Are you an entrepreneur who is curious about how to form an LLC in Illinois? Then this is the article for you.
Illinois is the perfect state to launch and run a business of any size. Its business climate benefits from a dynamic economy and various tax incentives. But you need to form a company before you can leverage any of those benefits.
Follow our step-by-step guide to learn exactly what you need to do to start an Illinois LLC and how you can speed up the process.
Naming Your Illinois LLC
The first and most important step in forming an LLC in Illinois is choosing a name for your business. We recommend choosing a name that is easy to pronounce, sticks in the mind, and is related to your business.
You also need to choose a name that complies with the naming requirements of any business operating in the U.S. and the state of Illinois specifically:
- The name for your Illinois LLC must be unique
- Your Illinois LLC name must not confuse your business with other business names or government agencies.
- The name of your Illinois LLC must include the following phrases “L.L.C.,” “Limited Liability Company,” or “LLC”, often at the end.
- Restricted LLC names may need additional paperwork and a licensed person, such as a lawyer or doctor, to be part of the Illinois LLC.
For a complete list of Illinois requirements and guidelines, you can read the Illinois naming rules.
Search for Your Illinois LLC Name
Once you have chosen a name for your Illinois LLC, ensure that no other business is using your chosen name by running an LLC name search on the Secretary of State’s Cyberdrive Illinois website.
Secure a Domain Name for your Illinois LLC
You should also do an online check to ensure that your chosen Illinois LLC name is available as a web domain. Even if you have no plans to create a business website, you may want to buy and reserve a URL to prevent other individuals from acquiring it.
Hire a Registered Agent for Your Illinois LLC
All LLCs formed in Illinois are legally required to hire or appoint a registered agent. An Illinois registered agent can be an individual in the state or a business entity authorized to operate in Illinois. Your registered agent is responsible for receiving legal documents and correspondence on behalf of your LLC.
A registered agent for your Illinois LLC must have a physical or street address in Illinois. You must ensure that the physical address and name of the hired registered agent are up to date in Illinois state records.
While you can pick yourself or any member of your business to act as a registered agent, we highly recommend hiring a trusted service provider as your registered agency. Here are three of the most popular choices:
Northwest is one of the most popular registered agent service providers in Illinois. It has assisted thousands of business owners in maintaining compliance, all at a relatively affordable cost. A subscription to Northwest will give you access to the following registered agent services for only $125 a year:
- Pre-filled state forms
- Compliance reminders
- Free mail forwarding
- Online document storage
- Same-day document scans
- Pre-filled state forms
The company also offers corporate guides, a range of business maintenance tools, and custom-built software that keeps you on top of everything.
ZenBusiness is rated as the leading registered agent by publications like Forbes and Investopedia. It offers a range of services, including:
- Mail forwarding
- Email notifications
- Access to a personalized dashboard
- State notices monitoring
- Fast turnaround
ZenBusiness will scan your legal and compliance documents and upload them to your dashboard for easy access at any time you need. Better still, the dashboard is intuitive and user-friendly.
ZenBusiness also offers additional services, such as LLC formation, EIN Number, operating agreement, taxes and accounting, annual reports, domain name and website, worry-free compliance, business license reports, and business advice.
The only downside of ZenBusiness is that their annual cost of $199 is slightly more expensive than Northwest registered agents.
IncFile has assisted more than 800,000 business owners in forming their LLCs and staying compliant. For $119 per year, you will get the following registered agent services:
- Personalized notifications
- Automatic mail forwarding
- Document scanning
- Compliance reminders
- Access to a personalized dashboard
The best part about IncFile is that they will give you a free year of registered agent services if you use their LLC formation package. The company also offers several other services, including a virtual address, company dissolution, business licenses and permits, trademarking, and certificate of good standing application.
File Articles of Organization for Your Illinois LLC
Filing the Article of Organization is the next step in the process of forming your LLC in Illinois after choosing an LLC name and appointing a registered agent
The Illinois Article of Organization is a document used to officially and legally register your LLC with the State, making it a separate business entity under Illinois laws.
You will need the following details about your LLC to file an Article of Organization with the Illinois Secretary of State:
- The purpose of your LLC
- The name of your LLC
- The physical address of your business
- The physical address of the hired registered agent
- The physical addresses and names of the initial members and managers
- The physical address, names, and signatures of the LLC organizers
- The effective date of the LLC
Once you have the above information ready, visit the Illinois Secretary of State website and fill out the Article of Organization Form LLC-5.5. You can file via mail, online, or in person. You will need to pay a fee of $150.
Once your Article of Organization is approved and you have registered your LLC, you must ensure that your LLC remains in good standing by filing annual reports with the Illinois Secretary of State. The filing fee for your annual report is $75.
Create an Operating Agreement for Your Illinois LLC
The next step after filing an Article of Organization is to create an Operating Agreement. This internal document outlines all operating procedures of your LLC in Illinois.
While you aren’t required by law to create an Operating Agreement, we highly recommend doing so. An Operating Agreement ensures all LLC members and managers are on the same page about splitting profits, managing your business, and other key decisions.
