Ready to launch your business as a limited liability company (LLC)? Illinois is a great place to do so. With its vast population, high-caliber universities, and vibrant culture, this state offers ambitious entrepreneurs a ton of opportunities.
To create an Illinois limited liability company, you’ll need to follow certain steps. And if you want to get the liability protection of an LLC while avoiding costly fines or delays, you’ll need to complete those steps carefully and correctly.
That said, the thought of trying to form a business may make you cringe harder than hearing someone pronounce your state’s name as “Illi-noise.” But don’t worry. We’re here to guide you through the entire process, step-by-step.
Along the way, we’ll even explore how our services can handle much of this process for you, and help to cut through the red tape. That way, you can focus on what you do best: running your business.
To form an LLC, you need to register your business with the Illinois Secretary of State. This involves filing formation paperwork, known as Articles of Organization. But before you can file these formation documents, you’ll need to name your business and appoint a registered agent.
After you file your Articles of Organization, you’ll also need to create an LLC operating agreement. Finally, you’ll get set up with the Internal Revenue Service (IRS) by obtaining an EIN.
Below, we’ll show you how to start an Illinois LLC with five key steps. We’ll also include lots of helpful information to help you position your new business for success.
Note that these guidelines are for a domestic LLC, which is one started in the same state in which you reside. A foreign LLC is one that originated in a different state. To register a foreign LLC in Illinois, you would need to file an Application for Admission to Transact Business and follow a different process.
The first step is to name your Illinois LLC. Your business name provides potential customers and investors with their first impression of your brand. Be sure to choose a name that conveys the image you want to project, and one that you’ll want to stick with long-term.
In addition to choosing a name that works well for your brand, you also need to follow Illinois LLC naming rules and requirements.
Under Illinois state law, an LLC name must contain one of the following designators (separate and apart from any other words or abbreviations):
Note that, unlike most states, Illinois does not allow LLC business names to include the abbreviations “Ltd.” or “Co.”
The name of your LLC also cannot have a name that makes it sound like a corporation or limited partnership. That means the words “Corporation,” “Co.,” “Corp.,” “Incorporated,” “Inc.,” “Limited Partnership,” or “LP” aren’t allowed in your business name.
Your business name must be distinguishable from any other company name on record with the Illinois Secretary of State. Use our Illinois business entity search page to check online and see if your desired business name is available. (Note: In Illinois, the name of an administratively dissolved LLC is not available for use by another business until three years have passed following the notice of dissolution issuance date.)
Your Illinois LLC name can’t contain any word or phrase that implies that it’s a government agency or organized for the purpose of:
Finally, any words that can be considered offensive are restricted from being used in an Illinois LLC name. For more naming guidelines, check with the Secretary of State’s Department of Business Services.
Found the perfect business name, but aren’t quite ready to start your LLC? You can reserve your name for up to 90 days instead. That way, no one else can take it before you’re ready to officially form.
To reserve your business name in Illinois, you’ll need to file form LLC-1.15. O
A huge part of running a successful brand today is being available online. That’s why it’s also a good idea to make sure your desired name is also available as a URL.
For example, if your first business name choice isn’t available as a domain name, but your second choice is, that could sway your decision. Need some inspiration or want to check domain name availability? Use our domain name search tool.
Note: You may also want to check for available social media handles that align with your desired business name and snag them before anyone else does.
If you want to conduct business under a different moniker than your official company name, you’ll need an Illinois assumed business name. Assumed business names also need to be registered with the Secretary of State.
An assumed business name is often used when an LLC wants to do things like sell/launch new product lines or open a store without having to form a whole new business entity.
Examples of when a DBA would be used include:
Note: Assumed business names are also known as “doing business as” (DBA) names, fictitious business names, or trade names in other states.
Even if the Secretary of State database shows that your desired LLC name is available, that doesn’t mean you’re clear to use it. Business names can be trademarked at both the state and federal level.
That’s why it’s also a good idea to check with the U.S. Patent and Trademark Office. By using the website’s search engine, you can check to see if your desired name has already been federally trademarked.
For state-level trademarks and service marks, you can check with the Illinois Secretary of State.
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All LLCs in Illinois are required to have a registered agent. A registered agent is an individual or or business entity who receives important legal notices on behalf of your business.
Your Illinois registered agent must:
A registered agent’s responsibilities include:
Legally, you can serve as your own LLC’s registered agent, but there are several reasons why this isn’t the best idea. Just two of the pitfalls include:
Many LLC owners opt to use a professional registered agent service. The benefits of registered agent services like ours include:
A professional service can go a long way toward giving you peace of mind and more freedom to focus on running your business. Use our Illinois registered agent services to keep your LLC organized and compliant with the state’s requirements.
If your registered agent office address can’t be reached, you could incur the wrath of the state. Failure to maintain a registered agent could even result in the forced dissolution of your LLC.
Not having a dependable registered agent address on file could also result in you not receiving notice that your business is being sued or has had legal action taken against it.
