Start your business
Congratulations on deciding to start a new business in Illinois! While you’re likely eager to jump in, you’re probably not excited about working through the legal side of launching your new limited liability company (LLC). If this is your first business venture, the setup process can seem complicated at first glance.
Luckily, forming an LLC is actually straightforward and relatively inexpensive — you just have to know the right steps in the right order.
Every state has different requirements, so understanding what’s expected of your Illinois LLC is key. Once you know the guidelines, you can launch your LLC quickly and painlessly.
In this guide, we’ll walk you through each step of the LLC setup process, providing advice along the way. We’ll direct you to the online state resources and forms you’ll need to set up your LLC and maintain compliance. We’ll also explain how the right LLC partner can handle some of this tedious paperwork on your behalf, so you can get back to what’s really important — growing your business.
1Name Your Illinois LLC
2
Appoint a Registered Agent in Illinois
Your LLC’s name is extremely important, both for marketing purposes and legitimizing your company through the state of Illinois. You’ll also need to have this name chosen before you can form your LLC.
From a marketing standpoint, 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 name that does not already exist, and you’ll need to follow a few guidelines for LLC companies.
Here are some quick tips for choosing a name for your LLC in Illinois:
Note that the abbreviation “Co” in your submitted entity name can be interpreted by the state as a corporate designator, causing your name to be rejected in Illinois.
Once you have your official name ready to go, you have the option of reserving it for 90 days through the Secretary of State’s website. To do this, you’ll fill out the Illinois LLC-1.15 form (Application to Reserve a Name) and mail the completed document to:
Secretary of State
Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62756
This will cost $25 to fill out and can be expedited for an additional $50. For expedited service, the state requires business owners to deliver their form in person to the department’s Springfield or Chicago office.
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 ZenBusiness — we can work with your company to register your new web domain.
Finally, you should 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 here 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. The fee is $10. You will need to mail your registration to:
Secretary of State
Department of Business Services
Trademark Division
501 S. Second St., Rm. 330
Springfield, IL 62756
If you believe you’ll sell goods or services under a name different from your official name, you’ll also want to obtain a DBA (“doing business as”) name or “assumed name.” This can be done online or by 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.
The next step in the process is deciding who will act as your LLC’s registered agent. Illinois requires LLCs to designate a registered agent who will act on their behalf to receive legal business documents from the Secretary of State. 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 a person 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 potential 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. Also, if you act as your own registered agent, some of your private information will be made public.
For these reasons, many LLCs decide to hire an outside registered agent service like ZenBusiness, which 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 registered agent must be available to receive paperwork between these time frames.
The state of Illinois does not require LLCs to file an Operating Agreement to register. However, it’s a smart idea to have an Operating Agreement, whether you’re the sole member of your LLC, have employees, or work alongside other owners.
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 partnerships, but can also protect sole proprietors if they become injured or incapacitated. If you do not have an Operating Agreement, your LLC will be subject to the state’s default rules for managing LLCs, which may not reflect your company’s best interests.
Here are some additional reasons why you should consider drafting an Operating Agreement:
All members of the LLC should review, agree to, and sign the Operating Agreement.
The good news is that with the right partner, you can create an 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 ZenBusiness to receive a professional Operating Agreement template for just $35.
The good news is that with the right partner, you can create an Operating Agreement quickly and affordably. This step is important not to skip since it can protect yourself and the other owners down the line. Do you need some help? You can partner with ZenBusiness to receive a professional Operating Agreement template for just $35.
Now that your business is fully registered and you’ve created an Operating Agreement, it’s time to get set up with the IRS. To do this, you’ll need to request an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
You can think of your EIN as your company’s Social Security number. It allows you to handle your taxes, work with outside contractors, and hire and pay employees.
LLCs that only have a sole member with no employees may not need to apply for an EIN, although it can be helpful, as it can allow 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 immediately via the IRS website. The process is simple, fast, and free.
Understanding how much it will cost to register and set up your business is important before forming your LLC. We’ll walk you through the main costs below, so you have an accurate idea of how much you’ll need to spend upfront.
Summary of costs:
Therefore, the total cost of state fees for forming your LLC runs from $150 (standard process) to $300 (expedited process).
Keep in mind that these fees don’t take into account the recurring cost of filing your annual report, which costs $75, or your time spent filing the registration paperwork or creating an Operating Agreement. The good news is that you don’t have to do this alone. ZenBusiness can walk you through these steps at an affordable price.
The business formation services provided by ZenBusiness start at just $49 per year. For this price, we’ll provide registered agent services, work with you to complete and submit business filing paperwork, and supply you with a customizable Operating Agreement template for your LLC. We can also provide more comprehensive business services that help you apply for an EIN and help your company meet all state regulations.
Let us take care of the unpleasant paperwork, allowing you to stay focused on your business’s future. With our business formation services, you won’t have to worry about mailing in documents: We’ll handle each step with the state, and let you know when your LLC becomes official. Our work is quick and affordable, saving you a lot of headaches at an extremely low 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, making it easy for even first-time business owners to navigate through the process.
Let’s take a look at some of the main benefits you’ll enjoy by establishing your company as an LLC in Illinois:
Want more information on the LLC business structure? Check out our comprehensive guide on 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:
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. This account will be used to conduct business and manage your employees’ payroll.
You should do a quick search for local banks or credit unions who 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 (you can learn more about how to request this here), 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.
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.
Many LLCs forget to estimate the costs of creating a website for their new company so that clients can find them online. You’ll need to consider domain registration, hosting, and the setup of a business email and website maintenance. Not tech-savvy? Don’t worry — ZenBusiness can offer these services and more as part of our full-suite premium package, starting at just $299 per year.
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.
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 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. You can find out more about filing as a corporation in this guide.
If you aren’t sure which tax filing structure works best for your LLC, reach out to a qualified accountant or tax specialist for help.
LLCs are owned by the members of a 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 this form here. There is a $400 filing fee associated with this form. You can find more details on creating a Series LLC in Illinois’s Guide for Organizing Domestic Limited Liability Companies.
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. You can find a list of state permit and license requirements by industry available on the Illinois government page.
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.
A DBA or assumed name form is something your Illinois LLC should fill out if you’re operating or selling your services under a name that’s different from your registered LLC name. DBA stands for “doing business as” and refers to any company that sells under a different name from its official name.
An example might be if your company “Innovative Designs, LLC” decides to start selling under the abbreviated name “INNdesigns.” Even though this name is your official name abbreviated, you still need to register this new name to remain compliant with Illinois LLC guidelines.
In Illinois, you’re required to fill out a form to Adopt an Assumed Name.
The cost of your filing will depend on the year you’re filing. We’ve included the payment structure below.
Cost
Your assumed name registry is good for five years. After this period, you can renew your assumed name for $150.
A domestic LLC in Illinois is an LLC that was formed and conducts business in the state. Most small business LLCs are domestic LLCs.
A foreign LLC is one that was formed outside of Illinois and conducts business in Illinois. It’s recommended that you register your LLC in the state where you intend to conduct business.
To dissolve an LLC in Illinois, you’ll need to file a Statement of Termination. However, before this, you’ll need to close any tax accounts and pay off any taxes or fines owed.
The cost to file the Statement of Termination is $5.
We hope this guide helped you better understand the steps required to set up an LLC in Illinois.
While this process can be managed by your LLC, ZenBusiness is happy to help take care of the setup process for you. Feel free to contact us today to find out more about how we can help you set up your business for success.
Additional tax and regulatory requirements may apply to you
Additional tax and regulatory requirements may apply to you
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