Starting Your Business in Illinois | A Step-by-Step Guide

There are numerous factors to consider if you want to start an LLC in Illinois. Doing business in Illinois, also known as The Prairie State, will provide you with numerous opportunities due to the current estimated population of 12,807,072. Given the large number of customers, you must cater to many.

Starting your own business is one of the most exciting and profitable things you can do in Illinois. But where do you start? There are numerous business establishment strategies, each with important factors to consider. Follow our comprehensive guide on How to Start a Business in Illinois. We will assist you in removing doubt from the process and investigate your success chances. It will begin with defining your business idea and progress to establishing, launching, and expanding your business. Webinarcare Editorial Team will help you every step of the way.

Steps in Starting a Business in Illinois?

To form a business in Illinois, you must follow a few steps that include creating a business plan, choosing business entity type, determining your Illinois business costs, naming your business, registering a business, and lastly, marketing your Illinois business.

Please continue reading to learn more about the overall procedure and what new small business owners should keep in mind as they complete each step.

Step 1: Creating a Business Plan

When developing a business plan, many factors should be considered during the decision-making process. Your business plan in Illinois serves as a road map for your company’s success.

A business plan should take into account the specific goals of your company. You should know the product or service you will provide in Illinois. A well-thought-out business plan is essential for determining how your company will make a profit. If the purpose of the business plan is ambiguous and unrelated to the service you provide, it will impact the business you are forming. Make sure your business goals are SMART (specific, measurable, achievable, realistic, and time-bound). Also, researching your competitors’ services will help you determine your strategy for your state business. Finally, you should consider your company’s funding.

When starting a business, you should write a business plan. You are left with nothing but a blank slate without it. With this article’s assistance, you can better comprehend your business’s essential components and success strategy. You can apply for Illinois Small Business Loans from banks and investor funding to help support your company in the state.

Once you have the entire plan in your hands, you can work on the legal framework of your company. Legally, you can form an LLC for your ideal business.

Step 2: Choose a Business Entity in Illinois

Selecting a business entity for your Illinois company. When starting your own business, you must choose a business structure. How well your personal assets are secured, how much tax you pay, and how much paperwork you have to deal with will all be significantly impacted by the type of corporate entity you choose. Consider setting up a corporation, LLC, LLP, or sole proprietorship as your business entity in Illinois.

Sole Proprietorships

Consider a sole proprietorship if you want to start a business in Illinois by yourself. A sole proprietorship is the simplest business structure in which a single individual owns and operates the entire business. The owner and the business are considered the same legal entity in a sole proprietorship. There is no legal distinction between the owner and the business, meaning that the owner has complete control over the business operations, profits, and losses.

Sole proprietorships are best suited for Illinois small businesses with low risks and for individuals who want to maintain complete control over their business without the complexities of establishing a separate legal entity.

Limited Liability Company

A Limited Liability Company (LLC) is a business structure that combines features of both partnerships and corporations, offering limited liability protection to its owners (called members) while allowing flexibility in management and taxation. An LLC is a separate legal entity from its owners, meaning the members are not personally liable for the business’s debts, obligations, or liabilities.

It is a popular choice for small to medium-sized businesses that want the liability protection of a corporation while maintaining management flexibility and simpler tax treatment. It’s essential to consult with a legal or financial professional to determine if an LLC is the best choice for your specific business situation.

Limited Liability Partnership

A Limited Liability Partnership (LLP) is comparable to an LLC. However, it is usually used by licensed business professionals like attorneys or accountants. A partnership agreement is necessary for this kind of business entity.

Corporation

Forming a Corporation reduces your personal liability for business debts as an LLC does. A corporation is a legal entity that is separate and distinct from its owners, known as shareholders. It is created under the laws of the state it is incorporated in and is considered a separate “person” under the law. The corporation can enter into contracts, own property, sue and be sued, and pay taxes separately from its owners.

