How to Start a Limited Liability Partnership in Illinois | 2023 Guide

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Start a Limited Liability Partnership in Illinois

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in Illinois. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in Illinois, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Illinois LLP, all the steps in this article must guide you.

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in Illinois, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and Illinois General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

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Steps in Starting a Limited Liability Partnership in Illinois

To form a limited liability partnership in Illinois, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Registered Agent, filing for Articles of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in Illinois, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the Illinois business registry. Ensure that your chosen name follows Illinois naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with Illinois Secretary of State if desired.

Here are some guidelines you must follow while naming your LLP in Illinois- 

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the Illinois Secretary of State business name database and Illinois Business Name Search. If the name is available, you may choose to reserve it for a specific period of 90 days by filing a name reservation application and paying the online name reservation fee of Not available and mail name reservation fee of $300. If your LLP plans to operate under a name other than its legal name, you may also need to register a fictitious or “Doing Business As” (DBA) name. 

The DBA filing can be done by three methods, online, by mail, and in person filing, which costs around $50. In addition, the DBA’s validity in Illinois is Indefinite, which you can file in the Illinois Secretary of State.

You can check out how to file a DBA in Illinois for clearer understanding.

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Step 3: Designate a Registered Agent

In Illinois, you’ll need to designate a Registered Agent for your LLP. The Registered Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or Illinois Registered Agent Services to serve as your LLP’s Registered Agent, ensuring that they meet Illinois requirements.

However, If you plan to become a Registered Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the Illinois Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the Illinois Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with Illinois laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Illinois. The default laws in Illinois might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain Illinois Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain Illinois Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Illinois.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your Illinois LLP. Additionally, obtain the necessary Illinois Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in Illinois to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the Illinois Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, Illinois, and local levels.

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Advantages of Forming a Limited Liability Partnership in Illinois

While the specific advantages of forming an LLP in Illinois can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in Illinois:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in Illinois.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in Illinois may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in Illinois.

Cost of Forming an LLP in Illinois

The cost of forming an LLP in Illinois may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as Illinois Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in Illinois instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

