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Congratulations on deciding to start an LLC in Illinois! While you may be eager to jump in, the legal side of launching an Illinois limited liability company (LLC) is important. If this is your first business venture, we can help you with the process.
Every state has different requirements, so understanding the expectations of starting an LLC in Illinois is key. Once you know the guidelines, you can launch your Limited Liability Company with ease.
In this guide, we’ll walk through each step of the LLC setup process and how we can help you along the way. We’ll also show you how the right LLC partner can handle the tedious paperwork on your behalf, so you can focus on growing your business.
You’ll start by making a few crucial decisions, like choosing a business name. Then, you’ll register your LLC with the Illinois Secretary of State and file paperwork to establish your company in Illinois. We can take care of some of this for you with one of our business formation plans. You’ll also need to create an operating agreement for your company and register your LLC with the IRS.
The requirements for a limited liability company can seem overwhelming, so we’ll break down the process into five steps.
The first step is choosing a name for your LLC in Illinois. Your LLC’s name is extremely important, both for marketing purposes and legitimizing your company throughout the state of Illinois. You’ll also need to have this name chosen before you can form your LLC.
From a marketing perspective, you’ll want to choose a name that’s memorable and quickly explains what your business sells or the service you provide. From a legal standpoint, you’ll need to choose a business name that does not already exist, and follow a few guidelines for limited liability companies.
Here are some quick tips for choosing a name when you start an LLC in Illinois:
There are also some naming restrictions, so be careful. Your LLC’s name cannot contain any of the following terms: “Corporation”, “Corp.”, “Incorporated”, “Inc.”, “Ltd.”, “Co.”, “Limited Partnership”, or “LP.”
Once you have your official name ready to go, you have the option of reserving it for 90 days through the Illinois Secretary of State’s website. Our business name reservation service can handle this process for you.
Once you have your LLC name, you might also decide to register your company name as a domain for your business website. To find out if your domain is available, you’ll want to run a quick domain search. After you find an available domain, be sure to reach out to us — we can work with your company to register your new web domain.
Finally, you can perform a trademark search and decide if you need to secure a DBA in Illinois. You can check the United States Patent and Trademark Office (USPTO) database to see if any federal trademarks exist on your desired business name. Trademarks also exist on the state level, so search Illinois’s trademark database to make sure your name isn’t trademarked within the state.
If you wish to pursue getting a trademark of your own, you can get instructions for getting a federal trademark from the USPTO. Although it applies outside of your state, getting a federal trademark can be a long and costly process. A state trademark doesn’t apply outside Illinois but is quicker and less expensive. To do this, fill out the Illinois Trademark or Service Mark Application. There’s a small fee. You will need to mail your registration to:
Secretary of State
Department of Business Services
501 S. Second St., Rm. 330
Springfield, IL 62756
If you want to sell goods or services under a name different from your official name, you will want to obtain a DBA (“doing business as”) name or “assumed name.” This can be done online or mail by filling out the Application to Adopt, Change, Cancel or Renew an Assumed Name. The filing fee varies according to the current year. So consult the price listing on the form to determine the cost. If you use our DBA name service, we can handle this process for you.
Illinois requires LLCs to designate a registered agent who will act on their behalf to receive legal notices as well as official documents from the Illinois Secretary of State. You’ll need to decide who will act as your LLC’s registered agent when you’re starting an LLC in Illinois. This agent is who the state will reach out to if they need to get important paperwork to your company.
A registered agent can be an individual or business entity, but they must have a registered address (not a P.O. box) located in the state of Illinois. Since legal papers are often served in person, the registered agent must keep regular business hours at this address.
Many LLCs, particularly small ones, consider acting as their own registered agent for their company. While this is allowed in Illinois, there are downsides to consider before making this decision. For instance, if your company is sued, your paperwork will be served at your place of business, which means clients and customers might be present.
For these reasons, many decide to hire an outside registered agent service like ours when they start an LLC in Illinois. Our registered agent service in Illinois can receive and pass along important paperwork to their company. Doing so is extremely affordable and can save your LLC from the headache of managing this part of the process.
Hiring an outside registered agent service can also save you from needing to be on-site at your office location between normal operating hours (9 a.m. to 5 p.m.). Your Illinois registered agent must be available to receive paperwork between these time frames.
Next you need to file Articles of Organization and register your LLC with the Illinois Secretary of State. Filing official government documents like this can be intimidating or complicated for many people, which is why we’re here. With our business formation plans, our professionals handle the filing for you to make sure it’s done quickly and correctly the first time. But, although we can handle this for you, we’ll show you how the process works below.
The form you’ll need to file is called the Limited Liability Company Act Articles of Organization. You can file this form online through the Illinois Secretary of State website for a fee. If you need to have this form expedited, it will cost an additional fee. To file your Articles of Organization by mail, send the completed paperwork to the Illinois Secretary of State Department of Business Services, Limited Liability Division, 501 S. Second St., Rm. 351, Springfield, IL 62756. You’ll need the below information to complete this form:
Use our step-by-step guide on how to file your Articles of Organization in Illinois.