A corporation can be taxed as an S-corporation (S-Corp) or a C-corporation (C-Corp). If a small corporation satisfies certain Internal Revenue Service (IRS) standards, then S-corporation status is available, providing pass-through taxation. However, most larger businesses and startups seeking venture financing are taxed as C-corps.

To choose the right business structure in Illinois, consider personal liability protection, taxation, management flexibility, administrative requirements, and setup costs. Consult a legal or financial professional to help you make the best decision.

Step 3: Determine your Illinois Business Costs.

In Illinois, you should determine the business costs that you will form. You should consider paying the Articles of Organization fee, business licenses fee, office supplies and equipment, payroll, rent, utilities, transportation, and taxes.

Usually, filing an initial Illinois Articles of Organization fee costs $150, while the LLC annual fee costs $75 in Illinois.

In terms of filing Illinois Articles of Incorporation, the costs usually range up to $150 for filing in-person and by mail If you file it offline or by mail, you can Send the form by mail to Department of Business Services, Limited Liability Division, 501 S. Second St., Rm. 351, Springfield, IL 62746.

Step 4: Name your Business in Illinois

Naming your business doesn’t take a lot of time. With the help of Illinois Business Name Search, you can acquire a name for your business. If you form an LLC in Illinois, you must follow the below rules while naming your business-

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 business right away but want to hold the name that you have decided on, then you can reserve your business name. You must file a name reservation application in the Illinois Secretary of State to keep the name.

If the business 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 corporation 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 Illinois Secretary of State.

You can check out How to File a DBA in Illinois for clearer understanding.

Step 5: Register Illinois Business

To register a business in Illinois, you need to file it with the Illinois Secretary of State. Before that, you must have a Illinois Registered Agent for your business. The Registered Agent is a person who is responsible for receiving important legal documents on your behalf.

You can serve as your own Registered Agent, or you can appoint a friend or family member, or you can check the Professional Registered Agent Services in Illinois.

Apply For Articles of Organization

After you have a Registered Agent, you need to file the Illinois Articles of Organization, if you want to have an LLC structure, or you need to file the Illinois Articles of Incorporation if you want to have a Corporation.

Request For an EIN

In addition to the paperwork, your Registered Agent should apply for an Employer Identification Number (EIN). 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. You can obtain the EIN for free from the IRS.

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 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 (for 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 number, you can benefit in several ways. It will give your LLC the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 6: Apply for Business License and Permit

Illinois Business Licenses and operating permits are necessary to run any business in Illinois. Before launching your new business, request any required business license or permission. Most Illinois businesses need licenses or permits to operate. Federal, state, and local governments may all require businesses to have licenses and permits. The business license fee depends on the type of license you are applying for. It can start from $25 till going up to $100+. However, in Illinois, the business license fee ranges from $50 – $300.

Step 7: Obtain a Bank Account

Your business dealings in Illinois might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Opening a separate bank account for your Illinois business is essential for maintaining a clear separation between your personal and business finances.

You can check out the Best Banks in Illinois, which offers the best fees, services, and convenience for your business needs.

Step 8: Market your Business in Illinois

Now that your Illinois business is registered, you can market it with an ideal marketing plan. An ideal marketing plan can help a start-up business to become known. Making a comprehensive social media network like META, Facebook, Instagram, Twitter, and YouTube falls within this category. While creating an SEO campaign for your company website, you may also look at specialized communities on Facebook and LinkedIn.

FAQs

What are the legal steps to starting a business in Illinois?

In Illinois, you’ll need to register with the Secretary of State’s Office.

How much does it cost to register a business in Illinois?

Registering a business in Illinois costs $150.

What are the tax requirements for businesses in Illinois?

Illinois requires businesses to pay income tax, sales tax, and use tax.

How do I obtain a business license in Illinois?

You will need to obtain a business license through the city or county where your business is located.

Do I need a local tax ID number in Illinois?

