How to Start an LLC in Illinois: Ultimate Illinois LLC Guide
How to Start an LLC in Illinois: Ultimate Illinois LLC Guide
There are several steps you must understand to know exactly how to start an LLC in Illinois.
It might seem a little confusing at a short glance, but it doesn't have to be. Our informative guide will walk you through the details of creating an LLC in Illinois.
Phase 1: How to Start an LLC in Illinois
Starting an LLC in Illinois is much less difficult than you might think. The entire process can be boiled down to phases, with the first consisting of the following steps:
1: Name Your Illinois LLC
The first step to forming an LLC in Illinois is to name your business. The state does have some regulations and restrictions concerning business names—see below:
Tip: Use a free business name search tool to ensure your Illinois LLC's desired name is available. FIND YOUR BUSINESS NAME
Business Name Guidelines
The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C.
Your business name cannot be intentionally misleading to consumers.
When you start an LLC in Illinois, its name must not be similar to another organization's name/trademark.
Restrictions
There are some state and federal level restrictions concerning certain words that cannot be used for a business name.
A few examples include:
“Lottery” and “Bank” are ineligible for use (any state).
Terms that represent educational or Veterans' organizations are restricted.
Terms related to the Armed Forces or civil servants (police, EMT, fire) are also restricted.
LLC business names associated with government and/or financial entities are not always restricted — it depends on the state. Additional paperwork may be required.
URL Availability
As you are deciding on a business name, you also need to choose a domain name for your company's website. Nowadays, whether you start an LLC in Illinois or anywhere else, having an online presence is critical.
2. Establish Ownership
LLC owners are known as members and managers; the difference in title depends on the selected management structure of the LLC. When setting up an IL LLC, there are generally two management structures to choose from:
Member-managed
: All members share in the decisions and daily operations of the LLC.
Manager-managed
: Manager-managed: A manager runs the business; the members are not involved in most decisions for the LLC.
When you open an LLC in Illinois and designate its members, there are certain rules dictating the designation process.
Required Number of Members
There must be at least one member or manager to open an LLC in Illinois.
Member Disclosure Requirements
Illinois state law requires all LLC members/managers to be listed in the Articles of Organization.
Age Restrictions
LLC members in Illinois may be of any age.
Residence Restrictions
There are no residency restrictions imposed on LLC members in Illinois.
3. Find a Registered Agent in Illinois
In order to start an LLC in Illinois, you will need to appoint a registered agent. This position is required for any Illinois LLCs to legally operate.
What is a registered agent?
A registered agent is an authorized party (person or business) that receives all official state and legal notices on behalf of Illinois LLCs.
Why do you need a registered agent?
Illinois requires all businesses to have an appointed registered agent; this party serves as the consistent contact between the LLC and the Secretary of State.
What are the main requirements for a registered agent?
The registered agent must have a physical address — not a P.O. Box.
The registered agent must be available during business hours.
Who can be a registered agent in Illinois?
An Illinois resident with a physical address
An LLC or corporation licensed to work in Illinois
Is the registered agent's contact information publicly accessible?
The name and contact information of the LLC's registered agent is a matter of public record.
Can I be my own registered agent for my business?
You can appoint yourself as your LLC's registered agent as long as you fit the guidelines.
Is being my own registered agent discouraged?
LLC business owners who choose to be their own registered agent risk compromising their personal information since the registered agent's name and address must be publicly listed.
Tip: Avoid the hassles and choose Swyft Filings' registered agent services to fill the registered agent needs for LLCs in Illinois. FIND YOUR AGENT
4. File the Articles of Organization
Illinois LLCs are not officially formed until they submit their Articles of Organization to the Secretary of State.
What are Articles of Organization?
As a legally binding document, the Articles of Organization are filed with the state government to officially and legally set up an LLC in Illinois.
Why do I need the Articles of Organization?
The Secretary of State will not legally recognize your Illinois LLC without filing this document as it's a part of your LLC's foundation.
What is the cost of filing the Articles of Organization?
The filing fee for Illinois is $150.
What information is included in the Articles of Organization?
