Do you know what Illinois is known for? Well to start it’s the home of Chicago, IL which is where the Chicago Cubs continue to play at Wrigley Field. If you’re learning how to start an LLC in Illinois, maybe you should build a business around the Cubs! They are one of the greatest baseball franchises in history.
The guide below is a great place for you to start learning about how other LLC owners have setup their operating agreement. You’ll need to submit your annual report and make sure you’ve setup your own registered agent too. There are lots of pieces to the puzzle. Everything from getting the right business name to operating agreements and of course – don’t forget about federal taxes that you’ll need to submit to the internal revenue service (IRS).
Take a look at the services we recommend here once you form your LLC and are ready to conduct business in Illinois. We have recommendations for business insurance, bank accounts and even the website and domain registrar you should use. Now let’s get started!
Name Your Illinois LLC
Names are required to meet Illinois name regulations. This list is an important requirement that must remain true: See Illinois’ full name rules page.
- The name must end with “LLC,” “L.L.C.,” or “Limited Liability Company.”
- The name cannot include the words: Corporation, Incorporated, Company, Limited, Corp., Inc., Co., L.P., LLP, Chartered, Bank, Trust, Federal, National, Reserve, or United States.
- The name cannot be the same as another business entity registered with the Illinois Secretary of State.
You may reserve a name for your LLC by filing an Application for Reservation of Name with the Illinois Secretary of State. The reservation is good for 60 days and costs $15.
If you’re going to name your Limited Liability Company or Illinois LLC something that’s already taken, you’ll run into an issue and need to make sure you’re using a business name generator to help you find a new one.
The last thing you need is having the Illinois department thinking you’re setting up a fictitious business name. You can use an assumed business name or potentially think about hiring employees to help you but really – it’s on you to make sure you’re following the naming rules for the government agency you’re submitting it to. In this case, we’re talking about the Illinois
Choose your registered agent
In Illinois, a Registered Agent Service must be appointed for the entity. A registered agent represents the person able to obtain official documents or notices from your LLC. Registered Agents are individuals or entities offering registration services to individuals or entities who have an LLC. It should comply with the following requirements:
- The name and address of the Registered Agent must be listed on the Articles of Organization.
- The Registered Agent must maintain a physical location in Illinois where legal documents can be served during business hours.
- The Registered Agent may not list their own name as the Registered Agent for another business entity.
- You will need to appoint a registered agent when you file your Articles of Organization. You may also appoint a registered agent when you register your LLC with the Secretary of State.
- Appoint a business manager
The management structure of your LLC can take on several different forms. The most common is referred to as a “member-managed” LLC, where all the LLC members ( owners ) participate in the business’ day-to-day operations. You can also choose to have a “manager-managed” LLC, where one or more members ( designated as managers ) handle the business’ operations.
If you want your LLC to be member-managed, you don’t need to do anything special. This is the default management structure for Illinois LLCs.
If you want your LLC to be manager-managed, you’ll need to include language in your Articles of Organization specifying that your LLC will be managed by one or more managers. You’ll also need to specify the names and addresses of the LLC’s initial managers in your Articles of Organization.
If you’re a foreign LLC there may be different rules for the business structure and the annual report you may have to submit but it’s important to check. There are law firms that will be the Illinois registered agent but it’s also important that you check with the state department to make sure that as one of the small business owners running either a sole proprietorship or some type of professional services organization that you follow the right rules when doing this.
Prepare and File Articles of Organization
The Statute of Organization is a document which provides you with an outline of how to start an LLC. Make the Organizations file this with the Illinois Secretary of State to ensure the correct registration of your Illinois LLC.
Although that sounds a huge task it is simple to complete an online form with the required information. This can be sent via email. If you are preparing a certificate, the secretary of state reviews the certificate. Upon approval the LLC becomes legally registered for business.
The Statutes of Organization requires the following:
- The name and address of the LLC.
- The names and addresses of the LLC’s organizers.
- The LLC’s registered agent and registered office in Illinois.
- Whether the LLC will be member-managed or manager-managed.
- If the LLC will be manager-managed, the names and addresses of the LLC’s initial managers.
- The effective date of the LLC’s Articles of Organization.
- The signatures of the LLC’s organizers.
To get started, you can download and fill out the Statutes of Organization form from the Illinois Secretary of State website. Once you’ve completed the form, you’ll need to file it with the Illinois Secretary of State.
You can file your Statutes of Organization online, by mail, or in person at the Illinois Secretary of State office in Springfield. The filing fee is $150.
If you’re mailing in your Statutes of Organization, you’ll need to include a check or money order for the $150 filing fee. Make the check payable to the “Secretary of State.”
You can also file your Statutes of Organization in person at the Illinois Secretary of State office in Springfield. The office is located at:
17 N. State St., Suite 1380
Springfield, IL 62701
The filing fee for in-person filings is $150.
Once your Statutes of Organization have been filed, you’ll need to wait for the Illinois Secretary of State to approve them. This can take a few days. Once your Statutes of Organization have been approved, you’ll receive a Certificate of Organization from the Illinois Secretary of State.
Create an operating agreement
An operation agreement defines the ways in which the LLC conducts business. Illinois has no requirement for LLCs to have operating agreements, but this should always be advisable.