Some Illinois cities require you to apply for a local tax ID number.

What is the minimum wage in Illinois?

As of 2021, the minimum wage in Illinois is $11.

What are the insurance requirements for businesses in Illinois?

Businesses in Illinois are required to have workers’ compensation insurance.

Is there funding available for small businesses in Illinois?

Yes, there are multiple grant and loan programs available for small businesses in Illinois.

Must I file an annual report in Illinois?

Yes, Illinois requires all businesses registered in the state to file an annual report.

How can I trademark my business name in Illinois?

You can trademark your business name in Illinois by registering with the Secretary of State’s Office.

Are there any special regulations for starting a food business in Illinois?

Yes, food businesses in Illinois are subject to specific regulations from the Department of Public Health.

Can I obtain a business tax ID number online in Illinois?

Yes, you can obtain your Illinois business tax ID number online through the Illinois Department of Revenue.

How long does it take to register a business in Illinois?

It usually takes around 7-10 business days to register a business in Illinois.

What is an LLC in Illinois?

An LLC (limited liability company) is a legal business entity that protects the personal assets of its owners.

Are foreign businesses allowed to operate in Illinois?

Yes, foreign businesses are allowed to operate in Illinois but may be subject to additional regulations.

Is there an option for a sole proprietorship in Illinois?

Yes, you can register your business as a sole proprietorship in Illinois and be taxed as an individual.

Are there any tax incentives for businesses that hire in Illinois?

Yes, there are tax credits and exemptions available for businesses that hire and retain employees in Illinois.

How many employees can I have in my small business in Illinois?

There is no limit to the number of employees you can have in your Illinois small business.

What is the difference between an S Corp and a C Corp in Illinois?

S Corps are taxed as pass-through entities, while C Corps pay corporate taxes separate from their owners’ personal income tax.

Can I change my business structure in Illinois?

Yes, you can change your business structure at any time in Illinois by filing the necessary paperwork with the Secretary of State.

How can I dissolve my business in Illinois?

You can dissolve your Illinois business by filing a form called the Articles of Dissolution with the Secretary of State.

What is a franchise tax in Illinois?

A franchise tax in Illinois is an annual fee paid by corporations and LLCs organized in Illinois.

What is the Secretary of State’s role in registering my business in Illinois?

The Secretary of State’s office is responsible for registering new businesses in Illinois and keeping records up to date.

Can I file for trademark protection for my business in Illinois and nationally?

Yes, you can apply for trademark protection through both the Illinois Secretary of State’s office and the US Patent and Trademark Office.

How often do I need to register my business with the Illinois Department of Revenue?

You need to register your business with the Illinois Department of Revenue if you will be collecting sales tax in the state.

Do I need a seller’s permit for my business in Illinois?

Yes, you need a seller’s permit to legally sell goods or services in Illinois.

What happens if I operate my business without proper registration in Illinois?

Operating your Illinois business without proper registration can lead to penalties, fines, and legal issues.

Are there any resources available for minority-owned businesses in Illinois?

Yes, there are various programs and resources available specifically for minority-owned businesses in Illinois.

What steps do I need to take to incorporate my business in Illinois?

You will need to file Articles of Incorporation with the Illinois Secretary of State, obtain an Employer Identification Number (EIN) from the IRS, register with the Illinois Department of Revenue, and obtain any necessary business licenses and permits.

What are the advantages of incorporating a business in Illinois?

Incorporating a business in Illinois provides limited liability protection, tax advantages, and the ability to issue stock.

What is the corporate income tax rate in Illinois?

The corporate income tax rate in Illinois is currently 7%.

Where can I find information about state taxes in Illinois?

The Illinois Department of Revenue website has information about state tax regulations in Illinois.

What are the sales tax rates in Illinois?

The sales tax rate varies by location, with the state rate currently at 6.25%.

Are there any state-specific business grants or funding opportunities in Illinois?

