Illinois LLC Formation Guide (April 2024)

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This guide to starting a LLC in Illinois provides step by step instructions on how you can file documents for formation, get tax IDs, set up company records, and so forth.

Overview

LLCs are the most common business structure. They are cost-effective, flexible, and easy to operate. The legal formation of an LLC allows you to establish your business, limit your personal liability, and gives you tax flexibility. You will find the steps below helpful as you complete this process.

Step-by-Step Illinois LLC Instructions

Warning

By the anniversary of formation, Illinois LLCs must pay a $250 annual report fee to the Secretary of State.

  1. Check Name Availability

    The legal name of your LLC cannot be confused with any other registered name. Conduct a name look to verify availability.

    Name Search Illinois Secretary of state – Business Services Department

    Name searching
    Name Reservation Optional
    Suffix: Shall contain terms “limited liability company”, L.L.C. “, or “LLC,” and, if formed as a low profit limited liability company pursuant to Section 1-26 of the Act, the term “L3C”. Should consist of alphabetic letters, Arabic or Roman numerals, and symbols that are easily reproduced or readable by the Office Secretary of State. It is the name under, which the limited- liability company transacts in this State, unless the company chooses to adopt an assumed names or names as required by this Act.

    805 ILCS SS180/1-10

  2. Register an Agent

    Before you can officially file to form your Illinois LLC you need to choose who your Illinois registered representative will be. A registered agent is a person appointed by a business to receive legal notices, such as government or legal notices, and notices of lawsuits.

    A registered agent is required by law in every state. The Illinois Secretary of State – Business Services Department will designate the registered representative when you file Illinois articles.

  3. Illinois Certificate of Formation

    Register the articles to form a limited liability corporation.

    Agency: Illinois Secretary of state – Business Services Department
    Form:
    Form LLC. 5.5: Articles of Organization
    Instructions:
    Public c334 – A Guide for Organizing Domestic Limited Liability Companies
    Filing Method Mail, Fax (only if your prepaid account is active), or on-line
    Agency Fee $150 + $100 expedite fees. If you file online, an expedite charge is required.
    Turnaround: 2 weeks for mail or fax. 1 business day with $100 expedite cost
    Law:
    805 ILCS180
    Notes:
    • Send the original documents by mail.
    • Illinois offers two types of LLCs: the Series LLC and L3C. Each have their own specific formation requirements.
    • Online filing allows you to return to the Secretary for State’s website within 24 hours of filing and obtain a copy at no extra cost for a period 30 days.

  4. Establish Company Records

    Your LLC must maintain correct and complete books, records, and financial statements. Your LLC’s documents begin with your filed articles. Other records will be created by your LLC, including:

    • Minutes of a meeting
    • Operating agreement
    • EIN verification letter
    • Amendments and other filings made during the LLC’s lifetime

  5. Sign the Operating Agreement

    You can draft an Operating Agreement by using a template. This is the governing document that governs the LLC. It describes the details of how the LLC operates, such as the holding of an annual meeting. At your organizational meeting you will review and approve the agreement.

  6. Host the Organizational Meeting

    The organizational meeting is a first meeting of LLC members. For this meeting you will need your operating agreement and filed articles of organisation. Keep minutes from this meeting and place them in your company’s record book.

  7. Get a Federal Employee Identification Number (EIN).

    EINs must be obtained if your LLC employs more than one person or has multiple members. EINs are also required to open bank accounts.

    Agency: Internal Revenue Service
    Form:
    IRS SS-4
    Filing Method Mail, phone or fax
    IRS fee $0
    Turnaround: Instantly online or by phone 4 business day by fax. 4-5 weeks via post
    Notes: The IRS website can only be accessed during specific hours. Before closing your session you should print your EIN. For additional guidance, refer to IRS Publi 1635: Understanding Your.

  8. Get Illinois State Tax Identification Numbers/Accounts

    Illinois offers a consolidated application for state tax registration.

    Submit to
    Illinois Department of Revenue

    http://www.revenue.state.il.us/

    Form:

    Form REG-1: Illinois Business Registration Application
    Filing Method
    Mail or Online
    Fee:
    State fees vary depending on the tax accounts required

  9. Consider Electing C-Corp taxation or S-Corp governance

    Your LLC automatically receives pass through taxation. The vast majority of LLCs however, keep this tax category. Some LLCs have the option to choose S-Corporation or C-Corp tax treatment.

      • S-Corp may be able to help owners who earn more that $75,000 annually save on self-employment taxes.
      • C-Corps have double taxation. Members pay taxes on the profits of the corporation, while members pay taxes when they receive their distributions. C-Corp treatment may allow you to benefit from low tax rates on retained earnings, if you have more than $250,000 in profits per owner.

  10. Get business licenses & permits

    The necessary licenses or permits are necessary to operate your business legally. Searching by business type and location using the Small Business Administration Business License & Permit search tool is the easiest way to navigate the vast array of federal, state, or local requirements.

    Illinois Business License

    Not Required

    Illinois does not require the licensure of general business licenses.

    Illinois does have a state-level general business license, but licenses at the local level are often required.

  11. Keep your LLC afloat with ongoing filings

    Federal and state tax returns must be filed.

    A lot of states require that business entities file an annually required report in order to remain in good standing with their secretary of state. Check out the table below for information on Illinois LLCs.

    Domestic Illinois Corporation Annual Report Requirements:

    Agency: Illinois Secretary of state – Business Services Department
    Form:
    BCA 14.05 D: Domestic Corporation Annual Report
    Filing Method Mail or online .
    Agency Fee $75 annual report fees + franchise tax (varies), +$1.69 Transaction Fee
    Due: Annually at the end each month prior to the anniversary month. For example, if you were incorporated on February 14th then your annual reports are due January 31.
    Law:
    805 ILCS 05/14.05
    Penalties: Late fee is calculated on the franchise tax due.
    Notes:
    • An officer must sign this report.
    • Original signatures are required
    • To change your registered agent, you will need to complete a separate application.

    As your LLC grows, it will become more important to show your good standing to customers and banks as well as other state agencies. You should not allow your Illinois LLC to become inactive because you have missed the annual report deadline.

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