What is a limited liability partnership?
A limited liability partnership is a type of business entity where the partners are only liable to the extent of their contributions to the partnership.
What are the benefits of forming a limited liability partnership in Illinois?
Some benefits of forming an LLP in Illinois include limited liability protection, pass-through taxation, and flexibility in management.
How do I file for an LLP in Illinois?
You can file for an LLP in Illinois by submitting registration forms to the Secretary of State.
What is the difference between an LLP and an LLLP in Illinois?
An LLLP is a limited liability limited partnership, which offers further liability protection than an LLP.
What is the fee for registering an LLP in Illinois?
The fee for registering an LLP in Illinois currently stands at $750.
How many partners are required to form an LLP in Illinois?
At least two partners are required to form an LLP in Illinois.
What paperwork is required when creating an LLP in Illinois?
Required paperwork when creating an LLP in Illinois includes a Certificate of Formation and an Operating Agreement.
Do Illinois LLPs need a registered agent?
Yes, Illinois LLPs are required to have a registered agent within the state.
Can foreign entities form an LLP in Illinois?
Yes, foreign entities can form an LLP in Illinois as long as they comply with the relevant laws and regulations.
Are LLP partners required to have equal shares of ownership in Illinois?
No, LLP partners are not required to have equal shares of ownership in Illinois.
Are LLP partners in Illinois considered employees or self-employed?
LLP partners in Illinois are typically considered self-employed for tax purposes.
Can LLCs convert to LLPs in Illinois?
Yes, LLCs can convert to LLPs in Illinois through a filing process with the Secretary of State.
Are there any industry-specific regulations for LLPs in Illinois?
Yes, there are industry-specific regulations for LLPs working in fields such as law and accounting in Illinois.
Can LLPs raise capital through the sale of equity in Illinois?
LLPs in Illinois are not permitted to issue equity to investors in exchange for capital investments.
When is my LLP required to file annual reports in Illinois?
Illinois LLPs are required to file annual reports on the first day of their anniversary month each year.
Can my LLP have one partner and still maintain limited liability protection in Illinois?
No, LLPs in Illinois require a minimum of two partners to maintain limited liability protection.
Is there a residency requirement for LLP partners in Illinois?
No, there is no residency requirement for LLP partners in Illinois.
How long does it take to form an LLP in Illinois?
It typically takes between one and two weeks to form an LLP in Illinois.
Do I need to obtain any licenses or permits when forming an LLP in Illinois?
The permits and licenses required to form an LLP in Illinois will depend on the business activities of the LLP.
Can an LLP be taxed as a corporation in Illinois?
Yes, LLPs can elect to be taxed as corporations under certain circumstances in Illinois.
Can I form a single-member LLP in Illinois?
No, single-member LLPs are not permitted under Illinois law.
Will my LLP name be protected once I form it in Illinois?
Yes, Illinois offers name protection for registered LLPs to prevent other companies from using the same name.
Are D/B/A names allowed for LLPs in Illinois?
Yes, Doing Business As (D/B/A) names are allowed for LLPs in Illinois.
Can I change the name of my LLP in Illinois?
Yes, it is possible to change the name of your LLP in Illinois by filing a name change amendment with the Secretary of State.
Can I dissolve my LLP in Illinois?
Yes, LLPs can be voluntarily dissolved by filing dissolution paperwork with the Secretary of State.
Who is required to sign on behalf of an LLP when filing in Illinois?
An authorized partner is typically required to sign on behalf of an LLP when filing registration paperwork in Illinois.
Can an LLP in Illinois be converted to an LLC?
Yes, LLPs can be converted to LLCs through a filing process with the Secretary of State.
What happens if my LLP is sued in Illinois?
If your LLP is sued in Illinois, the partners are typically only liable to the extent of their contributions to the partnership.
Can I convert my LLP into a corporation in Illinois?
Yes, there are processes in place for converting Illinois LLPs into corporations.
What is a limited liability partnership in Illinois?
A limited liability partnership in Illinois is a legal business entity where partners are not personally liable for the debts of the partnership.
How many partners are required to form a limited liability partnership in Illinois?
At least two partners are required to form a limited liability partnership in Illinois.
Can individuals form a limited liability partnership in Illinois?
No, individuals cannot form a limited liability partnership in Illinois. Only businesses with two or more owners can form a limited liability partnership.
How do I register a limited liability partnership in Illinois?
You must file the proper paperwork with the Illinois Secretary of State’s office to register a limited liability partnership in Illinois.
What is the process for registering a limited liability partnership in Illinois?
The process for registering a limited liability partnership in Illinois involves filing a registration form and paying a registration fee with the Illinois Secretary of State’s office.
What documents are required to form a limited liability partnership in Illinois?
To form a limited liability partnership in Illinois, you will need to file a certificate of limited liability partnership with the Illinois Secretary of State that includes certain mandatory information.
What obligations do partners have in a limited liability partnership in Illinois?
Partners in a limited liability partnership in Illinois have a duty to act in the best interest of the partnership as a whole.
What is the taxable status of a limited liability partnership in Illinois?
A limited liability partnership in Illinois is tax classified as a passthrough entity, which means that its income is passed through to its partners to be taxed at the individual level.
What is the liability of partners in a limited liability partnership in Illinois?
The liability of partners in a limited liability partnership in Illinois is limited to the amount of their investment in the partnership.
Are there any restrictions on the types of businesses that can form a limited liability partnership in Illinois?
No, any type of business can form a limited liability partnership in Illinois.
What is the minimum investment required to form a limited liability partnership in Illinois?
There is no minimum investment required to form a limited liability partnership in Illinois.
Can I form a limited liability partnership in Illinois with an out-of-state partner?
Yes, you can form a limited liability partnership in Illinois with an out-of-state partner.
What are the advantages of forming a limited liability partnership in Illinois?
One advantage of forming a limited liability partnership in Illinois is that partners are protected from the debts of the partnership.
Are there any disadvantages to forming a limited liability partnership in Illinois?
One disadvantage of forming a limited liability partnership in Illinois is that the partners may be subject to self-employment taxes.
How can I dissolve a limited liability partnership in Illinois?
You can dissolve a limited liability partnership in Illinois by filing a statement of dissolution with the Illinois Secretary of State’s office.
How long does it take to form a limited liability partnership in Illinois?
The time it takes to form a limited liability partnership in Illinois varies, but it usually takes a few weeks.
Can a limited liability partnership in Illinois be converted to a different type of business entity?
Yes, a limited liability partnership in Illinois can be converted to a different type of business entity.
What is the difference between a general partnership and a limited liability partnership in Illinois?
In a general partnership, partners are personally liable for the debts of the partnership, but in a limited liability partnership in Illinois the liability of partners is limited to the amount of their investment in the partnership.
How can I change the name of my limited liability partnership in Illinois?
To change the name of your limited liability partnership in Illinois, you will need to file a name change form with the Illinois Secretary of State’s office.
What is the cost of registering a limited liability partnership in Illinois?
The cost of registering a limited liability partnership in Illinois is $750.
When is my annual report due for my limited liability partnership in Illinois?
The annual report for a limited liability partnership in Illinois is due every year on the first day of the month in which the partnership was formed.
What if I fail to file my annual report for my limited liability partnership in Illinois?
If you fail to file your annual report for your limited liability partnership in Illinois, the state will place your partnership on delinquent status and may eventually revoke your partnership status.
Can I form a limited liability partnership in Illinois if I have previously been barred from forming a partnership?
No, if you have previously been barred from forming a partnership in Illinois, you cannot form a limited liability partnership there.
What happens if a partner in my limited liability partnership in Illinois dies or leaves the partnership?
If a partner in your limited liability partnership in Illinois dies or leaves the partnership, the partnership must file a statement of dissociation with the Illinois Secretary of State’s office and notify any creditors of the change.
Who regulates limited liability partnerships in Illinois?
The Illinois Secretary of State’s office regulates limited liability partnerships in Illinois.
Can a limited liability partnership in Illinois be sued?
Yes, a limited liability partnership in Illinois can be sued, but the personal assets of the partners are usually not at risk.
Can I be personally sued as a partner in a limited liability partnership in Illinois?
Yes, in certain situations a partner in a limited liability partnership in Illinois can be personally sued.
Do I need a registered agent for my limited liability partnership in Illinois?
Yes, your limited liability partnership in Illinois needs a registered agent in the state of Illinois.
What does a registered agent do for my limited liability partnership in Illinois?
A registered agent for your limited liability partnership in Illinois receives legal documents on behalf of the partnership.

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Conclusion

Starting an LLP in Illinois may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in Illinois.

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