How to Start an LLC in Illinois | 2024 Guide

Start a LLC in Illinois

How to Start an LLC in Illinois: If you’re looking to launch a business in Illinois, starting a Limited Liability Company (LLC) may be the right choice for you. An LLC provides personal liability protection for its owners while giving them flexibility in managing and taxing the business. This guide provides a step-by-step process for starting an LLC in Illinois. From choosing a unique name to registering with the state and obtaining necessary licenses and permits, Webinarcare Editorial Team will walk you through setting up your new business entity. So grab a pen and paper, and let’s get started!

What is a Limited Liability Company?

A Limited Liability Company (LLC) is a type of business entity that combines a corporation’s limited liability protection with a partnership’s tax benefits. LLCs are popular among small business owners for their flexibility and ease of formation. In Illinois, an LLC must have a unique name and file Articles of Organization with the Secretary of State. Depending on their business needs, LLCs may also elect to be taxed as a corporation or an S-corp. Owners of an LLC, called members, are not personally liable for the company’s debts and losses, and the company’s profits and losses are passed through to the member’s personal tax returns. This makes an LLC an attractive option for those seeking personal liability protection and simplified taxation.

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Steps on How to Start an LLC in Illinois

To form an LLC for your business, you must follow the guidelines that include naming your LLC, hiring a Registered Agent, filing your Articles of Organization, creating your LLC operating agreement, getting an employer identification number, opening a bank account and getting business licenses and permits.

Step 1: Name your LLC in Illinois

After you have decided on the idea to form an LLC in Illinois, deciding the name for your LLC is significant. There is a complete guide on LLC name guidelines for you to have a proper LLC business name. Here are some regulations you must follow while naming your LLC,

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In Illinois, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 90 days. You must file a name reservation application in Illinois Secretary of State to keep the name.

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You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for filing Illinois DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in three methods, online, by mail, and in person filing. However, before filing a DBA, you should know that you need to renew your DBA from up to Indefinite, which costs around $50.

Step 2: Hire a Registered Agent in Illinois

Hiring a Registered Agent in Illinois is a must since a Registered Agent is a person or business entity responsible for receiving important legal documents on behalf of your Illinois LLC. Most states require you to designate a Registered Agent when forming your LLC.

The qualifications of a Registered Agent vary depending on the jurisdiction. Still, generally, a Registered Agent must meet the following criteria:

  • Availability: A Registered Agent must be available during regular business hours to receive and process legal documents and official correspondence.
  • Physical Address: A Registered Agent must have a physical street address within the state where the LLC is registered. This address, known as the registered office, cannot be a P.O. Box.
  • Residency or Authorization: For individuals serving as Registered Agent, they must be residents of the Illinois where the LLC was formed. A business entity acting as a Registered Agent must be authorized to do business within that state.
  • Age: A Registered Agent must be at least 18 years old.
  • Good standing: A Registered Agent should not have any legal or financial issues that impede their ability to fulfill their duties.

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. Some businesses use professional Registered Agent services to ensure compliance and proper handling of legal matters.

However, if you would like to have an easier process in filing the necessary documents, you can get Illinois Registered Agent Services.

Step 3: File your Articles of Organization in Illinois

The Articles of Organization for an LLC is an important document to start your limited liability company (LLC). Illinois Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization.

Here are the guidelines and specific requirements in filing your Articles of Organization in Illinois.

1. Obtain the Necessary Forms: Visit the Illinois’s business filing office website, usually the Illinois Secretary of State’s office, to download the required forms or file online.

2. Provide the Required Information: Fill in the necessary details in the form, which typically include:

  • The name of your LLC (must include an LLC designator such as “LLC,” “L.L.C.,” or “Limited Liability Company”)
  • The purpose of your LLC (a general statement or specific business activities)
  • The address of your LLC’s principal place of business
  • The name and address of your registered agent (the person or business entity responsible for receiving legal documents on behalf of your LLC)
  • The management structure of your LLC (member-managed or manager-managed)
  • The duration of your LLC, if not perpetual
  • The names and addresses of the LLC’s organizers or members

3. Sign and File the Form: Submit the completed form in the {state} state office, either by mail, in person, or online. You may mail it at Department of Business Services, Limited Liability Division, 501 S. Second St., Rm. 351, Springfield, IL 62746.

4. Pay the Filing Fee: When you submit your Articles of Organization, you’ll need to pay a filing fee of $150. Make sure to check and include the correct payment with your submission.

5. Receive Confirmation: After your Articles of Organization have been filed and processed, you’ll receive a confirmation from Illinois, typically a stamped and approved copy of the document or a Articles of Organization.

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Once you have successfully filed your Articles of Organization and it has been approved, your Illinois LLC is officially formed. However, remember to complete additional steps, such as creating an Operating Agreement, obtaining an EIN, and registering for any required licenses and permits.

