in general have a lot of benefits when it comes to business taxes. You as an LLC do not have to pay any federal taxes. Apart from fewer tax liabilities, LLCs can have a business credit card to separate their personal and professional expenses. Other than the LLC filing fee paid to the state government agency, not much of the expenditure is involved to start an LLC in Illinois.
In Illinois, the LLC start-up costs are much lesser than in other prominent states. There are incentives and business funding options by the government are given to businesses such as any woman-owned business and all. These incentives help LLCs to cover annual costs and other costs to run a successful business. Some of the benefits are given below,
Reporting is made biennial by the government
Reporting of any business by the government takes a considerably high time. It nearly disturbs the whole working set-up of a company, but if you have LLC in Illinois, you don’t have to care about it much. Here the government has set the reporting of an LLC twice a year which makes it easy for the member, and above that, the fees are only around $32 if a person is filing the report online.
Continuous decreasing rates of Income-tax
In Illinois, the tax is only required to pay by the LLC members on their personal profits. This rate of personal income tax is meager, i.e., 3.23%. It means that the LLC profits don’t matter if your profit is 100,000 USD or 10,000,000, then the tax one member has to pay will be the same for all the levels of people. Read more on Illinois’ classification of LLC Tax.
Hoosier Business Investment Tax Credit
The Hoosier Business Investment is an incentive-based program that is provided to the LLCs, mainly the start-ups. The main motive of this Tax credit is to provide some investment to the start-ups and support the task of job creation of the states through these LLCs. This will improve the financial status of the state and also the standard of living.
No sales taxes are applied
Many states impose sales taxes on their LLC, like taking nickel and dime from members’ pockets. But in Illinois LLC, these taxes are not imposed on them, which means that they only have to pay the basic sales tax, which leaves them with plenty of money for hiring and research, and development.
Leading Businesses in Illinois
Are you looking to start an LLC in Illinois? If yes, then you have to think of a good and profitable business idea. If you cannot figure out the best flourishing industry in Illinois, here is the best business.
The export business is thriving very well in Illinois state due to the state’s favorable rules and regulations. That is why more companies have started entering the field of exporting business. The state’s primary export product is machinery, chemical, equipment used in transportation and agricultural processing.
The state has exported a material of 53,000 million dollars which shows the golden opportunity offered by this niche. So, don’t waste any time further and decide the product you want to export in the state.
Illinois is known worldwide, second in manufacturing food products and first in the construction business. The state has the most significant portion of countries manufacturing share of construction machinery, making the manufacturing business a fair choice. Chemicals used in the pharmaceutical industry are also made on a larger scale in the country.
Rocks found in Illinois State are known for being the best source of coal, minerals, and petroleum. According to the census, more than 8 billion tonnes of coal are produced in the state. Also, the amount of petroleum gained from this mining is around 4 billion barrels. These businesses are more than enough for a person to make up their mind regarding starting a mining business.
The state is a hose of 1500 different fertile soil types, which can help you grow any simple ornamental crop. If a person is interested in agriculture, they can also enter the business field and start farming-related businesses.
For a small investment business, here are some options.
- Restaurant and food business
- Departmental stores·
- Digital marketing services
Illinois LLC Formation Review
Time needed: 5 minutes.
To recap, here are the basic steps again when forming an LLC in Illinois. Click on the steps in this list to read the full detail.
- Name your Illinois LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a registered agent
In Illinois, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
How Fast Can I Form an LLC in Illinois
When you are ready to start a business, it is important to know How Fast Can I Form an LLC in Illinois. You will need the name, registered agent and articles of organization, which are essential to run a legal business. You must designate a registered agent when you file your articles of organization. Illinois law requires each LLC to designate a registered agent. You can file your articles of organization in two weeks by mail, or one business day if you pay an expedited fee of $100. You must have original signatures in black ink.
The name of your business is the first step in starting your new LLC. It should be distinctive and not similar to any other business entity in Illinois. You can also file for a reserved name in Illinois. However, you should keep in mind that this type of name can only be reserved for ninety days. You should also be sure to designate a registered agent who will accept all official documents, as well as accept business cards, letterheads, and other documents.
Generally, LLCs are approved within seven to 10 business days if you file them online. Otherwise, it can take a week or two to receive an approval if you file by mail. However, if you file your LLC by mail, the processing time can be extended to three or four weeks. If you file your Illinois LLC online, it can take as little as 1-2 business days. Once approved, you must pay the filing fee and designate an Illinois registered agent. Once you’ve filed your articles of organization, you will need to complete other required steps.
If you are a resident of Illinois, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $150 (domestic LLC) and $150 (foreign LLC), LLC costs in Illinois include $75 for Annual Reports every year. LLCs are liable to pay sales tax of 6.25% every year
It takes 10 business days to get an Illinois LLC if you file it online or via mail.
Every year all the LLC have to submit an Annual Report and pay $75 to the Illinois Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens.
LLCs are easier to establish than other business structures. Small businesses, especially start-ups can easily start their LLC in Illinois at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, leave a comment below.