That’s why acting as your own registered agent or asking a friend or family member to do so can be risky.
To avoid problems with your registered agent address, many business owners opt to use professional registered agent services. When you sign up for our registered agent service, our registered agent partners will always be available to receive important legal, tax, and other notices on behalf of your LLC from the state.
Not only will using our services help you stay in compliance with the Illinois registered agent requirements, but it will also enable you to avoid the embarrassment of being served legal notices in front of others.
Finally, our registered agent services will help you keep organized. When you receive notices, we’ll inform you quickly so you can handle them as you deem appropriate (by viewing, downloading, or printing them whenever you want).
The next step is to file Articles of Organization. Your Illinois Articles of Organization (Form LLC-5.5) are the formation documents that officially register your LLC. To form your LLC, you’ll file these documents with the Illinois Secretary of State Department of Business Services, Limited Liability Division, and pay your filing fee ($150 at the time of this writing). You can file your Articles of Organization via mail, in person, or by completing the online application.
Your Articles of Organization should include the following:
Illinois requires all Articles of Organization to be submitted in duplicate, and all responses to be typed or printed in black ink.
An LLC can be formed by one or more organizers. An organizer can be an individual who is over the age of 18, or a business entity. Each individual acting as an organizer must sign the Articles of Organization. The names of each organizer must also be typed or printed in the correct section.
If a business entity acts as an organizer, the exact name of the business must be provided, as well as the typed or printed name and the signature of the individual acting on behalf of the entity.
The Secretary of State generally takes approximately 10 days to process and approve Illinois Articles of Organization. However, you can also expedite your filing to 24-hour service (excluding weekends and holidays) for an additional fee.
Another way to accelerate the process is to choose our faster filing speeds service.
You only need to file your Articles of Organization once. But if you need to make changes later (such as changing your registered agent address), you’ll need to file LLC Articles of Amendment.
If you do need to file an amendment, we have an amendment filing service that can handle it for you as well. Our Worry-Free Compliance service also includes two amendment filings per year.
According to current state legal requirements, any LLC in Illinois providing professional services licensed by the Illinois Department of Financial and Professional Regulation (IDFPR) must now be registered as a professional limited liability company or PLLC. Common professions that require a professional license include lawyers, doctors, accountants, and architects. Check with your industry’s state licensing board or agency to determine whether you need to form a PLLC.
Note: We at ZenBusiness do not handle PLLC formation at this time.
Illinois is also one of the few states that allow Series LLCs. A Series LLC is when you register a main LLC, as well as one or more off-shoot LLCs. A common example of when Series LLCs are applicable is when an entrepreneur owns multiple rental properties and wishes to separate the liability of each property.
Note: We do not offer formation of Series LLCs at this time.
Another less-common type of business entity allowed in Illinois is the low-profit limited liability company, or L3C. Similar to a nonprofit, this designation is reserved for LLCs that, according to the Secretary of State, “at all times significantly further the accomplishments of one or more charitable or educational purposes…”
You must indicate your intention to qualify as an L3C in your Articles of Organization. You can learn more about the L3C requirements on the Secretary of State’s website.
If you have us file your Articles of Organization, your paperwork will be available in the ZenBusiness dashboard once the Secretary of State approves your LLC. This dashboard enables you to conveniently store and organize all your important documents in one place.
We also offer a customized business kit to help you keep your business records organized and looking professional.
A big decision LLC owners must make is whether to be member-managed or manager-managed. Which choice is right for you is dependent on your situation and preferences.
For instance, many LLCs opt to be member-managed, which means the members (or LLC owners) manage the day-to-day activities for your business.
However, if all of your members don’t have the time or inclination to run the company on a day-to-day basis, you can also adopt a manager-managed setup. In a manager-managed LLC, you appoint one or more members or hire an outside manager to manage your LLC.
Note: If you hire an outside manager, it’s important to scrutinize your candidates carefully and make sure they will run your business honestly, efficiently, and effectively. Also, be sure to spell out exactly how much decision-making power they have in your operating agreement.
Entrepreneurs will sometimes choose to delay the filing date of their LLC. This is most commonly done if it’s already near the end of the calendar year, and the business doesn’t need to start for a few more months. Most business owners who delay their filing date do so in order to avoid having to start paying taxes until the next calendar year.
In Illinois, your LLC effective date defaults to the date the Secretary of State Department of Business Services “files” your Articles of Organization. However, you also have the option of specifying a later date of up to 60 days in the future.
This is something else we can help you with. When you form your Illinois LLC with us, we give you the option of paying an extra fee to have your LLC’s effective date delayed. (Note: This service is only available from October to January.)
The next step is to create an Illinois operating agreement. While not required by Illinois state law, an operating agreement lays out how your LLC will be run.
The benefits of an LLC operating agreement are extensive. They include:
Your operating agreement should include all pertinent details about how your business will be run, such as:
Trying to brainstorm every little thing you need to include in your operating agreement can seem overwhelming, especially if you’re starting from scratch. That’s why we offer an operating agreement template to help get you started.
