If you’ve decided to start a business in the state of Illinois, there are several tasks you’ll need to handle in order to start. The first is deciding on a type of business entity to form. Limited Liability Companies, or LLCs, are a popular choice, as they provide some personal liability protection for the owner(s) of the business.
In Illinois, LLC formation is handled by the Illinois Secretary of State – Department of Business Services. This department will process your application and Articles of Organization when you sign up for your new LLC. The process is relatively straightforward, but for new business owners, it can feel intimidating.
Fortunately, you’ve found the right guide to help you. The article below will help you navigate the process of starting an LLC in Illinois from start to finish. Let’s get started!
1. Consider utilizing an LLC formation service
For the most efficient and error-free process, it’s wise to use an LLC formation service, such as ZenBusiness or Northwest Registered Agent. These companies help walk entrepreneurs through the business formation process and help eliminate errors and hassles. They are inexpensive – ZenBusiness has plans from just $49 + state fees – and are well worth the cost for many entrepreneurs.
Of course, this is optional – you can certainly form an Illinois LLC on your own, using the steps below. But if you’re looking to save some time and hassle, LLC formation services like ZenBusiness are definitely worthwhile.
Also, keep in mind that you’ll need to appoint a Registered Agent for your business (see step #3 below). ZenBusiness and Northwest Registered Agent both offer this service, so it may make sense to use one of them for the initial business registration, as well.
Check out our roundup of the Best LLC Services
2. Name your new company
Next, you will need to select an appropriate name for your business. The main thing to consider here is that the name must be unique from other companies in Illinois. You can confirm if a name is available or not by searching the database here.
Finding a unique name is not the only requirement, however. You’ll also need to meet certain requirements.
For one, the name must include “LLC” or a variation, like “L.L.C.” or “Limited Liability Company”. It also cannot contain certain restricted words. There are also restrictions for certain terms, such as “bank”. Full naming rules can be found here.
Using an Assumed LLC Name in Illinois
Illinois also allows for the use of an “assumed business name”, otherwise known as a DBA or “doing business as” name. This is essentially a second name that your business can operate under. The cost ranges from $30 to $150 – more information can be found here.
3. Appoint a Registered Agent
All Illinois LLCs are required to select a Registered Agent to represent their company. In other states, these agents may also be called resident agents or agents for service of process.
A Registered Agent is simply an individual – or business – tasked with receiving important documents and legal notices for your business. They must have a physical mailing address in the state (no PO boxes), and they must be willing for this address to become public record.
You can be your own Registered Agent – or you can appoint an employee. Alternatively, many businesses choose to hire a Registered Agent service in Illinois. Both ZenBusiness and Northwest Registered Agent offer this in an affordable subscription service.
Using a professional firm offers several advantages. For one, it ensures that everything is handled correctly and efficiently. And, it protects your personal information, including your home address.
Check out our roundup of the Best Registered Agent Services
4. File LLC Articles of Organization
The Articles of Organization will be the main document that you will need to submit in order to form the LLC business entity in Illinois. These documents collect key information about your new business and are submitted to the Illinois Secretary of State. This can be done online, or by mail.
To file online – Head to this link and fill out the required forms. The filing cost is $150, payable by credit card online.
To file by mail – Fill out form LLC-5.5 and mail it in. The form must be typed. Mail your application, along with a check for $150, to:
Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62756
Either way you file, there is a $150 processing fee that goes directly to the state. There is no surcharge for filing by mail. If you choose to use a service like ZenBusiness, you’ll pay the $150 Illinois LLC fee, as well as ZenBusiness’s fee of $39.
Processing time is typically around 10 business days, but this can vary. Online applications are typically processed faster than mailed applications.
5. Create an operating agreement
Note: This step is optional, but recommended.
An operating agreement is a document that lays out details of how your business will operate. One of the most important aspects of it is establishing ownership agreements between multiple owners, if relevant. As such, this is a very important document for multi-member LLCs.
Operating agreements aren’t required by Illinois, but you should likely still have one. To draft an agreement, you can use a template from a company like ZenBusiness, or you can work with an attorney to draft your own. You may also be able to find free operating agreement templates online.
6. Wait for your documents
You will now need to wait for Illinois to process your Articles of Organization. This generally takes 9-12 business days. You will be notified when your application has been processed, and if there are any issues the application will need to be re-submitted.
7. Apply for business licenses & permits
The steps above will form your LLC – however, that’s not all you need to do in order to operate legally. You will also need to obtain business licenses and/or permits. Generally, these are handled on the local level. You will need to apply for a license in your city or county (where you plan to do business). For multi-location businesses, you may need multiple business licenses.
In addition, certain businesses may need specialized permits. For example, bars and restaurants will need a liquor license, and medical professionals will need professional permits. More information can be found here.
These are all the steps required to form your new LLC in Illinois. However, there are additional tasks that you will want to complete soon:
8. Apply for an EIN
An EIN, or employer identification number, is essential if you plan to hire employees. This is a federal tax ID number that is similar to a social security number, but for your business entity itself!
EINs are simple to obtain, and there is no cost. Simply fill out this application on the IRS website and wait for processing. It is free. Once you have an EIN, you will be able to hire employees, open business banking accounts, and more. This leads us to our next point…
9. Open a business checking account
For accounting purposes, and for liability protection, it’s very important to keep your personal assets separate from your business finances. The best way to do this is to open a separate business checking account as soon as you start your company, and use this new account for all business-related transactions.
Most financial institutions now offer business bank accounts. You’ll want to call ahead to see what their requirements are. At a minimum, most will require a business license and an EIN, as well as a small opening deposit. You may wish to also apply for a business credit card at this time.
10. Keep your business in good standing
In order to keep your company in good standing with local, state, and federal agencies, there are several tasks that you will need to handle on an ongoing basis.
For example, there are many tax reporting requirements on both the federal and state level. You will need to file federal income tax returns, federal employer taxes, estimated taxes, and more. On the state level, you will likely need to pay employer taxes, excise taxes, and sales tax (if you sell taxable goods or services in the state). There may also be local tax reporting requirements on the city or county level.
Another important requirement is the Illinois Annual Report for businesses. This is due every year for LLCs in Illinois. If you fail to file an annual report, your LLC may be dissolved.
You will also need to maintain and renew any business licenses and permits that your company holds. This includes local business licenses, specialized permits, and more. Check with local county and city governments for details.
This can all feel a bit overwhelming for new business owners. That said, it’s worth putting in the time now to stay on top of things. If you need help, companies like ZenBusiness can remind you of key dates to help keep you on track. We also recommend setting up a calendar with key due dates so that you never overlook a requirement.