How to Start a Business in Illinois


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Start a Business in Illinois

Starting your own business in Illinois is one of the most exciting and profitable things you can experience. But where do you begin? There are numerous strategies to establish a business, each with important factors to consider. If you wish to start a business in Illinois, there are many things that you should consider. Doing business in Illinois, popularly known as The Prairie State, will give you many opportunities because of the current estimated population, which consists of 12,807,072. Considering the large numbers, you will cater to a lot of customers.

Follow our in-depth guide on how to start a business in Illinois. We will help you remove the doubt from the process and explore your chances of success. It will start from defining your business idea to establishing, launching, and expanding your business. And we will guide you every step of the way.

How to Start a Business in Illinois?

To form a business in Illinois, you must follow a few steps that include creating a business plan, choosing a business entity type, determining your Illinois business costs, naming your business, registering a business, and lastly, marketing your Illinois business. Starting a business is not something you can do overnight. The processing, planning, and preparation take a lot of time. If you want to start a business in Illinois, you must have everything ready beforehand.

Continue reading to learn more about the procedure as a whole and what new small business owners should keep in mind as they carry out each phase.

Step 1: Create a Business Plan

The first thing you need to start your business is a solid plan. In creating a business plan, you should consider many things when you are in the decision-making phase. Your business plan in Illinois is a road map for your successful business.

A business plan should consider the detailed purpose of your business. You should know what product or service you will serve in Illinois. A purposeful business plan is important because that plays a key role in knowing how your business will make a profit. If the purpose of the business plan is vague and not aligned with what service you are giving, it will affect the business you are forming. Make sure to be SMART (specific, measurable, achievable, realistic, and in a certain timeframe) with your business goals. Also, researching your competitor’s service is a great deal to knowing what strategy you will form for your Illinois business. And lastly, you should include the funding of your business.

A business plan should be created before you start a business. Without it, you have nothing but a blank slate. This document will help you understand the key parts of your business and the plan for success. Regarding the potential funding for your business in Illinois, you can avail of business loans in bank and investor funding.

You can continue working on the legal structure of your business once you have the whole plan in your possession. You may create an LLC for your business legally. You can check other business guides shared by the LLCBuddy Editorial Team.

Step 2: Choose a Business Entity in Illinois

A business entity refers to a legal structure formed to conduct business activities. It is a separate and distinct organization recognized by the law, which possesses rights, responsibilities, and liabilities distinct from its owners or members. Choosing a business entity for your Illinois business is significant.

You must decide on a business entity structure while beginning your own business. The form of company entity you choose will significantly impact how well your personal assets are protected, how much tax you pay, and how much paperwork you have to deal with. You should consider forming a business entity in Illinois through having Sole Proprietorship, LLC, LLP, and Corporation.

Sole Proprietorships

A sole proprietorship is a simple and common type of business structure where an individual owns, operates, and manages the entire business. It is the easiest and least expensive form of business organization to establish and maintain. One of the most appealing aspects of a sole proprietorship is the owner’s direct control over all aspects of the business.

A key characteristic of a sole proprietorship is that the owner and the business are considered a single legal entity. This means that all profits, losses, assets, and liabilities are the owner’s personal responsibility. Although this can lead to increased risk exposure, it allows the owner to control their business operations completely.

Consider a sole proprietorship if you want to start a business in Illinois by yourself. For legal and tax reasons, the owner and the business are regarded as one and the same. The business owner takes on liability for the business. Therefore, the owner is liable for all business debts in the event that the company fails.

Limited Liability Company

A Limited Liability Company, also known as an LLC, is a business structure ideal for entrepreneurs and start-ups. It is perfect for start-ups and aspiring entrepreneurs since it has limited liability issues for a company. The Illinois LLC is mainly used for the legal structure of a business between two or more companies that share management and profits. It also protects its owners from liabilities, debts, and responsibilities that may cause them in the future.

LLCs offer pass-through taxation, meaning that the profits and losses flow through to the members’ personal tax returns, avoiding double taxation that corporations may experience. Additionally, LLCs have fewer formal requirements and administrative burdens compared to corporations. Read Illinois classification of LLC tax to get more information about tax.

Another advantage of an LLC is the flexibility in the management structure. Members can choose to manage the company themselves or appoint managers to oversee the business operations. This allows for customization based on the unique needs and preferences of the owners.

Limited Liability Partnership

Limited Liability Partnerships (LLPs) are a unique business structure combining partnerships and corporations’ elements. An LLP offers limited liability protection to its partners, meaning that each partner is only responsible for their actions and debts rather than jointly and severally liable for the entire partnership’s obligations.

