Start An LLC In Illinois
Creating an LLC in Illinois allows you to spend much less money on establishing the company than you would with opening other types of businesses.
Limited Liability Companies have the benefit of being completely separate from your personal finances and allow you to spare quite a bit on taxes.
Yet, forming an LLC in Illinois requires that you’re well acquainted with the paperwork and forthcoming expenses. Keep reading to find out the exact steps to starting an LLC in Illinois.
Let’s first compare Illinois to other states as a place to form an LLC.
|LLC Filing Fee||$150||$95||$50||$50||$130.38|
|LLC Annual/Biennial Fee||$75 (every year)||$30 (every 2 years)||$0 (no fee and no information report)||$45 (every 2 years)||$89.34 (every year)|
|Corporate Tax Rate||9.50%||4.90%||4.00%||5.5-9.8%||5.60%|
|Nominal GDP per capita||$74,052||$61,760||$58,356||$68,849||$64, 773.08|
Before You Set Up An LLC In Illinois
LLCs allow you to keep your personal funds and properties separate from your business endeavors. They are simple to establish, with only a handful of documents needed to do so, and only a few steps and fees to cover.
Illinois is quite a suitable state for starting an LLC due to the EDGE (Economic Development for a Growing Economy Tax Credit Program) Incentive. This government program assigns tax credits to business ventures to improve the Illinois economy and business landscape and raise the overall living standard.
How Much Does It Cost To Start An LLC In Illinois
Those wondering how much to start an LLC in Illinois will find there are several main expenses worth considering:
- Articles of Organization – $150 (online filing)
- LLC Name Reservation – $25
- DBA Name – $25 (optional)
- Annual Report Fee – $75
- Registered Agent Fee – $39+ (optional)
- Foreign LLC in Illinois – $150 (optional)
- Certificate of Good Standing – $25 (optional)
- Certified Copies of Documents – $25 (optional)
The minimal overall cost of starting an LLC in Illinois is $175 (including the Articles of Organization and the name reservation), with an additional annual report fee of $75.
The maximum fee is $400, only in case you’re starting a foreign LLC in Illinois, you need a DBA (Doing Business As) name and certified copies of documents, and or need a certificate of good standing. This also includes an additional annual report fee of $75 and an extra $39 if you want to hire an external registered agent.
For those wondering how to start an LLC in Illinois for free – this isn’t a viable option.
Steps To Start An LLC In Illinois
If you are ready to start your LLC journey, here are the detailed steps to go over in the process.
Pick A Name For Your LLC
The first step to starting an LLC in Illinois requires picking a name for your company. Illinois law mandates that the name fulfills at least the following two criteria:
- The name needs to be unique. No other business, company, or corporation in Illinois should have been or be registered with the Secretary of State under the same name.
You can check if the name you’re considering is available by searching the Illinois Business Website section dedicated to registered companies, or by contacting the Secretary of State via phone call or email.
- The name needs to include LLC, L.L.C., or Limited Liability Company in its name. Usually, this addition goes at the end of the name. If your business needs professional certification, the phrase has to be PLLC, P.L.L.C., or Professional Limited Liability Company. Owners can check if their business requires professional certification at the Illinois Department of Financial and Professional Regulation website.
One thing to bear in mind regarding the name is that Illinois does not permit names containing words related to banks or insurance without special allowance, nor does it permit words like “incorporated”, “corp.”, “limited partnership”, “Ltd.”, “LP”, or “Co.”.
After choosing a name, you have to reserve it for up to 90 days – by submitting Form LLC-1.15 and paying a $25 fee. This isn’t a mandatory step, but it prevents other businesses from taking your chosen preliminary name until your LLC is set up.
Find A Registered Agent In Illinois
A registered agent is an entity – a company or an individual – that will accept legal and official documents, tax forms, or lawsuit notices on behalf of the LLC. According to Illinois law, the two conditions that an individual would need to satisfy in order to qualify as a registered agent are:
- To be an Illinois resident.
- To be older than 18.
You yourself, or any other owner or co-owner of the LLC can be appointed as a registered agent, and so can any other company – is registered as a business with an official address in Illinois. In case the registered agent needs to change, you would need to file Form LLC 1.36/1.37 with the Secretary of State as soon as possible.
The agent needs to be available at all times during working hours and be physically present in the office in order to receive official documents. You can also turn to a registered agent service company, which acts as a registered agent to LLCs. Or, you can hire a registered agent separately, but this would entail additional costs.
|ZenBusiness – $49 + state fees to register your LLC (read review)|
|Incfile – $0 + $50 state fees to register your LLC (read review)|
Articles Of Organization
Filing articles of organizations in Illinois will cost you a minimum of $150, which is a higher cost than in other states.
The main documents that need to be included in the articles of organization are:
- Name of the LLC;
- An official business address in Illinois;
- Starting date of the LLC (60 days after filing the articles at most);
- Registered agent details (name, address);
- The business purpose of your LLC;
- Duration (if it’s limited, add dissolution date; otherwise the LLC is assumed perpetual);
- Extra provisions for the internal regulations of the LLC’s affairs,
- The names and addresses of all managers if the LLC is manager-managed.
- The name and address of the organizer.
- If you’re registering the LLC from a foreign state (if you’ve already established it in another state but want to start doing business in Illinois), you need to file an Application for Admission to Transact Business to the Secretary of State. The fee for this form is $150, in addition to the necessary articles of organization and a compulsory attached certificate of good standing.
- If you’re registering your business as a series LLC and allow separate sections of the company to operate independently – with separate assets, operations, and interests –
you need to file Form LLC-5.5(S), which costs $400.