If you have us handle filing your Articles of Organization, once the state approves your LLC, your paperwork will be available from your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized.
Once you get your physical paperwork back from the state approving your new LLC, you’ll want to keep it in a safe location along with your other important documents, such as your LLC operating agreement, member certificates, contracts, compliance checklists, etc. We offer a customized business kit to help you keep these important documents organized and looking professional.
You may want to create an operating agreement, although the state of Illinois does not require LLCs to file this to register. It’s a smart idea to have an LLC operating agreement, whether you’re the sole member, have employees, or work alongside other owners (members).
Your company’s operating agreement will outline the terms of your LLC’s ownership and management structure to protect everyone with a vested interest in the company. This is important for multi-member LLCs, but can also help protect sole proprietors if they become injured or incapacitated. If you don’t have an operating agreement, your LLC will be subject to the state’s default rules for managing LLCs. This may not reflect your company’s best interests.
Here are some additional reasons to consider drafting an operating agreement:
All members of the LLC should review, agree to, and sign the Illinois operating agreement.
The good news is that with the right partner, you can create an LLC operating agreement quickly and affordably. This step is important not to skip since it can protect yourself and the other members down the line. Do you need some help? You can partner with us to receive a professional operating agreement template.
To get set up with the IRS you’ll need to apply for an EIN. To do this, you’ll need to request an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). These are important factors to consider when you’re ready to start an LLC in Illinois
Also known as a Tax ID Number, Federal Employer Identification Number, or Federal Tax Identification Number, think of your EIN as your company’s Social Security number. It allows you to handle your taxes, work with outside contractors, hire employees, and payroll.
Sole proprietorship LLCs with no employees may not need to apply for an EIN. Although, an EIN can be helpful as it allows you to apply for business bank accounts, grants, or loans. If you have multiple LLC members or employees, you will be required to apply for an EIN.
You can apply for an EIN online and have one issued via the IRS website. If you’re not fond of dealing with that particular government agency, we can get it for you. Our Federal Tax Identification Number service is quick and eliminates the hassle.
Once you’ve secured an EIN, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is critical for sorting out your finances at tax time and helps you avoid commingling funds. Commingling funds can not only make your taxes much more of a headache, but it could also be used against you if someone takes you to court to challenge whether you and your LLC are truly separate entities.
We have partnered with LendingClub to offer a discounted business bank account when you start an LLC in Illinois. This allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we have a banking resolution template to simplify the process for you.
For more help managing your new company’s finances, try the ZenBusiness Money App. It can help you make invoices, receive payments, transfer money, and manage clients all in one place.
Once your LLC is officially registered, you can begin moving money around. To do this, you’ll want to set up a business bank account. You can use this account to conduct business and manage your employees’ payroll.
You should do a quick search for local banks or credit unions that offer business accounts and may provide incentives that are appealing to your company.
In many cases, you’ll need a copy of your LLC’s Articles of Organization and your EIN to open a business bank account. Depending on the institution you’re filing with, you may also be required to provide a Certificate of Good Standing for your LLC from the Illinois Secretary of State, copies of any required business licenses for your LLC, or documents similar to a banking resolution for your business.
Once your bank account is set up, you can look into additional business financing options, such as small business loans or grants, if needed.
Another task you’ll want to complete is making sure your Illinois LLC has all of the business insurance needed to operate. Insurance for your LLC can help you mitigate or reduce your risk of liability in a variety of cases. Common forms of business insurance include:
Additional insurance policies, such as property, commercial, life, auto, and umbrella insurance, can be purchased for LLCs.
Now that you know the primary setup and filing costs, you’ll also want to decide how to pay for the cost of running your business. From managing your books to record-keeping, you might want to hire a part-time or full-time administrative assistant to help keep your LLC running smoothly.
If you don’t have the need for another employee, you might consider partnering with an accountant or consultant to help manage your expenses, create and pay invoices, oversee the flow of your company’s funds, pay bills, and handle daily administrative and financial duties.
In addition, you might need to consider several other startup expenses when launching your LLC. This could include printed or digital marketing materials, business cards, office supplies, and furniture, office space, and a digital presence. Consider all of these into your Illinois LLC cost.
Now that your LLC is fully set up and operational, you’ll want to understand a little more about the annual forms you’ll need to submit. All LLCs are required to submit an annual report to the state government to confirm they’re still active. In Illinois, you’ll need to file an Illinois annual report each year. This report can be filed online or through the mail and is used to confirm your LLC is still active and compliant with all government laws and regulations. You’ll need to fill out the below sections of this form each year:
Your annual report is due each year by the first of the month when your LLC was formed. For instance, if your LLC was formed on June 8, 2020, your first annual report would be due on June 1, 2021. There’s a filing fee to submit your annual report. Failure to submit this report on time will lead to a late fee, in addition to the regular filing fee.