This structure is particularly popular among professional service providers such as lawyers, accountants, and architects, as it allows them to maintain the collaborative nature of a partnership while enjoying the liability protection typically associated with corporations.

In an LLP, each partner’s income is subject to self-employment taxes, and the profits and losses are passed through to the partners’ personal income tax returns, similar to a general partnership. This pass-through taxation avoids the double taxation issue faced by some corporations.

Corporation

Forming a Illinois corporation reduces your personal liability for business debts as an LLC does. A corporation can be taxed as an S-corporation (S-Corp) or a C-corporation (C-Corp). If a small corporation satisfies certain Internal Revenue Service (IRS) standards, then S-corporation status is available, providing pass-through taxation. However, most larger businesses and startups seeking venture financing are taxed as C-corps.

Step 3: Determine your Illinois Business Costs

In Illinois, you should determine the business costs that you will form. You should consider paying the Articles of Organization fee for LLCs, Articles of Incorporation fees for corporations, business licenses fee, office supplies and equipment, payroll, office rent, utilities, transportation, and taxes.

Usually, filing an initial Illinois Articles of Organization fee costs $15, while the annual fee costs $75 in Illinois. Read about the overall cost of LLC registration in Illinois cost to know more about Illinois LLC cost. If you wish to know more about how much it costs to form an LLC, you should look up and be guided by the LLC formation costs. For a corporation, you must pay the $150 for filing in-person and by mail. Besides, you need to pay taxes as a corporation.

Step 4: Name Your Business in Illinois

Naming your business doesn’t take a lot of time. With the help of Illinois LLC name search, you can acquire a name for your business. If you form an LLC in Illinois, you must follow the below rules while naming your business-

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In Illinois, if you do not wish to file your business right away but want to hold the name that you have decided on, then you can reserve your business name for 90 days. You must file a name reservation application in the Illinois Secretary of State to keep the name. There is a complete guide on LLC name guidelines for you to have a proper LLC business name.

Step 5: Register Your Business in Illinois

In order to register a business in Illinois, you need to file it with the Illinois Secretary of State. Before that, you must have a Illinois Registered Agent for your business. The Registered Agent is a person who is responsible for receiving important legal documents on your behalf.

Get the Illinois Registered Agent

You must get your Illinois Registered Agent before you file your business. The person should be eligible to conduct business in Illinois. Also, they must be aged above 18 years. You can be your own registered agent. However, that will not be a wise decision. Appointing a professional will be much more beneficial for your business than doing it on your own.

Apply For Illinois Formation Document

After you have a Registered Agent, you need to file the Illinois formation document. If you are filing an LLC in Illinois, you must file the Articles of Organization and if you want to have a corporation structure, you need to file the Illinois Articles of Incorporation.

Request For an EIN

In addition to the paperwork, you should apply for an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website. You can obtain the EIN for free from IRS.

The application of an EIN in Illinois can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone (for International Applicants)– International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in a number of ways. It will give your LLC the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 6: Apply for Business License and Permit

Obtaining a business license and operating permit is necessary to run any business in Illinois. Before launching your new business, you should request any required business license or permission. Most Illinois businesses need licenses or permits to operate. Federal, state, and local governments may all require businesses to have licenses and permits. The business license fee depends on the type of license you are applying for. You must contact Illinois Department of Revenue for more details.

Step 7: Get a Bank Account

Your business dealings in Illinois might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN to create a business bank account for firms other than sole proprietorships. Also, keeping separate finances helps you avoid combining personal and professional finances.

Step 8: Market your Business in Illinois

Now that your Illinois business is already registered, you can market it with an ideal marketing plan. An ideal marketing plan can help a start-up business to become known. Making a comprehensive social media network like META, Facebook, Instagram, Twitter, and YouTube falls within this category. While creating an SEO campaign for your company website, you may also look at specialized communities on Facebook and LinkedIn.

Important Information

Do you need to have Business Insurance?

Your company needs insurance even if it’s a home-based business or you don’t have employees. Depending on your business planning and the risks you face, you may require different types of insurance. As your business expands, you might require more than one type of insurance. If you have employees, you are typically legally required to carry workers’ compensation insurance. You must contact Illinois Department of Insurance to ensure what type of insurance is required for your business.

What is the most profitable type of business?