The name of the LLC
The location of the business
The contact information of all members/managers
The name and location of the registered agent
The effective date of the LLC
The statement of purpose
Other Illinois Filing Requirements — Professional Service Business
The state of Illinois allows professional service businesses to form LLCs as long as the members are all licensed in their respective practices.
Professional service businesses can include:
Accountants
Attorney
Physicians
Professional Counselors and Psychologists
Architects and Engineers
Veterinarians
A few points to consider:
All LLC members must be licensed in the profession of the business.
The LLC must provide only the services for which the business is licensed.
The members are still subject to whichever licensing boards govern the LLC's profession.
5. Create an LLC Operating Agreement
The state may not require an LLC Operating Agreement, but it is still necessary to successfully form an LLC in Illinois.
What is an LLC Operating Agreement?
The LLC Operating Agreement is a legal document that lays out the details of how the business will function and explains the rights and responsibilities of the members.
Why do I need an LLC Operating Agreement?
The LLC Operating Agreement is necessary because it adds structure to the business by defining the members' roles and explaining the LLC's purpose and function. It also helps in reducing disputes among the members by ensuring a level of stability and transparency.
Do I need to file the LLC Operating Agreement?
You do not need to file the Operating Agreement with the state; it is for the benefit of your LLC and remains in-house.
What goes into an LLC Operating Agreement?
Every LLC Operating Agreement is unique to the business; however, most agreements include the following:
Designation of the members/managers
Initial capital contributions of the members
Voting designations and percentages
Member transfer/addition rules and restrictions
Distribution of profits
Tip: Get a customized LLC operating agreement for your Illinois LLC. Add structure to your LLC now. CREATE YOUR LLC OPERATING AGREEMENT
6. Obtain an EIN
An EIN is necessary for any business that currently has or plans to have employees. Your IL LLC will not be able to legally function without it.
What is an EIN?
The EIN is a nine-digit number that your business receives from the IRS to identify your business with the federal government much like a personal Social Security number.
What does EIN stand for?
The acronym EIN, also known as a Federal Tax ID, stands for Employer Identification.
Are all businesses required to have an EIN?
According to Federal law certain types of business entities are required to register for an EIN:
Any business with employees (even if owned by one person)
Any business with more than one member
A partnership (LLC or C-corp)
Please Note: A sole proprietorship is not required to have an EIN, but it is still recommended.
Why does my LLC business need an EIN?
Some common reasons you might need an EIN:
To hire employees
To open a bank account in the U.S.
To file your company’s taxes
To pay independent contractors
In short, if you make money through your business and have employees, you must have an EIN.
Is the EIN publicly listed?
Your Illinois LLC's EIN will be a part of the public record.
Can I use my Social Security Number as the EIN?
As a sole proprietor, you can elect to use your Social Security as the EIN for your business, however, your EIN is a part of the public record.
Swyft Filings offers EIN/tax ID services for small businesses in Illinois. GET YOUR EIN
Phase 2: Maintaining Your Illinois LLC
The second phase of setting up an LLC in Illinois involves steps that will get you ready to do business while keeping your LLC compliant with state regulations:
1. Register for Illinois State Taxes
Owners of state of Illinois LLCs are required to pay a 1.5% personal property replacement tax (PPR) on the company's net income.
State Income Taxes
Illinois has a flat state income tax rate of 4.95%
Corporate Tax Information
You can also choose to have your LLC taxed as a corporation; if so, you will be responsible for paying corporate taxes on your business's earnings.
If you start an LLC in Illinois, you can expect to pay three types of taxes:
Corporation Income Tax (7%)
Personal Property Tax (2.5%)
Franchise Tax (.15% — .1%)
Franchise Tax Fees
Corporations must pay .15% of paid-in capital during the first year and .1% of paid-in capital every subsequent year. The minimum fee is $25 and the maximum fee is $2 million.
Additional Tax Information
Other taxes your LLC may need to pay include:
6.25% Sales/Use Tax
Employee Withholding Tax
Unemployment Tax
2. Obtain Business Licenses and Permits
The licenses and permits required for an LLC in Illinois will vary depending on a number of variables:
Location (city and county)
Type of Business
Industry
Tip: If you would like to see more in-depth information on licenses and permits, please free to visit our business license research package page. LEARN MORE
3. File an Annual Report
All Illinois LLCs are required to file an annual report with the Department of State in order to keep your business information updated.
