Starting a Business in Illinois: 8 Essential Steps

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Swyft Filings is committed to providing accurate, reliable information to help you make informed decisions for your business. That's why our content is written and edited by professional editors, writers, and subject matter experts. Learn more about how Swyft Filings works, our editorial team and standards, what our customers think of us, and more on our trust page.

Polina Solovyeva
Written by Polina Solovyeva
Written byPolina Solovyeva
Updated December 20, 2023
Edited by Carlos Serrano
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Illinois is one of the best states to start a small business. Whether you want to experience the hustle and bustle of Chicago or run your Illinois business in a remote rural region, the Prairie State offers generous opportunities to entrepreneurs. Here’s how to start a business in Illinois, from an exciting idea to a successful incorporation and becoming your own boss. 

Start Operating in Illinois: Key Points

  1. Illinois is business-friendly, with small businesses accounting for 99.6% of all companies in the state.[1]

  2. You can start a limited liability company, a corporation, or a nonprofit in Illinois. 

  3. To start operating in Illinois, you must file appropriate documents with the Secretary of State and apply for any necessary business licenses and permits. 

Set the Stage for Business Success

Easily start your business and remain compliant with our all-in-one tools, guiding you well past the initial setup with the right support and documents.

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Ready to Start an Illinois Business?

Setting up a business in Illinois can seem overwhelming at first, but there are steps you can take to make the incorporation process as smooth as possible. Spending time researching and getting familiar with Illinois’s requirements for starting a small business is essential.

We’re here to help. If you’re ready to become a business owner and start operating in Illinois, follow these eight steps to seamless incorporation. 

1. Choose a Business Idea

A bright business idea is the first step to starting a successful new business in Illinois. You may already know what business you want to run and need to decide on small details. However, many successful entrepreneurs don’t have a good business idea immediately. 

If you need inspiration to choose the right business idea, here are some of our best tips: 

  • Brainstorm solutions to the issues you care about. Small businesses can make a real difference in other people’s lives. Think about how you can contribute to solving pressing problems in present-day society, and if you’re short on ideas, try these nine green business ideas you can start today.

  • Turn to what lights you up. Small business owners are some of the most passionate people because they care about what they do. Consider your interests and skills and how to turn them into a profitable Illinois business.

  • Build on your education. Get inspired by what you’ve studied in college (or another academic setting) and turn your knowledge into a booming business. For example, if you were an English major in college, you could try your hand at copywriting or content marketing. For more business ideas for recent college grads, read this article

Your business idea doesn’t have to be perfect, but it has to make you excited. Your business will grow and change over time. Still, the idea behind it should always remind you why you decided to start a business in Illinois in the first place. 

→ Still short on inspiration? Try doing one of these thirteen things to develop a business idea that lights you up.  

2. Draft an Illinois Business Plan

A comprehensive business plan is the foundation for your new business’s success. It’s what turns your exciting business idea into a functional Illinois business or startup. It gives you a framework for making crucial business decisions. 

There’s no set business plan format that every business needs to follow. It would help if you customized your business plan to fit your unique vision and needs, but here’s a breakdown of what a typical business plan includes: 

  • Executive summary: a summary of your entire business plan that gives your mission statement and goes over the most critical points of your business plan 

  • Target market: an in-depth overview of the audience(s) your new business is targeting

  • Competitor analysis: a study of your main competitors in the industry and how you stand out from them

  • Financial plan: revenue and expenses projections and other important financial considerations for your business, such as where your funding comes from

  • Products/services: an overview of the products or services you will be selling 

  • Marketing plan: your pricing strategy and an overview of how you will market your new business

  • Operations plan: any standardized processes you will follow and whether you will hire employees 

No state law requires you to have a business plan to go through the business formation process and start operating in Illinois. However, not having one in place comes with high risks. Without a business plan, you might miss out on promising opportunities, face unexpected expenses, and struggle to get your business off the ground. 

→ If you don’t know how to start drafting a business plan, the Small Business Administration,, has downloadable templates.

3. Select a Business Name

Deciding on your business name is a big step to starting a business in Illinois. You should pick a unique name that relates to your business idea and makes it easy for prospective clients or customers to remember your brand. This is also an excellent time to secure your business’s domain name and social media handles. 