When creating an Operating Agreement for your Illinois LLC, you should ensure that it includes the following details:
- Ownership distribution and transfer policies
- Decision making guidelines
- General LLC information, including business duration and purpose
- LLC dissolution rules
- Member information, including ownership percentage, contributions, profit distributions, roles, etc.
- Management structure and voting rights
If in doubt, consult an Illinois legal professional for advice.
Obtain Licenses and Permits for Your Illinois LLC
Filing an Article of Organization allows your formed LLC to legally and officially operate in the state of Illinois. But that’s not the only legal document you need. For instance, when forming your LLC in Illinois, you must comply with federal, state, and local government regulations by obtaining the relevant permits and licenses.
The requirements and fees of the permits and licenses for your Illinois LLC can vary depending on your type of business and location.
Some of the most common types of Illinois business licenses and permits include:
- A general business license
- Seller’s permits
- Health permits
- Professional or occupational licenses
Please consult the Illinois state website for more information.
Acquire Federal and State Tax IDs
The next step in forming your LLC in Illinois is to acquire a Federal and State Tax ID. The most common one will be an Employer Identification Number (EIN), which is similar to the SSN (Social Security Number) but for multiple-member business entities.
This nine-digit number is used by the IRS (Internal Revenue Service) to identify your Illinois LLC and determine your tax obligations.
If you have a single-member LLC in Illinois, you don’t need an EIN unless you choose to hire employees or file taxes as a corporation. This is because the IRS considers single-member businesses as disregarded business entities.
The process of acquiring a Federal and State Tax ID for your Illinois LLC is free and straightforward. Simply register your LLC with the Illinois Department of Revenue, and you will have your Federal and State Tax ID in no time!
Open Business Bank and Credit Accounts
You must open a separate business bank and credit account for your Illinois LLC. This helps distinguish between personal and business finances and makes it much easier to manage your financial responsibilities.
Having a business bank and credit account also helps track your business’s tax deductions, expenses, investments, cash flow, and more. It doesn’t help to build a relationship with your bank, either, making you eligible for loans and credits to fund your business in the long run.
The good news is that opening an Illinois business bank and credit account is straightforward. You just need to provide the following documents:
- Personal Identification, e.g., passport, driver’s license, utility bill, etc.
- Federal and State Tax Identification Number
- Article of Organization or Certificate of Formation
- Operating Agreement
There are several highly regarded business banks in the state of Illinois, including:
- The First Trust Bank of Illinois
- The First National Bank of Illinois
- The Farmers-Merchants Bank of Illinois
Purchase Illinois Business Insurance
Once your Illinois LLC is up and running, you will need to purchase relevant business insurance to protect your business assets and properties. The right Illinois business insurance for your LLC depends on various factors, such as your type of business and whether or not you have employees.
At the very minimum, every LLC in Illinois must have General Illinois business insurance to cover your LLC from common business risks and lawsuits. Other business insurance you may want to purchase for your Illinois LLC includes the following:
- Workers’ compensation insurance to cover your employees from on-work injuries and illnesses
- Professional liability insurance to protect you from occupational negligence and inaccurate work:
- Commercial property insurance to cover the repair or replacement of lost, damaged, or stolen LLC assets and properties.
You can use a company like Insureon to get quotes for a range of business insurance policies.
Things Taking Too Long? Buy an LLC Formation Package to Speed Up the Process
You don’t have to set up an Illinois LLC by yourself. There are plenty of companies that offer a fast and affordable LLC Formation service to speed up the process.
For example, Northwest is a top LLC formation company whose package includes all the state filing fees, access to their Corporate Guides, a registered agent service, and more for only $225 per year.
FAQs About Forming an LLC in Illinois
How Long Will It Take to Form My Illinois LLC?
You can expect your Illinois LLC to be formed in five to ten days if you file your Article of Organization online and 3-4 weeks if you file them via mail. You can also have your Illinois LLC formed faster by paying for expedited processing.
How Much Does It Cost to Set Up an LLC in Illinois?
To set up your LLC in Illinois, you will need to pay an Article of Organization filing fee of $150. You will also be required to pay $75 per year for filing an annual report. If you want to reserve the name of your LLC before forming your Illinois LLC, you will need to pay a $25 fee, too.
Can I Act as my Own Registered Agent in Illinois?
Yes. The state of Illinois allows business owners to appoint themselves as their own registered agents, provided they meet all the state requirements. You must be a resident of Illinois with a permanent street address and be available to receive state and legal documents during regular business hours in Illinois.
Can I Form a Single-Member LLC in Illinois?
Yes. Illinois state law allows business owners to form a single-member LLC. However, you must follow all the requirements of forming an LLC in Illinois. The good news is that the process of forming a single-member Illinois LLC is similar to what we discussed in this article.
We hope our guide on how to form an LLC in Illinois helps you get more acquainted with the steps of forming your Illinois LLC.
Generally, it only takes simple steps to form an LLC in Illinois. If you find some steps too time-consuming and tedious, you can purchase an LLC formation package to speed up the process. You can also seek assistance from our experts to guide you through the most essential steps of the process.