Yes, there are several funding opportunities available through the Illinois Chamber of Commerce, the Small Business Administration, and local government programs.

Are there any industry-specific regulations in Illinois that I should be aware of?

Yes, depending on the type of business, there may be specific regulations relating to health and safety, zoning, or trade licensing.

Can I register my business online in Illinois?

Yes, the Illinois Secretary of State website allows for online registration of businesses.

Do I need a registered agent for my business in Illinois?

Yes, all businesses in Illinois are required to have a registered agent who is authorized to receive legal and official documents on behalf of the company.

What is the cost to register a business in Illinois?

The cost of registering a business in Illinois depends on the business structure and any necessary licenses or permits. Fees are typically a few hundred dollars.

Do I need to obtain a business license in Illinois?

It depends on the type of business you plan to operate. Some businesses require specific licenses and permits, while others do not.

How can I find out about zoning regulations in Illinois?

Zoning regulations can vary by location, so it’s best to check with your local government for specific regulations in your area.

Can I operate my business from home in Illinois?

Yes, but there may be specific regulations and requirements for running a business from your home in Illinois, such as zoning and licensing restrictions.

What should I consider when choosing a business location in Illinois?

You should consider factors such as local industry trends, competition, proximity to suppliers and customers, and transportation access.

Are there any tax incentives for starting a business in Illinois?

Depending on the location and industry, there may be tax incentives and credits available for businesses in Illinois.

Should I incorporate my business in Illinois or in another state?

It depends on various factors, including tax laws, business regulations, and proximity to suppliers and customers. Consult a legal or financial professional for guidance.

What are the business structure options in Illinois?

The business structure options in Illinois include sole proprietorship, partnership, corporation, and limited liability company (LLC).

Do I need to register my business name in Illinois?

No, but it is recommended that you register your business name to protect your brand and ensure that it’s legally available for use.

Are there any specific insurance requirements for businesses in Illinois?

Depending on the type of business, there may be specific insurance requirements. Consult with an insurance professional for guidance.

How can I find out about labor laws in Illinois?

The Illinois Department of Labor website has information about state labor laws and regulations.

Are there any grants or loans available for small businesses in Illinois?

Yes, there are several grants and loan programs available specifically for small businesses in Illinois.

Are there any state-specific intellectual property regulations in Illinois?

Yes, Illinois has specific regulations for trademarks, patents, and copyrights. Consult a legal professional for guidance.

Do I need to pay state taxes on sales made outside of Illinois?

No, only sales made within Illinois are subject to state sales tax.

Can I form a nonprofit organization in Illinois?

Yes, you can form a nonprofit organization in Illinois. There may be specific regulations and requirements for nonprofit organizations, such as obtaining tax-exempt status from the IRS.

How can I find resources for expanding my existing Illinois business?

The Illinois Department of Commerce and Economic Opportunity has resources and assistance programs available for businesses looking to expand in Illinois.

Are there any state-specific regulations for hiring employees in Illinois?

Yes, there are specific labor laws and regulations for hiring and managing employees in Illinois. Consult with an HR professional or legal expert for guidance.

Can I obtain a business loan from the state of Illinois?

Yes, there are several loan programs available through the Illinois Department of Commerce and Economic Opportunity.

Conclusion

In conclusion, starting a business in Illinois has unique advantages and challenges. The Prairie State offers a large and diverse market, access to skilled talent, and numerous networking opportunities, making it an attractive location for entrepreneurs. However, business owners must also contend with a high cost of living, intense competition, and potentially complex regulations.

Ultimately, whether starting a business in Illinois is the right decision depends on the entrepreneur’s specific needs, goals, and industry. It is crucial to conduct thorough research and consider factors such as taxes, regulations, workforce availability, and target market when choosing a location for a new business. By carefully weighing the pros and cons, entrepreneurs can make informed decisions and set themselves up for success in the competitive Illinois business landscape.