Step 4: Create Your Illinois Operating Agreement

An operating agreement is a document that contains all of your company’s organizational details. Drafting an operating agreement in most states is not required. Yet, having one as an internal document is strongly advised. An operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

To understand how an operating agreement works, you should check out how to create an operating agreement in Illinois.

Recommended: Get oprating agreement drafts ready on your table with a help of a professional service. We recommend using –

LegalZoom($0 + State Fee for LLC formation)

Step 5: Get an EIN

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN) in Illinois. An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Illinois 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 the 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.

In obtaining an EIN for your LLC, you should be aware to ensure that your LLC is eligible for an EIN. You need an EIN if you have employees, operate as a corporation or partnership, or meet other specific IRS criteria. Before applying, gather the required information, including your LLC’s name, mailing address, and the responsible party’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Also, you can apply for an EIN through various methods, including online, by fax, mail, or telephone (for international applicants).

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

LegalZoom($0 + State Fee for LLC formation)

Step 6: Open a Bank Account and Prepare for Taxes

After you have filed for and received your Employer Identification Number, you should open a bank account because you will use this account for yourself, your clients, and your employees.

Your business dealings in Illinois might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN to create a business bank account for firms other than sole proprietorships. Also, having an EIN makes tax preparation easier. You can anticipate paying employment and corporate taxes with Illinois LLC.

Opening a bank account is necessary for Illinois business. If you are still wondering where to open an account in your Illinois, you should check the Best Bank for Small Business in Illinois.

Step 7: Get a Business and License Permit

You must get a business license in Illinois before establishing your LLC. A business license is a legal document granted by a state government body that permits you to conduct business within the area under its jurisdiction. The price of business licenses and permits in Illinois ranges from $50 – $300. If there is a requirement for a specific license or city-based permit, you must inquire with the Illinois Secretary of State.

Cost to Form an LLC in Illinois

Even if you have a business name and structure in mind, you should consider whether you can afford the costs of forming an LLC in Illinois. Articles of Organization costs around $150. The initial filing fee is $15, and the annual fee is $75.

If you forget to pay the annual fee for your Illinois LLC, you will have a penalty of $100. However, you can check the Illinois LLC Cost for additional information.

Advantages of Creating Illinois LLC

Even though some people decide on what to do with their businesses, some choose to put it in their own individual name, while others still choose to set it up via LLC in Illinois. Important benefits will help you set up an LLC in Illinois.

  • Pass-Through Taxation: The pass-through structure will make the company not pay twice the tax. Most start-ups and entrepreneurs in Illinois apply for an LLC because of this structure. Pass-through taxation refers to how income and losses from an LLC (Limited Liability Company) are passed through to its members (owners) for tax purposes rather than being taxed at the business entity level. This means the LLC does not pay federal income taxes; the members’ profits and losses are allocated based on their interests. Each member then reports their share of the LLC’s income or losses on their personal tax returns and pays taxes at their individual tax rates.
  • Ownership Flexibility: If you need sole and primary control over your company’s operations, a sole proprietorship will allow you to do so. If you apply for an LLC in Illinois with flexibility, you will have default rules set by law and need an operating agreement.
  • Personal Liability Protection: Personal Liability Protection protects your business from damage, debts, or legal obligations. In personal liability protection, the company’s profits and earnings will stay as is even if your company is about to be sued. This protection of having an LLC in Illinois can also be extended to the company’s properties and assets. Many start-up companies will benefit from this since most are starting to build a company. Even if liability exists, the LLC in Illinois will protect its assets.

