Forming an LLC (Limited Liability Company) in Illinois is easy and affordable. The following are few procedural steps on how to start an LLC in Illinois. LLC forms in two ways, domestic and/or foreign. If you are planning to set up an LLC in states other than Illinois, visit How to Start an LLC.
On this page, you’ll learn about the following:
- How to Start an Illinois LLC
- After Starting your Illinois LLC
- Why an LLC in Illinois
- Leading Businesses in Illinois
- Illinois LLC Formation Review
How to Start an Illinois LLC
Suppose you’re planning to invest in some profitable business or maybe about to set up your business in Illinois. In that case, forming an LLC in Illinois is the simplest option for you.
An LLC or a Limited Liability Companya hybrid business entity reports combining a corporation’s characteristics with a partnership or sole proprietorship. This section gives you a step-by-step guide on How to Start an LLC in Illinois.
Step 1: Decide a Name for Your LLC
If you are to start an LLC in Illinois, the first thing you do is decide on a business or company name, and how to name your LLC may be tricky. Thus, you have the option to choose a name that complies with the Illinois business naming requirements. It must also be easily searchable for potential clients. Here is a step-by-step guide to follow when naming your Illinois LLC.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
- You can only get the EIN number when you have your name registration certificate with you.
What are the requirements when deciding a name for your LLC?
A name search is vital to make sure your business’ name is unique. Check the availability of your name with Business Entity Search on the Illinois Secretary of State’s website. Reserve the name by completing the Name Reservation Request Form for Domestic Entities.
- Don’t include words that could confuse people about your company. Words like ‘treasury, state department.’
- You should also avoid restricted words like ‘bank, attorney, university,’ because they may require a lawyer and more paperwork.
- As for a business website and your URL name, check if your name is still available for domain use with NameCheap.
Reserve a business domain
Even if you don’t have plans to set up a website today, it will help if you buy a domain to avoid others from using your name for their website, so do visit NameCheap for your domain name and Kinsta for web hosting.
If you have decided on your URL name and have reserved it, set up a professional email account with Google GSuite.
Step 2: Assign a Registered Agent in Illinois
A registered agent (also known as an agent for service of process or a resident agent) is a person/business entity responsible for working on your behalf. This person provides things like filing services. He will receive significant tax forms, legal forms, formation documents, a notice of lawsuits, and other official government correspondence in Illinois. Choosing Illinois-registered agents for your LLC is required.
Make sure that when you request services that your registered agents for service are residents of Illinois. It could also be a business. Here are the recommended agents and employees for you:
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These five LLC formation services are recommended agents’ registered services as they are authorized to conduct business in Illinois. Compare them to check the best yet cheapest option for you. Besides are professional service providers because they have been in the business for years.
Step 3: File Articles of Organization in Illinois
A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate with the Illinois Secretary of State. You may file them online or by submitting a paper form by mail.
This Certificate of Formation is a legal document that forms your business officially. It will indicate details about your LLC in Illinois, like if it is a member-managed or managers-managed.
Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of each professional service that your Illinois LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county.
How to File by Mail
If you prefer filling in paper forms for your Illinois LLC registration, then you can download the Illinois Limited Company Certificate of Formation. Read the form thoroughly and fill it out. It will have to fill, among others, your name, city, state, zip code, and signature. Mail it to the Department of Business Services, Limited Liability Division501 S. Second St., Rm. 351 Springfield, IL 62746.
Step 4: Create Your Illinois LLC Operating Agreement
An operating agreementis an internal document that legally outlines the proprietorship and operating procedures of your LLC This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
Starting an LLC in Illinois does not require you to have an operating agreement, but it is ideal to have one that contains all your details of business operation.
Step 5: Filing an Illinois LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes. It is like a Social Security number dedicated to a business.
It is also called a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). You will need this number for taxation filing and to determine tax classification options.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
After Starting your Illinois LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business account
- File Illinois business permits & licenses
- Get liability for business insurance with coverage for employees
- File an Illinois LLC annual report or biennial report for business income
- Already existing LLCs that wish to operate in Illinois must register as foreign Illinois LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Why an LLC in Illinois
With the Gross State Product worth $336 Million, Illinois has gained a position in the Top 10 business states by Forbes. The benefits that a business person will enjoy when they start LLC in Illinois are considerable.