The most profitable type of business will vary depending on a number of factors, including your industry, location, target market, and business strategy. However, some companies, such as those that provide expensive products and other services, tend to be more profitable than others. If you’re unsure about the kind of business to launch, think about your abilities and interests and the demands of your target market to guide your decision on an effective business.

FAQs

What is the process for starting a business in Illinois?
To start a business in Illinois, you’ll need to select a business structure, obtain a business license, register with the Illinois Department of Revenue, and register with the Illinois Secretary of State. You may also need to register with the county or municipality in which your business is located.
What types of business structures can I form in Illinois?
In Illinois, you can choose from a variety of business structures including sole proprietorship, partnership, limited liability company (LLC), corporation, nonprofit, or other speciality structures.
Do I need a business license to start a business in Illinois?
Yes, you will need to obtain a business license to start a business in Illinois. Depending on the type of business you are forming, the process and fees will vary.
How do I register my business with the Illinois Department of Revenue?
You will need to register your business with the Illinois Department of Revenue either online or by mail. You will need to provide your business name and address, information about the owners and/or officers of the business, and other information as required.
How do I register my business with the Illinois Secretary of State?
You will need to register your business with the Illinois Secretary of State either online or by mail. You will need to provide your business name and address, information about the owners and/or officers of the business, and other information as required.
Is there any additional registration I need to do with the county or municipality in Illinois?
Depending on the type of business and location, you may need to register with the county or municipality in which your business is located. You will need to contact your local county or municipal offices for additional information.
What is the cost to start a business in Illinois?
The cost to start a business in Illinois will vary depending on the type of business structure you choose and the registration fees associated with each type. Additionally, you may need to pay any applicable licensing fees or taxes.
Are there any grants or loans available to start a business in Illinois?
Yes, there are grants and loans available to help start a business in Illinois. The Illinois Department of Commerce and Economic Opportunity (DCEO) offers a variety of grants and loan programs to help small businesses in Illinois.
Is there a minimum capital requirement to start a business in Illinois?
No, there is no minimum capital requirement to start a business in Illinois. However, it is important to have enough funds to cover start-up costs and any ongoing expenses.
Are there any resources available to help me start my business in Illinois?
Yes, the Illinois Department of Commerce and Economic Opportunity provides business counseling, access to capital and incentives, and other resources to help businesses get started in Illinois. They also have a Business Start-Up Kit that can guide you through the process.
What taxes do I need to pay when I start a business in Illinois?
Depending on the type of business you are starting, you may need to pay state income taxes, personal property taxes, sales taxes, and/or use taxes. You will also need to register with the Illinois Department of Revenue for a state tax identification number and business tax accounts.
What are the laws and regulations I need to be aware of when starting a business in Illinois?
You will need to be familiar with the laws and regulations pertaining to the type of business you are starting in Illinois. This includes business licensing and permit requirements, worker’s compensation, employment laws, and any other rules and regulations that may be specific to your industry.
What type of insurance will I need for my business in Illinois?
You will need to purchase the appropriate insurance for your business, such as general liability insurance, property insurance, and commercial auto insurance. You may also need to purchase workers’ compensation insurance if you have employees.
Do I need to register my business with the Illinois Secretary of State?
Yes, in order to form a corporation, limited liability company, limited partnership, or other business entity, you will need to register with the Illinois Secretary of State.
What is needed to start a business in Illinois?
Depending on the type of business, you may need to register with the Illinois Secretary of State, obtain a federal Employer Identification Number, obtain a local business license, and/or obtain the necessary permits or zoning approvals.
How do I register my business in Illinois?
You can register your business with the Illinois Secretary of State’s office. You can do this online or in-person, depending on the type of business.
Where can I find information on business taxes in Illinois?
The Illinois Department of Revenue provides information on business taxes and filing requirements.
Are there grants available for businesses in Illinois?
Yes, the Illinois Department of Commerce and Economic Opportunity offers grants and other incentives for businesses in Illinois.
What are the rules for hiring employees in Illinois?
Employers in Illinois must comply with the state’s employment laws, including those related to minimum wage, overtime pay, workers’ compensation, and anti-discrimination.
Are there any programs that can help me fund my business in Illinois?
Yes, the Illinois Department of Commerce and Economic Opportunity provides loans and grants for businesses in Illinois.
What fees do I need to pay when starting a business in Illinois?
Depending on the type of business you’re starting, you may need to pay fees to the Illinois Secretary of State and other government agencies.
What are the regulations I need to follow when running a business in Illinois?
Depending on the type of business you are running, you may need to comply with state, local, and federal regulations, such as those related to taxation, labor, health and safety, and environmental protection.
What are the requirements for business insurance in Illinois?
Businesses in Illinois are required to have certain types of insurance, such as workers’ compensation, general liability, and property insurance.
What happens if I don’t comply with the regulations for my business in Illinois?
Non-compliance with regulations in Illinois can result in civil and criminal penalties.
How do I find a business mentor in Illinois?
The Illinois Small Business Development Center provides assistance in finding a mentor for your business.
What types of business advice is available in Illinois?
The Illinois Small Business Development Center provides free business advice on topics such as marketing, finances, and legal issues.
What resources are available to help me start a business in Illinois?
The Illinois Small Business Development Center provides resources to help entrepreneurs start and grow their businesses.
Are there any requirements for businesses to hire locally in Illinois?
Some cities in Illinois may have requirements for businesses to hire locally.
Are there any opportunities for businesses to receive tax incentives in Illinois?
Yes, the Illinois Department of Commerce and Economic Opportunity offers a variety of tax incentives for businesses in Illinois.
What types of local assistance is available to businesses in Illinois?
Local governments in Illinois may offer assistance to businesses in the form of grants, loans, tax incentives, and other resources.
Are there any business incubators in Illinois?
Yes, there are several business incubators located throughout the state of Illinois.
Are there any networking opportunities for businesses in Illinois?
Yes, there are several networking events, workshops, and conferences available to businesses in Illinois.
What are the eligibility requirements for businesses to receive incentives in Illinois?
The eligibility requirements for incentives vary by program and are determined by the Illinois Department of Commerce and Economic Opportunity.
Where can I find information on workforce training in Illinois?
The Illinois Department of Employment Security provides information on workforce training and development programs.
Where can I find information on local and state regulations for businesses in Illinois?
The Illinois Attorney General’s Office provides information on local and state regulations for businesses in Illinois.