FAQs

What does LLC stand for?
LLC stands for “Limited Liability Company”.
What is the process for starting an LLC in Illinois?
To start an LLC in Illinois, you must file Articles of Organization with the Illinois Secretary of State.
What are the fees associated with starting an LLC in Illinois?
The fee for filing Articles of Organization with the Illinois Secretary of State is $150.
Can I file Articles of Organization online in Illinois?
Yes, you can file Articles of Organization online through the Illinois Secretary of State’s website.
Is there a processing time for filing Articles of Organization in Illinois?
Yes, the processing time for filing Articles of Organization in Illinois is usually around 10 business days.
Do I need a registered agent for my Illinois LLC?
Yes, every Illinois LLC is required to have a registered agent in the state.
Can I be my own registered agent for my Illinois LLC?
Yes, you can be your own registered agent for your Illinois LLC, but many choose to hire a third-party.
What is a registered agent?
A registered agent is the person or company that receives legal and other important documents on behalf of an LLC.
What are the benefits of forming an LLC in Illinois?
Some benefits of forming an LLC in Illinois include personal liability protection, tax benefits, and ease of management.
How many people are required to form an LLC in Illinois?
Only one person is required to form an LLC in Illinois.
Can non-residents form an LLC in Illinois?
Yes, non-residents can form an LLC in Illinois.
Are there any age requirements for forming an LLC in Illinois?
No, there are no age requirements for forming an LLC in Illinois.
What is an Operating Agreement?
An Operating Agreement is a legal document that outlines the rules and regulations for the operation of an LLC.
Is an Operating Agreement required for an LLC in Illinois?
No, an Operating Agreement is not required for an LLC in Illinois, but it is highly recommended.
Can an LLC change its name in Illinois?
Yes, an LLC can change its name in Illinois by filing a Certificate of Amendment with the Secretary of State.
Can an LLC be owned by a corporation in Illinois?
Yes, an LLC can be owned by a corporation in Illinois.
How is an Illinois LLC taxed?
An Illinois LLC can be taxed as either a partnership or a corporation.
Do I need a business license to operate an LLC in Illinois?
It depends on the type of business you plan to operate. Some businesses require additional licenses and permits.
Do I need to file an annual report for my Illinois LLC?
Yes, every Illinois LLC is required to file an annual report with the Secretary of State.
What is the fee for filing an annual report for an Illinois LLC?
The fee for filing an annual report for an Illinois LLC is $75.
What is a Certificate of Good Standing?
A Certificate of Good Standing is a legal document that verifies that an LLC is authorized to do business in a state.
How do I obtain a Certificate of Good Standing for my Illinois LLC?
You can obtain a Certificate of Good Standing for your Illinois LLC by filing a request with the Secretary of State.
Can I dissolve my LLC in Illinois?
Yes, you can dissolve your LLC in Illinois by following the proper procedures and filing the necessary paperwork with the Secretary of State.
What is the fee for dissolving an LLC in Illinois?
The fee for dissolving an LLC in Illinois is $5.
How long does it take to dissolve an LLC in Illinois?
It can take several weeks to complete the process of dissolving an LLC in Illinois.
What is the Illinois Uniform Limited Liability Company Act?
The Illinois Uniform Limited Liability Company Act is the set of laws that govern the formation and operation of LLCs in Illinois.
Can I convert my Illinois LLC into a corporation?
Yes, you can convert your Illinois LLC into a corporation by following the proper procedures.
What is the fee for converting an LLC into a corporation in Illinois?
The fee for converting an LLC into a corporation in Illinois is $150.
Can I amend the Articles of Organization for my Illinois LLC?
Yes, you can amend the Articles of Organization for your Illinois LLC by filing a Certificate of Amendment with the Secretary of State.
What is the fee for amending the Articles of Organization for my Illinois LLC?
The fee for amending the Articles of Organization for an Illinois LLC is $50.

Also Read

How Fast Can I Form an LLC in Illinois

If you’ve decided that forming an LLC in Illinois is the right choice for your business, you’re probably wondering how fast you can get the process completed. While the exact timeline can vary depending on a variety of factors, including how busy the Illinois Secretary of State’s office is at any given time, there are some general guidelines you can follow.

First and foremost, it’s important to make sure you have all the necessary information and documents ready before you begin the process. This includes things like your business name, your registered agent’s name and address, and any additional information required by the state of Illinois. The more prepared you are, the smoother and faster the process is likely to be.

The actual timeline for forming an LLC in Illinois can vary depending on whether you choose to file your documents online, by mail, or in person. Filing online is generally the quickest option, with many applications processed within a matter of days. If you choose to file by mail, it could take a few weeks for your documents to be reviewed and approved. In-person filings can often be processed on the spot, assuming you have all the necessary paperwork in order.

Another factor that can impact the speed at which you can form an LLC in Illinois is whether you opt for expedited processing. For an additional fee, many states offer expedited service that can significantly reduce the turnaround time for your application. If time is of the essence for your business, this may be a worthwhile investment.

When forming an LLC in Illinois, it’s also worth noting that there are ongoing compliance requirements that must be met in order to maintain your business entity. These requirements can include things like filing annual reports, paying annual fees, and keeping your business information up to date with the state. By staying on top of these obligations, you can ensure that your LLC remains in good standing and continues to provide you with the liability protection and tax benefits that come with this business structure.

In conclusion, forming an LLC in Illinois can be a relatively quick and straightforward process if you have all the necessary information and documents prepared. By taking the time to understand the steps involved and any potential roadblocks you may encounter, you can ensure that your business entity is set up efficiently and effectively. Through careful planning and attention to detail, you can get your LLC up and running in no time.

Conclusion

In conclusion, starting an LLC in Illinois is a strategic choice for entrepreneurs seeking a flexible, straightforward business structure with limited liability protection. By following the essential steps, including choosing a business name, filing Articles of Organization, appointing a Registered Agent, creating an Operating Agreement, obtaining an EIN, and securing the necessary licenses and permits, you can successfully establish your LLC. This business structure offers numerous advantages, such as pass-through taxation and ownership flexibility, making it an attractive option for small business owners looking to grow and protect their ventures. As always, consult legal and business professionals for guidance specific to your situation and state requirements.

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