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For many new companies, forming as an LLC is the best option as it is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Additionally, LLCs often enjoy a lower tax rate than corporations. However, forming an LLC can be a little complicated, and each U.S. state has its own checklist for starting an LLC with minor procedural variations.
LLC formation in Illinois is a relatively standard process without uncommon requirements. In essence, an LLC is formed in Illinois by filing Articles of Organization with the Illinois Secretary of State, but there are a handful of other guidelines to follow.
In order to avoid a misstep in the filing process, follow these steps to start an LLC in Illinois, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Illinois step-by-step
1. Select a name for your Illinois LLC
Follow naming requirements
There are three major guidelines to follow when naming your LLC in the state of Illinois:
- Your LLC’s name must be distinguishable from the names of existing business entities on file with the Illinois Secretary of State.
- Your LLC’s name must end with the words, “limited liability company”, or the abbreviations, “LLC” or “L.L.C.”
- Your LLC’s name must not include the words or abbreviations, “Incorporated”, “Corporation”, “Corp.”, “Inc.”, “Co.”, “Ltd.”, “L.P.”, or “Limited Partnership”.
Reserve your LLC name with the Secretary of State
After selecting a name for your LLC, you can reserve it with the Illinois Secretary of State. First, check the name’s availability using the Secretary of State Business Services Name Database. If your chosen LLC name is available, you can reserve it for 90 days through the filing of an Application to Reserve a Name. Filers must pay a $25 filing fee to the Secretary of State.
Assumed business name option
As an alternative to using the LLC’s official legal name when filing Articles of Organization in Illinois, a company also has the option of filing with an assumed business name, aka a trade name, or “DBA” name (doing business as).
An assumed business name can be registered online using the Illinois Secretary of State website or via postal mail by mailing a completed Application to Adopt, Change, Cancel, or Renew an Assumed Name along with a filing fee payment of $30 a year (LLCs can register an assumed business name for up to five years for a total of $150).
2. Designate a registered agent
As in every U.S. state, forming an LLC in Illinois requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident with a street address in Illinois OR if the individual or professional service is based out-of-state, they must have a business office in Illinois.
3. File Articles of Organization
An Illinois LLC is officially formed through the filing of Articles of Organization with the Illinois Secretary of State, Department of Business Services. Filing of the Articles of Organization can be done online or by using postal mail. You must pay a filing fee of $150 (or an additional $100 fee for expedited service). Using a credit card is the preferred payment option.
Your LLC Articles of Organization should include the following information:
- Name of LLC
- Date of filing
- LLC’s principal office address
- Registered agent name and address
- LLC’s organization purpose
- Names and addresses of LLC members and managers
- Names and signatures of organizers
- A statement addressing the LLC’s intended duration of existence
LLCs formed out of state that intend on doing business in Illinois must also register with Illinois’s Secretary of State, Department of Business Services. Here are the steps that foreign LLCs must follow to legally operate in Illinois:
- Comply with LLC naming guidelines and check name availability online (If your company name is unavailable for use in the state, include a completed Application to Adopt, Change, Cancel or Renew an Assumed Name during registration).
- Appoint an Illinois registered agent.
- File an Application for Admission to Transact Business with the Illinois Secretary of State via postal mail and pay a filing fee of $150.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Illinois, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies. This document should describe the LLC’s business structure, establish the individual responsibilities and obligations of LLC members, and detail how the LLC will be run.
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of a single-member LLC). The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and to perform a number of other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Illinois LLC’s regular legal obligations
Once an LLC is registered, it is important that its members devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
Illinois LLCs are required to file an annual report with the Secretary of State office. An annual report must be filed every year prior to the first day of the month when the LLC was initially formed in the state.
LLCs have the option of filing their annual report online or via postal mail by filing Form LLC-50.1. Both options require an LLC to pay a state fee of $75. Those that file their annual report late must pay a $100 fine in addition to the principal filing fee.
State Tax Registration
Certain businesses may be required to register the Department of Revenue in order to pay certain state taxes or to collect sales tax. Visit the Illinois Department of Revenue website to register online.
An Illinois LLC may be required to acquire one or more business licenses depending on the nature of its business. Visit the Illinois Department of Commerce First Stop Business Information Center for information on state-issued licenses, and consult with the city clerk of the municipality where your LLC’s principal office is located for advice on obtaining local licenses.
Illinois LLC checklist
An Illinois LLC’s name must obey the following guidelines:
- Be distinguishable from the names of existing businesses that have filed with the Illinois Secretary of State.
- Include the following words or abbreviations at the end of the name: “limited liability company”, “LLC”, or “L.C.C.”
- Omit the following words or abbreviations from the name: “Incorporated”, “Corporation”, “Corp.”, “Inc.”, “Co.”, “Ltd.”, “L.P.”, or “Limited Partnership”.
Required formation documents and filing fees:
- Application to Reserve a Name: $25 filing fee
- Articles of Organization: $150 ($250 for expedited service)
- An Illinois LLC must file Articles of Organization with the Illinois Secretary of State, Department of Business Services online or by mail.
Regular legal obligations:
- Annual reports: Filed each year before the first day of the anniversary month when an Illinois LLC was originally created along with a $100 filing fee.