You have almost complete agency over what you want to name your business as long as there’s no other business in the state already using your desired legal name. You can check if your business name is available on the Illinois Secretary of State website or use the Swyft Filings Free Business Name Search tool for a faster answer. 

Once you complete the Illinois business search and decide on your business name, you can make a name reservation with the Secretary of State for a small fee. This is an excellent option for entrepreneurs who don’t want to form a business yet but want a particular business name. 

Abraham Lincoln statue in front of the Illinois State Capital Building

4. Choose a Business Structure

Choosing the proper business structure is one of the most critical parts of the business formation process — if not the most important. Your business structure affects your tax responsibilities and the organization of your business entity, so spend some time figuring out which business structure aligns with your goals.

A limited liability company and a corporation are some of the most popular business structures for startups, but other options exist. Here’s a comprehensive list of legal entities you can register in Illinois. 

Sole Proprietorship

Technically speaking, you don’t need to do anything to become a sole proprietor. It’s the default business structure that doesn’t require incorporation and is an inexpensive way to start a business in Illinois. You’ll pay personal income taxes on your business profits as a sole proprietor. 

However, doing business as a sole proprietor comes with significant disadvantages. A sole proprietorship doesn’t protect your assets. Suppose your company has debts or faces litigation. In that case, your creditors may come after your personal property, such as your house or car. 

As a sole proprietor, you can do business under your name or file for a DBA. This assumed name makes you eligible to open a business bank account and improves your business credibility.  

Limited Liability Company (LLC) 

A limited liability company, or an LLC, is a hybrid legal structure that combines a sole proprietorship’s flexibility with a corporation’s liability protection. It’s one of the most popular business structures for small business owners because it allows you to report profits and losses on your tax return. 

Swyft Filings can help you file for an LLC in Illinois in under ten minutes. Answer a few questions about your business, and we'll file your paperwork with the Secretary of State. 


A corporation is a robust business structure that offers considerable business growth opportunities, strong liability protection, and the ability to issue stock to shareholders.

However, corporations are typically more challenging to manage than limited liability companies. It’s also important to know that they’re subject to “double taxation,” meaning you’ll have to file tax returns on both personal and business levels unless you qualify for S corporation status

Starting an Illinois corporation can be fast and easy. Swyft Filings can help you form a C corp in Illinois in just a few simple steps. 

Nonprofit Organization

Suppose you’re starting your Illinois business to advance a social cause without expecting a financial gain. In that case, you may consider forming a nonprofit. The main difference between nonprofits and other types of business structures is that it’s funded by donations, not investments, and may qualify for tax-exempt status. 

Forming a nonprofit in Illinois involves several nuanced steps, especially if you want it to be tax-exempt. Swyft Filings can help you file for a nonprofit accurately and swiftly. 

5. File Business Formation Documents

You must file the necessary paperwork with the Illinois Secretary of State to officially register your new business. At the very least, you can expect to file an article of organization/certificate of formation if you’re forming an LLC and an article of incorporation/certificate of incorporation if you’re creating a corporation. You’ll also need to pay a filing fee.  

The state of Illinois also requires LLCs and corporations to “appoint and maintain a registered agent within Illinois.”[2] Your Illinois registered agent is responsible for receiving legal notices and mail on behalf of your business. 

Even though it’s not a required step of a business formation process in Illinois, it’s highly recommended to file an operating agreement if you’re forming an LLC.[3] It’s a legal document that outlines rules and regulations for your LLC. If you’re creating a corporation, you’re required to file corporate bylaws. 

Filing business formation documents is a serious step; even the most minor mistakes can result in losing liability protections or tax benefits. Swyft Filings can help you successfully form an LLC, a C corp, a DBA, or a nonprofit in Illinois in just a few clicks.  

6. Apply for Illinois Business Licenses and Permits

Most small businesses must apply for a business license to start operating in Illinois. You may be required to apply for a federal, state, or local permit, depending on the nature of your business activities and existing professional regulations. 

If your business involves a federally-regulated industry, you must apply for a federal license. Illinois doesn’t have a general business license requirement.[4] Still, you may need to apply for an Illinois business license depending on your industry or profession. You may also need a Certificate of Registration or License, Illinois’s seller’s permit. 