We can help you with your annual report in a couple of ways. Our annual report service will help you file your annual report, and our Worry Free Compliance service not only helps with filing your annual report, but also sends you other important compliance reminders and helps you with two amendment filings each year.
Your business structure and operations might change over time. You could bring in new members, have members leave, opt to change your Illinois registered agent, or even adopt a new LLC name. These changes are typical for LLCs but will require filling out forms to register these changes with the Illinois government. Our amendment filing service can handle this for you. Here are the steps you’ll need to take to make the below changes:
To avoid paying multiple fees, try to limit the number of times you make changes to these documents. You can also submit your requests all at once or wait and file the changes on your upcoming annual report.
The state fees for forming an LLC in Illinois range from $150 to $300, depending on factors such as your method of filing and whether you choose to reserve your business name or have your filing expedited. Note that fees change over time, so you should check the Illinois Secretary of State website for the most recent fee schedule.
Keep in mind that these fees don’t take into account the recurring cost of filing your annual report or your time spent filing the registration paperwork or creating an LLC operating agreement. The good news is that you don’t have to do it alone. We can help you through these steps to start an LLC in Illinois at an affordable price.
Many new business owners opt to form LLCs because this type of company allows you to separate your personal assets and liabilities from your company’s. LLCs offer many protections to anyone starting a business, with fairly minimal requirements.
Let’s take a look at some of the main benefits you’ll enjoy by establishing your company as an LLC in the Prairie State:
Want more information on the LLC business structure? Check out our comprehensive guide to LLCs.
As stated above, Illinois LLCs are exempt from double taxation, but there are a few more things to know about your LLC taxes. Managing your LLC’s taxes can seem overwhelming, but partnering with an experienced accountant or tax preparer can help ensure you’re compliant with all Illinois tax laws.
Let’s take a look at some of the federal and state tax laws for LLCs in Illinois:
It can take up to 10 days to process your Articles of Organization, whether you file online, by mail, or in person. Many filings are approved much sooner, but you can speed the process up by paying for expedited processing.
If you don’t want to jump through the hoops of the state’s expedited filing processes, we can handle it for you with our faster filing speeds service.
An operating agreement is not required in Illinois to operate an LLC. However, while not mandatory, your operating agreement is an important document that can save you from conflicts in the future.
When forming your LLC, you may have heard the term “limited liability partnership” (LLP). You may think this refers to an LLC with partners, but it’s a bit different. LLPs provide some liability protection to the partners by shielding them from the malpractice or wrongful actions of the other partners, though this liability protection can vary by state.
LLPs are typically formed by law firms and some types of health care practices.
LLC owners usually decide to have their business taxed the default way, which is as a sole proprietorship (for single-member LLCs) or a partnership (for multi-member LLCs). This method only requires owners to pay federal income taxes on their percentage of the profits on their personal tax returns. The LLC itself is not taxed. This avoids the “double taxation” that corporate shareholders pay, in which profits are taxed both at the business level and the personal level.
In some instances, it might be advantageous to have your LLC taxed as a corporation. If you aren’t sure which tax filing structure works best for your Limited Liability Company, reach out to a qualified accountant or tax specialist for help.
LLCs are owned by the members of the company. Most LLCs are “member-managed,” meaning that the members share in the responsibilities and decision-making for the company. Some LLCs instead prefer to be “manager-managed.” In these cases, LLC members appoint or hire one or more managers to run the company. The manager(s) can be one or more members of the LLC or someone hired from outside the LLC.
Many business owners enjoy forming LLCs because they can create an organizational structure that best fits their needs.
Some states allow business owners to form what is known as a Series LLC. This term refers to a group of LLCs that are nested under one parent LLC. This type of structure can be appealing to many business owners, entrepreneurs, or investors. However, not all states allow series LLCs.
In Illinois, you can create a Series LLC. When establishing a Series LLC, you’ll need to file your Articles of Organization (from step three) specifically for a Series LLC. You can find more details on creating a Series LLC in Illinois’s Guide for Organizing Domestic Limited Liability Companies.
When you start an LLC in Illinois, there’s no statewide general business license, but some local governments require one. There are also federal, state, local, and industry-specific licenses and permits your business may need to legally operate, so you’ll need to do some research or hire a service to research them for you.
If you don’t have the time or inclination to do all this research, or if you just want the peace of mind to know that your business has all the licenses and permits it’s legally required to have, our business license report service can do the work for you.
The insurance your business will need depends on a variety of factors, such as whether you have employees or have company vehicles. Contact the Illinois Department of Insurance for more information on Limited Liability Company insurance and licenses.
Before starting the dissolution process, the members of an LLC should vote to dissolve it. For the subsequent steps please refer to our Illinois business dissolution guide.