Also Read

Why Start Business Illinois is So Important

One of the main reasons why starting a business in Illinois is so important is the state’s strong economy. With a Gross State Product that ranks among the highest in the US, Illinois offers a stable and thriving business environment for entrepreneurs. The state is home to a diverse range of industries, including manufacturing, agriculture, technology, and healthcare, which provides ample opportunities for entrepreneurs to tap into lucrative markets and grow their businesses.

Furthermore, Illinois boasts a highly skilled workforce, with a large and diverse talent pool that includes professionals from various fields. This allows entrepreneurs to access the right talent and expertise needed to bring their business ideas to fruition. Additionally, Illinois has a robust education system, with top-ranked universities and colleges that produce highly qualified graduates ready to contribute to the workforce.

In addition to its economy and workforce, Illinois also offers a strategic location that serves as a major advantage for businesses. Situated in the heart of the Midwest, Illinois serves as a central transportation hub with easy access to major highways, railroads, and airports. This makes it easier for businesses to transport goods and services, reach customers, and expand their market reach.

Moreover, Illinois has a business-friendly environment that supports entrepreneurs and fosters innovation and growth. The state offers various resources and incentives for businesses, including tax incentives, grants, and financing programs that can help startups get off the ground and succeed. Illinois also has a strong network of incubators, accelerators, and coworking spaces that provide entrepreneurs with the support, resources, and mentorship needed to grow their businesses.

On top of that, Illinois is home to a diverse and vibrant entrepreneurial community, with a strong network of professionals, investors, and mentors who are willing to support and guide startups. This community provides a valuable source of connections, advice, and collaboration opportunities that can help entrepreneurs overcome challenges and achieve success.

Overall, starting a business in Illinois is important for the state’s economy, workforce, and overall prosperity. With its strong economy, skilled workforce, strategic location, business-friendly environment, and supportive entrepreneurial community, Illinois offers a wealth of opportunities for entrepreneurs to start and grow successful businesses. By choosing to start a business in Illinois, entrepreneurs can tap into these advantages and contribute to the state’s economic growth and success.

Conclusion

In conclusion, embarking on the entrepreneurial journey of starting a business in Illinois, also known as The Prairie State, requires thorough research, planning, and dedication. Understanding the local business landscape, choosing the right structure, and complying with all regulatory requirements are essential steps to ensuring your venture’s success. This article has provided valuable insights and guidance for aspiring entrepreneurs looking to seize the opportunities present in Illinois’s dynamic economy. By leveraging available resources and approaching the process with diligence and determination, you can lay the foundation for a thriving and prosperous business in Illinois.

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