If you’re forming a Illinois LLC, here are the steps to follow:
1. Pick an Illinois LLC Name
Choose a distinct name that isn’t already in use by another Illinois business and includes “Limited Liability Company,” “LLC,” or “L.L.C.” Check the Illinois Secretary of State’s business name database for name availability. Illinois also allows you to reserve a name for 90 days with a $25 fee if you’re not ready to file immediately.
2. Appoint a Registered Agent in Illinois
Illinois requires a registered agent with a physical Illinois address (no PO boxes) who can receive service of process for the LLC. This can be an individual resident of Illinois or a company authorized to do business in Illinois. The LLC itself cannot act as its own agent, so it must be a separate person or entity. The agent’s info will go on your Articles of Organization.
3. File Articles of Organization
File Form LLC-5.5 (Articles of Organization) with the Illinois Secretary of State, Department of Business Services. The state filing fee is $150 by mail or $250 if filed online (the extra $100 is for faster processing). Online filings are processed typically within one business day, whereas mail filings can take a couple of weeks. The Articles require:
- LLC name,
- Principal place of business,
- Registered agent name and address,
- Names and addresses of the LLC’s organizers (the people filing the paperwork; you need at least one organizer, who can be a member or not a member),
- Duration (usually perpetual unless you specify an end date),
- Management structure (whether it’s manager-managed; if so, you might have to list the managers; if member-managed, listing members is optional on the form),
- The purpose of the business (Illinois allows a general statement like “The transaction of any or all lawful business for which LLCs may be organized in Illinois”),
- Organizer’s signature. Once approved, the state will send you a confirmation (if online, via email with a link to your filed documents).
4. Create an Operating Agreement
Illinois doesn’t mandate an operating agreement, but it’s highly recommended to have one. This document outlines the internal governance of your LLC – who owns what, how decisions are made, how meetings are conducted (if any), and procedures for things like admitting new members or handling a member’s exit. In disputes, Illinois courts will refer to your operating agreement. It’s best to have one to avoid default state rules controlling your operations. Keep it with your LLC records.
5. Obtain an EIN
Apply for an EIN from the IRS for your LLC. Any multi-member LLC will need one for tax filings. Single-member LLCs will need one if they have employees or if they elect to be taxed as a corporation. Even without these, an EIN is useful for banking and privacy reasons. It’s free to obtain at the IRS website.
6. Register with the Illinois Department of Revenue (if needed)
If your LLC will have employees or needs to collect sales tax (for selling products or taxable services), register your business with the Illinois Department of Revenue (IDOR). You can do this online through the “MyTax Illinois” portal by completing the Illinois Business Registration application (Form REG-1). This will set you up for obligations like sales & use tax, withholding tax, etc., as applicable. Also consider if there are any industry-specific licenses or local (city/county) licenses required for your business activities.
7. Open a Business Bank Account
Open an account for your LLC to separate business funds from personal funds. This is critical for maintaining liability protection. Use your EIN and the Articles of Organization to open the account. Most banks will also want to see the operating agreement and an initial resolution authorizing the account opening (especially if more than one member). Illinois also has strong protections for personal assets, but commingling finances could jeopardize those, so keep it clean.
8. File Annual Reports
Illinois LLCs must file an Annual Report every year. The report is due by the first day of the LLC’s anniversary month each year (so if your LLC was formed June 15, your annual report due date is June 1 every subsequent year). The annual report fee is $75 (if on time; there’s a $100 penalty for late filing). You can file the report online or by mail. The annual report mainly updates the names and addresses of members/managers and the registered agent. Failing to file for two years can lead to dissolution of the LLC, so be sure to file timely.
Tip: Starting an LLC in Illinois can be streamlined by using Registered Agents Inc.. They will handle the state filing and can act as your registered agent. Plus, they’ll keep you reminded about annual reports and other compliance needs. Form your Illinois LLC with Registered Agents Inc. to take the guesswork out of the process and focus on your new business.
Final Thoughts
Though Illinois has a higher filing fee compared to some states, the process is direct. Once your LLC is set up, be mindful of the annual report every year and any taxes your LLC needs to handle (Illinois does have personal income tax which will apply to your LLC’s earnings on your individual return, and an LLC pays a minimal personal property replacement tax in some cases if income is retained at entity level). By following the above steps, you’ll have your Illinois LLC established and ready for business. Good luck with your new venture in Illinois!
Ready to start your Illinois LLC? Don’t wait – form your Illinois LLC now and launch your business with confidence!