Reporting is made biennial by the government
Reporting of any business by the government takes considerably high time. It nearly disturbs the whole working set-up of a company, but if you have LLC in Illinois, you don’t have to care about it much. Here the government has set the reporting of an LLC twice a year which makes it easy for the member, and above that, the fees are only around $32 if a person is filing the report online.
Continuous decreasing rates of Income-tax
In Illinois, the tax is only required to pay by the LLC members on their personal profits. This rate of personal income tax is meager, i.e., 3.23%. It means that the LLC profits don’t matter if your profit is 100,000 USD or 10,000,000, then the tax one member has to pay will be the same for all the levels of people.
Hoosier Business Investment Tax Credit
The Hoosier Business Investment is an incentive-based program that is provided to the LLC, mainly the start-ups. The main motive of this Tax credit is to provide some investment to the start-ups and support the task of job creation of the states through these LLCs. This will improve the financial status of the state and also the standard of living.
No sales taxes are applied
Many states impose sales taxes on their LLC, like taking nickel and dime from members’ pockets. But in Illinois LLC, these taxes are not imposed on them, which means that they only have to pay the basic sales tax, which leaves them with plenty of money for hiring and research, and development.
Leading Businesses in Illinois
Are you looking to start an LLC in Illinois? If yes, then you have to think of a good and profitable business idea. If you cannot figure out the best flourishing industry in Illinois, here is the best business.
The export business is thriving very well in Illinois state due to the state’s favorable rules and regulations. That is why more companies have started entering the field of exporting business. The state’s primary export product is machinery, chemical, equipment used in transportation and agricultural processing.
The state has exported a material of 53,000 million dollars which shows the golden opportunity offered by this niche. So, don’t waste any time further and decide the product you want to export in the state.
Illinois is known worldwide, second in manufacturing food products and first in the construction business. The state has the most significant portion of countries manufacturing share of construction machinery, making the manufacturing business a fair choice. Chemicals used in the pharmaceutical industry are also made on a larger scale in the country.
Rocks found in Illinois State are known for being the best source of coal, minerals, and petroleum. According to the census, more than 8 billion tonnes of coal are produced in the state. Also, the amount of petroleum gained from this mining is around 4 billion barrels. These businesses are more than enough for a person to make up their mind regarding starting a mining business.
The state is a hose of 1500 different fertile soil types, which can help you grow any simple ornamental crop. If a person is interested in agriculture, they can also enter the business field and start farming-related businesses.
For a small investment business, here are some options.
- Restaurant and food business
- Departmental stores·
- Digital marketing services
Illinois LLC Formation Review
Time needed: 30 minutes.
To recap, here are the basic steps again when forming an LLC in Illinois. Click on the steps in this list to read the full detail.
- Name your Illinois LLC
The simple – but essential – step thing you must do is to choose a company name, which should include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
- Choose a registered agent
In Illinois, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
A “domestic LLC” is one that conducts business in a state where it was formed. Meanwhile, a “foreign LLC” is an existing LLC that extended business to another state.
For Domestic LLCs, it is vital to have a Certificate of Name Reservation and Certificate of Formation. For the foreign entities/LLCs, you must have a Certificate of Good Standing.
The cost to form an LLC varies per state.
Seldom do L.L.C.s use D.B.A. or a ‘Doing Business As’ name nor a fictitious business name. However, if you want to have one, you make read more about DBAs here.
This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
>Your name should have “L.L.C. or LLC” or the phrase “limited liability the business.”
>Do not include words that could create confusion between your LLC and any government business.
>Words like ‘bank, attorney, university’ are restricted as well.
>Lastly, your name should distinguish from other limited liability corporations, limited partnerships, or registered limited liability partnerships.
Typically, you can file your LLC name online or by mail. Check with the state where you will set up your LLC name. Take note that the fees for business names may also vary per state.
As for a website and your URL name, check if your name is still available for URL use with NameCheap to see if your name is available as a web domain. Even if you don’t have plans to set up a website today, it will help if you buy a URL. Buying it can help to prevent others from getting your name; check out WPEngine, Kinsta, and GoDaddy for hosting and building your website.
No. Never mail these documents or payments to the Secretary of State directly.
The reason you might need an E.I.N. is that it would help for three reasons:
>Opening a business bank account
>Filing and managing state and federal taxes
>An EIN is needed when you hire employees/agents. LLCs with employees (two or more) will require it unlike Single-Member LLCs
You are not required a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
International EIN applicants do not need an SSN to get an EIN.