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? Great! But you’ll need to make sure it meets Illinois legal requirements too.
According to Illinois naming guidelines, every LLC name must:
- Be unique and distinguishable from existing businesses
- Include Limited Liability Company, L.L.C., or LLC
- Avoid words related to other business structures, like Corporation or Limited Partnership
- Only use terms related to regulated fields like banking or insurance if authorized
Once you find a name you think works, go to the Illinois Secretary of State website to see what’s already in use. It’s best to avoid anything that would cause confusion with existing businesses.
Now you need to call dibs on it. For $25, you can file an Application to Reserve a Name to hold it for 90 days. This stops anyone from taking it while you prepare the rest of your formation documents.
It’s also wise to avoid interfering with registered brand names and trademarks. Review the U.S. Patent and Trademark Office database. Or consult with an attorney to avoid lawsuits.
Step 2: Hire a Registered Agent (Company or a Service)
A registered agent is an essential part of an LLC. It serves as the main contact and receives important documents such as legal notices and tax information.
Any Illinois registered agent must:
- Have a physical street address (not a P.O. Box) in Illinois
- Be available during business hours all working days of the year
- Sort through junk mail without missing critical notices
You can keep costs low by tackling these responsibilities yourself. But many experienced business owners choose to hire a registered agent service instead.
Hiring a service helps reduce your burdens and prevents embarrassing situations. Without one, you may be served with a lawsuit in front of customers. And your address will be public information.
The average fee to hire a registered agent in Illinois is $100 to $150 per year.
Step 3: File the Illinois LLC Articles of Organization and the Certificate of Formation
It’s time for one of the most exciting parts of forming an LLC. Filing the articles of organization with the County Clerk will transform your idea into a legal entity.
You can handle the process through the SOS’s online services. Or you can use a paper application to file the documents in person or by mail.
The application requires:
- The LLC’s name, address, and purpose
- The registered agent’s contact information
- Manager contact information
- Organizer signature and contact information
The online process asks if you want to establish a standard LLC or a series LLC. It’s recommended you consult with an attorney if you’re planning to establish a series LLC.
The basic filing fee for your LLC articles of organization is $150. If you want a series LLC, the filing fee is $400.
The standard online filing has a 10-day processing time. There’s no official timeline for mail-in filings. You can buy expedited service to receive 24-hour processing for an extra $100 fee.
Once processed, get a Certificate of LLC Registration from the State of Illinois. It costs $25. You may also buy and immediately print a Certificate of Good Standing.
Keep these documents with company records. You may also need them to open a bank account or receive certain financing offers.
Step 4: Prepare an LLC Operating Agreement
An operating agreement is a contract between LLC members. It lays out how the business functions and handles many situations.
Even though Illinois doesn’t require one, it’s still a good idea to create one. Operating agreements are critical for multi-member LLCs. It is the first document an attorney will request if a dispute arises.
An LLC operating agreement should include:
- List of LLC members with ownership interests and contributions
- Rights and duties of members and managers
- Allocation of profits and loss
- Procedures for adding and removing members
- How to dissolve the LLC
- Methods for resolving certain disputes
You can create or change the operating agreement at any time over the life of the business. Use a free or low-cost online template to keep it simple. Or consult with an attorney to create a customized one but expect to spend $1,000 or more.
Step 5: Get an Employer Identification Number (EIN) and Register with the Illinois Department Of Revenue (IDOR)
Now it’s time to think about tax needs. There are two tax authorities to register with when forming your LLC. The Internal Revenue Service (IRS) for federal needs. And the Illinois Department of Revenue (IDOR) for state ones.
How to get an EIN for an Illinois LLC
The IRS uses Employer Identification Numbers (EINs) to track business tax information. Your LLC must get an EIN if it:
- Has more than one member
- Hires any employees
- Has other specific situations apply
Even if your LLC isn’t required to get one, it’s still best practice to get one.
You can get an EIN online in about 15 minutes with a simple application. The IRS will issue your EIN right after submission.
Register with the Illinois Department Of Revenue (IDOR)
All businesses operating in Illinois must register with the Illinois Department Of Revenue (IDOR).
You can complete this application online. Or file Form Reg-1 via mail or in person. There is no registration fee.
Certain businesses will need to include other schedules or get an IDOR license. This applies to things like alcohol sales and gaming.
Costs Associated with Creating an Illinois LLC
The minimum total cost to create an LLC in Illinois is $150 to file the articles of organization. You will also want a certified Copy of LLC Registration for another $25.
Other optional costs that may be part of forming an LLC in Illinois include:
- $25 to reserve a name
- $100 to $150 per year to hire a registered agent
- $400 to file the articles of organization for a series LLC
- $100 for expediting processing
- $0 to $1,000 or more to create an operating agreement
- GRAND TOTAL: $150 to $1,675 or more
Next Steps
At this point, you can pat yourself on the back and celebrate forming an LLC in Illinois. Before you start operating, there are a few more tasks to knock out.
Open a Business Bank Account
Opening a business bank account is not only helpful for bookkeeping and tax purposes. It’s also an essential tool that maintains your LLC’s legal protections.
A business bank account will keep your personal finances separate from your business. This shows that your LLC is a separate entity. If you don’t do this, you could lose the LLC’s personal liability protection. Your personal assets could be at risk if you get sued.
Many banking institutions offer business checking accounts. Fees range from free to about $25 per month. For example, Bank of America charges $10 and Chase charges $15. You can avoid fees entirely by meeting purchase or balance requirements.
Local licenses and permits
Local authorities may also issue business licenses and permits. Many of these depend on the activities your business engages in.
For example, the City of Chicago and the City of Aurora offer a range of business licenses. Cook County requires businesses in unincorporated areas to get a business license.
Before you start serving customers, make sure your Illinois LLC gets what it needs.
Other Considerations
Insurance is also worth investigating. A workers’ compensation policy is vital if you hire any employees. But most businesses can benefit from a general liability policy.
Leveraging the knowledge of seasoned business owners can help catapult your business ahead. Connect with local leaders by joining the Chamber of Commerce. Or take part in no-cost business consulting through Illinois SBDC.
When you’re ready to start your Illinois LLC, kick things off by making sure the name meets the Illinois legal requirements. Then identify your registered agent, file your articles of organization, and continue through each step.
Your efforts will pay off as you step into the new, exciting role of business owner.
Illinois LLC FAQs
The following are some frequently asked questions regarding forming a Limited Liability Company in Illinois.
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Last updated: Apr 2024