After submission, expect your documents to be processed in 7-10 days unless you request expedited filing, for which you’ll have to pay an extra fee of $50-$250.
According to Illinois law, an operating agreement isn’t a mandatory document, but it is very recommended. It determines various managerial aspects of the LLC, including the division of duties and profits, as well as its structure. The operating agreement would ideally answer the following:
- The business purpose of the LLC.
- Names and addresses of managers, owners, and members.
- Information on ownership rates and stakes, as well as financial contributions to the LLC.
- Information on the division of profits and voting rights.
- Manager election procedure format.
- New members’ admission procedure format.
- The procedure of exit from the company.
- The procedure for the dissolution of the company.
- Meeting schedule.
The operating agreement would ideally have been reviewed and signed by all members of the LLC, as it is a legally binding document to be used in all sorts of legal proceedings in the future.
Get An EIN
Another mandatory step is to obtain an EIN (Employer Identification Number) from the IRS (Internal Revenue Service). Used for paying employees, and payrolls, as well as filing and paying taxes, an EIN allows the IRS to recognize your LLC as an operating business entity.
Other Required Documents
The above cover all basic documents needed to create an LLC in Illinois. However, depending on particular cases, additional documents may be required. Check with the Secretary of State if your business needs a professional license or a business license. Many types of businesses, including those doing medical practice and law firms, need one or both of these.
If you want to operate under an assumed name (a name different from the one stated in the official documentation of your LLC), you would need to file Form LLC-1.20 for DBA (Doing Business As), and pay a fee of $25.
The final step includes your obligations to the state once the LLC starts registering employees. Once the LLC hires the first employee, you’ll first have to purchase worker’s compensation insurance. Next, any new employee has to be reported to the Illinois Department of Employment Security in the first 20 days of the hiring. Finally, once the LLC starts paying more than $1,500 in wages, you will need to pay unemployment taxes.
A $75 annual report also needs to be filed yearly through Form LLC-50.1.
The Forms You Need To Register An LLC In Illinois
You will need to fill out the following forms to start an LLC in Illinois:
- Form LLC-1.15 – reserving a name
- Form LLC-1.36/1.37 – changing the registered agent
- Form LLC-5.5 – filing articles of organization
- Form LLC-5.5(S) – filing articles of organization for series LLC
- Form LLC-1.20 – operate under an assumed name
- Form LLC-50.1 – filing an annual report
- Form IL-1065 – covering taxes
- Form LLC-35-15 – statement of termination
Did You Know?Illinois is one of the most advantageous states for starting an LLC, and first introduced the business concept in 1991. The convenient nature of the LLC format and the low official fees make it possible to start an LLC in Illinois with only $150! Also, thanks to the EDGE Incentive, you can get a tax credit for your newly started business, as Illinois is working on motivating the emergence of small businesses.
LLC Taxes In Illinois
In Illinois, LLCs have to pay 1.5% of all net income in state taxes to IDOR (Illinois Department of Revenue). In order to do so, you would need to file Form IL-1065. Alternatively, some business owners opt to register their LLCs like corporations for tax purposes.
Thanks to the format of the LLC (Limited Liability Company), the companies themselves don’t have to pay federal taxes, but the members of the LLC do have to pay federal taxes individually.
|Range of Tax in the US|
|LLC tax in Illinois||1.5%|
|States with the lowest LLC tax – Wyoming, South Dakota, Nevada||0%|
|State with the highest LLC tax – California||13.30%|
|Average LLC tax||2.9%|
In terms of taxes, although there are other states with more convenient terms, Illinois is definitely a good state to start an LLC.
How Long To Form An LLC In Illinois
On average, it takes about 3-4 weeks to form an LLC in Illinois, but it all depends on various factors, like whether you’ve filed most of the documents online (which would mean faster processing) or in person, or whether you’ve paid a fee to speed up the process.
How Much Does It Cost To Run An LLC In Illinois
The annual fees for running an LLC in Illinois are $75. Couple that with at least $150 for the articles of the organization during the first year, and you’re looking to pay $225.
Other expenses related to the business itself may add to the original cost.
What To Do After Formation?
Starting an LLC in Illinois is just the beginning of your business venture. After you’ve established your company, there are many additional steps to take in order to fully make it functional.
- Creating a logo – something that looks good and is memorable.
- Establishing a website and/or eCommerce store – to have an online presence and sell your products/services online.
- Opening a bank account – to keep track of the LLC’s finances.
- Finding good business insurance – to prepare for different situations and outcomes.
Of course, this just scratches the surface, but it’s good food for thought when it comes to planning your LLC venture.
Resources To Start A Successful LLC In Illinois
The following official websites will be useful when forming an LLC in Illinois for information purposes and finding all forms you need:
Start Marketing Your LLC In Illinois
There are many ways of successfully marketing your newly-founded LLC in Illinois.
Depending on what your particular business industry is, you can focus more on online marketing campaigns with developed SEO strategies and a regular social media presence.
Alternatively, you could invest in physical advertisements, billboards, etc., around Illinois.
How To Dissolve An LLC In Illinois
In order to dissolve your LLC in Illinois, you need to file two versions of the completed Form LLC-35-15 Statement of Termination, and a dissolution fee of $100 to the Secretary of State.
All that said, creating an LLC in Illinois is a convenient and flexible way to establish a small or medium-sized business venture, which will allow you to quickly and easily finish the registration process and start expanding without risking too much of your personal assets.
With a starting cost of about $150, LLCs in Illinois is definitely worth considering.