Your startup will also likely face additional local license requirements from your city or county. Figuring out what business licenses and permits you need to stay in compliance can be confusing. Still, Swyft Filings can research license requirements and apply for them on your behalf. 

7. File and Report Business Taxes

It’s crucial to know what kind of tax obligations you face after business registration and file them on time. Your small business may need to pay federal taxes to the IRS, state, local, and income taxes. Your tax obligations depend on your business structure and tax status, so familiarize yourself with the appropriate requirements.

Illinois requires all corporations to pay a franchise tax, but limited liability companies and limited liability partnerships don’t face this requirement. Filing and reporting business taxes is serious, so note all the critical deadlines on your business calendar. 

8. Open a Business Bank Account

A dedicated business bank account protects personal liability and makes accounting significantly easier. Business owners should also consider getting a business credit card to build their credit history in case they apply for funding opportunities later. 

Most banks will require you to have an employer identification number (EIN) to open a business bank account. You can consider an EIN as a social security number for your small business. It’s also sometimes called a federal employer identification number. You can apply for an EIN on the IRS (internal revenue service) website or have Swyft Filings do it

Illinois State Capital Building in Springfield, Illinois

Take Your First Steps Toward Small Business Ownership

Illinois is full of promising opportunities for entrepreneurs and small businesses. To turn your bright business idea into a successful startup and start operating in Illinois, you must go through a business formation process, obtain necessary business licenses, open a business bank account, and clear your tax obligations. 

You’re not alone on your journey to start a business in Illinois. Swyft Filings has formed 300,000+ businesses since 2015 and can help you obtain everything your new business needs to get up and running quickly. Start your LLC, corporation, or nonprofit in just a few clicks. 

Your Dream, Our Mission: Partnering for Success
  • Your Perfect Fit: Whether you're looking at a simple LLC or a dedicated nonprofit, we'll help you identify the best structure for your dream business.

  • Continued Support: Your entrepreneurial journey doesn’t stop at formation. Our key management services help ensure your business thrives. 

  • Tailored Affordability: Get value-packed options suited to your business needs, starting at just $0 + state fees.

Begin Your Business Journey

Frequently Asked Questions

Is Illinois a good place to start a business?

Illinois offers excellent opportunities to entrepreneurs and small businesses. Illinois businesses enjoy low corporate taxes, tax-free personal property, and Chicago’s diverse and highly-skilled workforce.[5]  

How much does it cost to start operating in Illinois?

Startup costs vary from business to business. You’ll need to pay the Secretary of State a filing fee when you form your business. Depending on the nature of your business, you may also need to apply for business licenses and permits or file additional paperwork. 

Can I start a business in Illinois without a business plan?

You can, but it’s not recommended. Drafting a business plan is a crucial step of the business formation process, and having a functional business plan in place significantly increases your chances of success.

What does Illinois require to start a business?

Business formation requirements vary, but at the very least, you’ll need to create a unique business name and file the necessary paperwork with the Illinois Secretary of State. 

What is the process for starting a business in Illinois?

Start with drafting a detailed business plan, creating a business name, and choosing a business structure. Then, file the appropriate paperwork with the Secretary of State, obtain appropriate business licenses, and open a business bank account. To stay in compliance, remember to file your taxes on time. 

Why are most LLCs in Delaware?

Delaware is one of the most business-friendly states in the US. One of the main reasons many entrepreneurs decide to form an LLC in Delaware is that you don’t have to disclose your name and address on your formation documents. Learn more about forming an LLC in Delaware. 


  1. U.S. Small Business Administration. “Small Business Profile.” Accessed on July 15, 2023. 

  2. Illinois Secretary of State. “Information for Forming an LLC Online Business Services.” Accessed on July 15, 2023. 

  3. U.S. Small Business Administration. “Register your business.” Accessed on July 15, 2023.

  4. U.S. Small Business Administration. “Apply for licenses and permits.” Accessed on July 15, 2023.

  5. Illinois Department of Commerce and Economic Opportunity. “Why Illinois?” Accessed on July 15, 2023.  

Originally published on August 11, 2023, and last edited on December 20, 2023.
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