Owners of single-member LLCs often wonder if they need an operating agreement, since they are the only owner.
The simple answer is that operating agreements are still helpful. For starters, potential investors, future business partners, and others may want to see your operating agreement.
Furthermore, having an operating agreement could help you out if someone takes you to court to claim that you and your LLC are actually the same entity (and thus go after your personal assets). That’s because, without operating agreements, single-member LLCs tend to look more like sole proprietorships in the eyes of the court. But by creating an operating agreement, you show the court that you’ve taken the time to draw up official internal documents for your business. This helps to further separate your business entity from you as an individual.
Finally, you need to obtain an Employer Identification Number (EIN). This is also known as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN). Much like a Social Security Number (SSN) does for individuals or sole proprietors, your EIN identifies your business to the Internal Revenue Service (IRS). Small business owners need this number to do things like pay business taxes, open a business bank account, or hire employees.
One of the major benefits of forming an LLC is the separation of your personal assets and business assets. In order to get the most out of this benefit, it’s important that you avoid commingling funds. That’s why you’ll want to open a business bank account for managing the finances of your LLC in Illinois.
To further separate your business and personal expenses, you may even want to take out a business credit card for your LLC.
To further help you start off on the right foot, we even offer a discounted bank account for your new business. This account allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others to use the account, we also offer a banking resolution template to simplify the process.
And for even more help managing your finances, check out ZenBusiness Money. It can help you create invoices, track tax-deductible expenses, receive payments, and transfer money all from the same place.
If you run an LLC in Illinois, you’ll also need to file an annual report each year you’re in business. Annual reports are required by the Secretary of State. This filing will include much of the same information that’s in your Articles of Organization, and will let the Secretary of State know that your LLC still exists and whether anything has changed.
Luckily, this is one more thing we can handle for you with our Illinois Annual Report Filing Service.
One of the biggest benefits to forming an LLC is the business structure’s flexibility. From management structure to day-to-day operations, LLCs have a lot of leeway in how they are run.
This flexibility is also apparent in how the business structure is taxed. By default, LLCs are usually taxed as either a sole proprietorship (for single-member LLCs) or a general partnership (for multi-member LLCs). However, LLC owners can also opt to be taxed as a C corp or S corp.
Being taxed as a C corp means you’re subject to double taxation. That said, this option can still save certain LLC owners money by qualifying them for a wide range of tax deductions. For example, insurance premiums can be written off as a tax deduction when filing as a C corp.
On the other hand, filing as an S corp (which is short for “Subchapter S Corporation”) offers both pass-through taxation and the potential to save money on self-employment taxes. It does this by allowing you to be an “employee-owner” and split your income into your salary and your share of the company’s profits. Then, you’ll pay self-employment taxes on your salary, but not your profits. (You’ll still have to meet the rest of your tax obligations for your profits, of course.)
That said, The IRS scrutinizes S corps closely and qualifying to file as one is more difficult because of the additional restrictions. You’re also more likely to get audited as an S corp.
While it’s possible that one of these scenarios will work for you, it’s no secret that taxes are complicated. You should consult with a tax professional before making any decisions for your business.
We can help
From Chicago to Springfield, the start of Route 66 to the S. Second St., Illinois is a splendid state that offers tons of opportunity to budding entrepreneurs. Ready to turn your dream into a reality? We offer fast, accurate online formation for your LLC in Illinois.
Plus, there’s no need to dread the formation process. We’re here to reduce your stress by taking care of formation, compliance, and more. Plus, our services provide long-term support to help you start, run, and grow your business.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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Illinois LLC FAQs
The state fees for forming an LLC in Illinois start at $150 (as of this writing) to file your Articles of Organization. You may also pay other fees depending on factors such as your method of filing and whether you choose to have your filing expedited.
Keep in mind that fees change over time, so you should check the Illinois Secretary of State website for the most recent fee schedule. You also 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 (unless filing as a corporation), but there are a few more things to know about your Illinois business taxes. Managing your LLC’s taxes can seem overwhelming, but partnering with an experienced accountant 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 your business engages in activities subject to Arizona’s TPT, you’ll need to get a license from the Arizona Department of Revenue.
In addition to the above taxes, you might need to pay taxes based on your city — however, the Department of Revenue will collect city tax on the city’s behalf.
To better understand your state tax burden, visit the Arizona Dept. of Revenue website.
An operating agreement is not required by Illinois law to operate an LLC. However, your operating agreement is an important document that can save you from conflicts in the future. Keep your operating agreement with your LLC’s other important legal documents.
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 certain 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 general 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.
Most LLCs are “member-managed,” meaning that the members (owners) 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 the Illinois Secretary of State’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 business 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 LLC business insurance and licenses.
First of all, you’ll need to follow the rules established in your operating agreement for dissolving your business. When you’re ready to dissolve your Illinois LLC, you’ll also need to submit a Statement of Termination form in duplicate to the Secretary of State. For the subsequent steps, please refer to our Illinois business dissolution guide.
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