It is important to establish an easily accessible operating contract to settle disputes regarding financial agreements or other potentially litigious matters. Unless a settlement exists, the courts decide the matters according to law and not necessarily in the best interests of its members. This operating agreement includes, but cannot be limited to, the following:
- the method of selecting or replacing the managers and members;
- the roles, rights, and duties of the manager or managers and the members;
- the financial contributions of each member to the LLC, if any;
- the distributions of profits and losses among the members;
- the voting rights of the members;
- the events that trigger a buy-sell agreement, if any; and
- the dissolution procedures of the LLC.
- You can find template operating agreements online or you can work with an attorney to create one that’s specific to your LLC.
Another important rule for the LLC Operating Agreement that you’re going to be setting up is making sure that you have submitted for your Federal Employer Identification Number and we’re going to jump into that next. It’s one of the most important pieces when running an individual or business entity that you’re going to either run on your own or hire employees for.
Let’s get into it.
Get an Employer Identification Number
The employer identification (EIN) has nine digits that will be used as identification to track the entity for tax purposes. You can receive this EIN via the IRS. A EIN can be used to assist in:
- Opening a business bank account
- Applying for business credit
- Filing tax returns
- Hiring employees
To find out more information on how to get an EIN, check out the IRS’ EIN page.
Some businesses will require specific permits or licenses to operate. Depending on your business, you may need to apply for one or more of the following:
- State tax ID
- Sales tax permit
- Federal tax ID
- Business license
- Zoning permit
- Health department permit
If you’re unsure about which licenses or permits you’ll need for your business, you can check with the Illinois Business Assistance Center.
If you haven’t gotten your Federal Tax Identification Number by now, this is the step where you’ll need to pause and go find a law firm to help you. Typically they will help you with business transactions like this during regular business hours but depending on the type of small businesses they support – you may be able to get additional assistance.
How much does it cost to set up an LLC in Illinois?
An LLC can be set up in Illinois by filing the necessary paperwork with the state and paying the requisite fees. The total cost will vary depending on the complexity of your business, but you can expect to pay around $500 to get started.
Additionally, you’ll need to obtain your EIN from the IRS, which will cost you an additional $75. Finally, you’ll need to create an operating agreement and file it with the state, which will cost you another $25. In total, you can expect to spend around $600 to set up your LLC in Illinois.
Before you assume anything, you’ll want to double check on the cost of this and make sure you’re also going to be getting liability protection for your LLC’s principal place of business.
How do I form an LLC in Illinois?
You can form an LLC in Illinois by filing the Articles of Organization with the Secretary of State. The Articles of Organization must include the name and address of the LLC, the names and addresses of the members, the name and address of the registered agent, and the effective date of the LLC. The filing fee is $100.
You will also need to appoint a registered agent and obtain an Employer Identification Number (EIN) from the IRS. You will need to file annual reports with the Secretary of State.
The LLC must also create an operating agreement, which outlines the rules and regulations for the LLC. The operating agreement is not required by Illinois law, but it is a good idea to have one in place.
How much are State and Federal Taxes in Illinois?
The state of Illinois imposes a flat tax rate of 4.95% on all LLCs. Additionally, the federal government imposes a tax of 15% on all LLCs.
As an LLC, you will be required to pay self-employment taxes, which include Social Security and Medicare taxes. The self-employment tax rate is 15.3%.
You will also be required to pay state and federal income taxes on any profits that you earn. The tax rate will depend on your income bracket. It will also depend on whether you’re going to cover health insurance for one or more employees. If you’re going to start an LLC and thinking about what might happen if there is an issue, you’ll also want to pay unemployment taxes and think about unemployment insurance contributions too.
For more information on taxes in Illinois, check out the Illinois Department of Revenue website.
Do I need business insurance in Illinois?
Yes, you will need to carry general liability insurance as well as workers’ compensation insurance. You may also need to carry other types of insurance, depending on the type of business you’re in.
You can get a business insurance quote from Commercial Insurance and find a link in the sidebar to it.
Do I need a business license in Illinois?
A business license is required if you plan on doing business in Illinois. The cost of the license will depend on the type of business you’re in.
To get a business license, you will need to fill out an application and submit it to the Illinois Department of Revenue. Once your application is approved, you will be issued a license.
If you’re planning on starting a restaurant, you will also need to obtain a food license from the Illinois Department of Public Health.
Is there anything else I need to do to start my LLC in Illinois?
You will need to comply with all state and federal laws, as well as any local ordinances. You will also need to obtain any permits or licenses that are required for your specific business.
It’s a good idea to have an attorney review your Articles of Organization and operating agreement before you file them with the state. An attorney can also help you with any other legal issues that may arise.
You may also want to consider opening a business bank account and obtaining a business credit card. This will help you separate your personal and business expenses.
Finally, you’ll need to promote your LLC by creating a website and marketing your business. You can use social media, online directories, and other online tools to reach potential customers.
You can take a look at the recommended services in the sidebar to get the domain, website, business insurance for your LLC or Limited Liability Partnership – whatever you’re working on getting setup.
You’re taking an exciting step in Cubs country so be proud and go get setup with your LLC so you can consider an S Corporation as the next step!
Congrats – you are going to become a business owner in Illinois!