What is an annual report?
An annual report, which is also called a periodic report, is a legal form that is filed with the Secretary of State on a periodic basis that is designed to keep your business's information current with the state.
What kind of information is in the annual report?
The information requested in the annual report is similar to what is in the Articles of Organization:
The name and address of the business
The name and address of the registered agent
The names of the members
The business’s EIN
Is the annual report part of the public record?
The annual report filed on behalf of your LLC is a matter of public record.
Fees and Due Date
Fee: $75 Due Date: The anniversary month of your LLC's formation Frequency: Every year Implications of Late Filings: $300 late fee and LLC dissolution of 180 days delinquent
Swyft FIlings helps you stay compliant by providing stress-free solutions. Use our annual report service today. GET YOUR ANNUAL REPORT
4. Obtain a Certificate of Good Standing
There is one last step before your Illinois LLC is officially ready for business — you need a Certificate of Good Standing.
What is a Certificate of Good Standing?
The Certificate of Good Standing is essentially a “seal of approval” for your business and confirms your LLC's compliance with all state regulations.
Who issues the Certificate of Good Standing?
The Secretary of State generally issues the Certificate of Good Standing.
When can I request a Certificate of Good Standing for my business?
You can request a Certificate of Good Standing once you set up an LLC in Illinois and form it through the Secretary of State.
Why do I need a Certificate of Good Standing?
The Certificate of Good Standing proves to other businesses and financial institutions that you are legally compliant and in good standing with the Secretary of State.
Does the Certificate of Good Standing have an expiration date?
The Certificate of Good Standing does not expire and does not need to be renewed.
Swyft Filings can create a Certificate of Good Standing for your Illinois LLC. GET YOUR CERTIFICATE
How to Get an LLC in Illinois: A Recap
If you're looking to understand how to form an LLC in Illinois, we hope the preceding guide has served as a good breakdown of the steps you need to take. No matter what, however, we're here to help you:
Name Your Illinois LLC
Establish Ownership
Find a Registered Agent in Illinois
File the Articles of Organization
Create an LLC Operating Agreement
Register for an EIN
Register for Illinois State Taxes
Obtain Business Licenses and Permits
File an Annual Report
Obtain a Certificate of Good Standing
Pros
Home to the Third Largest Metro Area in the Nation
Chicago is the third-largest metro area in the nation, with over 9.5 million residents and an impressive GDP of almost $680 million. As a whole, Illinois's GDP increased by approximately $25 million from 2016 to 2017.
Largest Inland Port in North America
Chicago is famous for many reasons — the city is also home to the largest inland port in the nation and North America, according to a recent report by CBRE.
Low Tax for LLCs
Owners who open an LLC in Illinois pay a very low 1.5% personal property replacement (PPR) tax on net earnings. Additionally, the flat tax rate is much less confusing than other states that have a sliding scale tax rate.
Cons
Less Privacy for Owners
Illinois is among the states that require full disclosure of an LLC's members in the Articles of Operation.
High Crime Rate
According to recent statistics, Illinois's violent crime rate is 18% higher than the national average. The 2016 murder rate in Chicago was higher than both Los Angeles and NYC.
Cost of Doing Business
$150filing fee /$75annual report
1.5% PPR Tax
How Long Does it Take to Get an LLC in Illinois?
It takes 7 to 10 business days to get an LLC in Illinois. If you want to create an LLC more quickly, you can pay an extra fee to request an expedited processing time. The expedited processing time will take 2 to 3 business days total.
How to Apply for an LLC in Illinois: Final Points
With our Business Specialists supporting you, there's no reason why establishing an LLC in Illinois should be stressful. You only need a few minutes out of your day to start enjoying the major perks that come when you open an LLC in Illinois, including low taxes.
How to Create an LLC in Illinois: Related Resources
Guides for Other States
Don’t Just Take Our Word for It
Every day, business owners from all over the nation rely on Swyft Filings to help them file an LLC online and maintain their company.
Frequently Asked Questions
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Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
Orders are processed as they are received. However, clients that select Express Processing or Same Day Processing will have their orders processed before Standard Processing orders.
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