Starting an LLC in Illinois is a good idea.
Why?
Because this business structure protects your personal assets better.
If your business is sued, it can only be held liable for the assets of the LLC. Not only that, but LLC is also a better structure for tax reporting. Plus, it’s a future-proof move towards business scalability.
So if you too are ready to join the ranks of growing businesses, here’s how to register an LLC in Illinois.
Table of contents
- Step 1: Choose a Name for Your LLC
- Step 2: Hire a Registered Agent
- Step 3: File the Illinois LLC Articles of Organization
- Step 4: Prepare an LLC operating agreement
- Step 5: Get an Employer Identification Number (EIN)
- Costs associated with Creating an Illinois LLC
- Next Steps
Step 1: Choose a Name for Your LLC
You’ve found the perfect name for your soon-to-be LLC? Now you need to call dibs on it.
Go to the Illinois Secretary of State Department of Business Services website to verify business name availability. If the name is taken, try another combo.
According to Illinois naming guidelines, certain words or abbreviations must appear in the business name or be omitted.
One of the following words or abbreviations in the exact form below must be present in your business name:
- Limited Liability Company
- L.L.C.
- LLC
However, you must exclude the following words or abbreviations:
- Corporation
- Corp.
- Incorporated
- Inc.
- Ltd.
- Co.
- Limited Partnership
- LP
Any word that implies the LLC is in business for purposes of insurance, assurance, or banking unless permitted by Section 1-9 of the Corporate Fiduciary Act.
- Bank – can be used if permitted under Section 46 of the Illinois Bank Act.
- Banker – can be used if permitted under Section 46 of the Illinois Bank Act.
- Banking – can be used if permitted under Section 46 of the Illinois Bank Act.
Also, if you plan to operate on a national level, verify that your name doesn’t interfere with any registered brand names and trademarks. Do a search at the U.S. Patent and Trademark Office or consult an attorney to prevent a trademark lawsuit.
Step 2: Hire a Registered Agent (Company or a Service)
Hiring a registered agent is not mandatory. You, as a business owner, can serve as one. It is an option if you want to cut costs.
You must satisfy the following requirements to be your own registered agent:
- Have a physical street address (not PO Box)
- Be available during business hours all working days of the year.
You must meet this requirement because registered agents must receive all service of process documents such as lawsuits, summons, and subpoenas, among others. Failure to meet this requirement can result in your registration status termination.
To avoid handling all these legal matters (especially if you lack the knowledge to respond as required when you get served), you should hire an LLC registered agent.
The average fee to hire a registered agent in Illinois is $100 to $150. There are many pros of hiring a registered agent and very few cons.
Step 3: File the Illinois LLC Articles of Organization and the Certificate of Formation
The articles of organization is a business registration document submitted to a County Clerk of the Illinois Department of Business Services as a part of your LLC application.
You can file the documents in person (expedited), online, or by mail.
If you plan to apply online, the form will first ask you to select between a standard limited liability company or a limited liability company with the ability to establish a series. It’s recommended you consult with an attorney if you’re planning to establish a series LLC.
It typically takes 10 business days for the standard online filing, 24 hours for the expedited service (not available by mail). There’s no official stated timeline for filing by mail.
The basic filing fee for your LLC articles of organization is $150. If a series LLC is requested, then the filing fee is $400. If electing the expedited service for either of these, a $100 expedited service fee will apply.
LLC online filing fee must be paid with a credit card when submitting the articles of the organization online. When mailing your articles of organization (Form LLC-5.5), a certified check, cashier’s check, or money order must be included within the envelope.
You can obtain a Certificate of LLC Registration from the State of Illinois for 25 dollars for a for-profit business.
You may purchase and immediately print a Certificate of Good Standing for a Corporation or LLC after satisfying all requirements of the relevant Illinois statutes
Step 4: Prepare an LLC Operating Agreement
An operating agreement outlines how a small business conducts daily operations.
Illinois doesn’t require to provide an operating agreement as part of the LLC formation process. But it's still good to create one. Because this is the first document, an attorney will request in case of a dispute with a customer or business partner. Along with the business bank account and EIN, these formalities give a business owner assurance that they have limited liability protection.
Here’s what to include in an operating agreement for your LLC:
- All LLC member(s)
- Percentage interest in the business
- Allocation of profits and loss
- Capital contributions
- Voting power
- Procedures for admitting new members and member withdrawal
The operating agreement can be created or amended at any time over the life of the business.
Step 5: Get an Employer Identification Number (EIN) and Register with the Illinois Department Of Revenue (IDOR)
There are two tax authorities to register with when forming your LLC. You’ll file Form Reg-1 with the Illinois Department of Revenue (IDOR) via mail, online, or in-person. Also, file for an EIN (employer identification number) with the IRS via mail, online, or phone.
An Employer Identification Number (EIN) is issued by the Internal Revenue Service (IRS) for federal tax purposes.
It’s required if your LLC:
- Has employees
- Withholds taxes (other than income) from a non-resident alien
- Pays taxes for certain products (alcohol, tobacco, firearms, or excise)
- Has a Keogh plan
- Or is involved with specific organizations (listed on the IRS website)
How to get an EIN for an Illinois LLC
You can submit an EIN application online. It takes about 15 minutes and must be completed in one sitting. You’ll get your EIN immediately after submitting the online application.
Download a PDF copy of your application and save it for future use. The name of this document is Form SS-4 and will be seen in the upper right portion of the page after downloading.
Costs Associated with Creating an Illinois LLC
Your total cost to set up your LLC in Illinois may vary on various factors, including whether or not you are a domestic or a foreign corporation, whether or not you have an Illinois Address, and other factors. The minimum amount you can expect to pay is 150 USD for filing your Certification of Formation with the state at the “regular” speed.
Next Steps
Open a Business Bank Account
All LLCs are legally required to open a business bank account.
Many banking institutions will open a business checking account for free or at a minimal cost.
For example, Bank of America charges $10 monthly for a business checking account. You can avoid this fee by maintaining an average monthly balance of $5,000 or more, spending $250 on the business debit card for qualified purchases, or becoming a preferred rewards member. It’s recommended to explore various banking options to see what’s best for your business.
The most significant benefit of opening a business bank account is keeping your personal finances separate from your business. If your LLC is ever audited, there’s a clear paper trail of what is private and what relates to the business entity. Without a business account, the auditor will have difficulty separating personal versus business, which can jeopardize your limited liability protection.
Chase offers similar terms. The Chase Business Complete Banking has a $15 monthly service fee. Nonetheless, you can avoid this fee by keeping your Chase Ink Business Card loaded with $2,000 minimum daily purchases or by maintaining a $2,000 minimum daily balance.
The US Bank doesn’t charge a service fee. With their basic business account, you get 125 free transactions monthly which include 25 deposits. Small fees apply when going over these volume limits.
Items needed to open a business bank account
- EIN
- Articles of Organization
- Ownership Agreements
- Business license or permit
Illinois LLC FAQs
The following are some frequently asked questions regarding forming a Limited Liability Company in Illinois.
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Last updated: Dec 2023