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Quick Facts for Forming an LLC in Illinois

State fee: $155
Processing time: 7 - 10 business days (online); 24-hour expedited
Filing method: Online or by mail
State agency: Illinois Secretary of State

What Is an LLC?

A limited liability company (LLC) is a popular business structure that combines the liability protection of a corporation with the flexibility and tax benefits of a partnership or sole proprietorship. When you form an LLC, you create a distinct legal entity separate from yourself. This separation means that your personal assets, such as your home or savings, are generally protected if your business faces a lawsuit or incurs debt. It is an accessible option for many entrepreneurs seeking professional structure without overwhelming complexity.

Why Form an LLC in Illinois?

Choosing to establish your business in Illinois offers specific benefits for entrepreneurs. Illinois is home to a diverse and highly accessible economy, with strong infrastructure, a large consumer base, and proximity to major national markets. This makes it an appealing location to build and grow your company while maintaining the protections an LLC provides.

How to form an LLC with LegalNature

Step 1

Let us know your business details and needs.

Our form will walk you through all the important decisions and information.

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Step 2

Relax as we handle your Illinois LLC formation.

We make the paperwork and file it with the secretary of state (SOS). You pay the $150 state filing fee.

Step 3

Start doing business!

We provide the documents and next steps for your business bank account, free tax consultation, and more!

What are the benefits of forming an LLC?

A Limited Liability Company (LLC) is the most popular business structure in the US today, and for good reason. The key benefits include:

Liability Protection

Owners and employees are shielded from becoming personal responsible for the company's debts and other obligations.

Simplified Tax Accounting

Unlike corporations, which file a separate tax return, LLC owners can simply pay all of their income taxes on their personal tax returns.

Easy to Set up and Operate

With fewer state requirements, LLCs are by far the easiest and most affordable business type to own and operate.

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How to Form an LLC in Illinois

1. Choose a Name for Your LLC

Your business needs a unique name that complies with state rules. In most cases, the name must include the phrase "limited liability company" or an abbreviation like "LLC." You will need to verify that your chosen name is available and not already in use by another business registered with the Illinois Secretary of State. Keep in mind that Illinois prohibits the use of certain words such as "Bank," "Insurance," or "Corporation" without special regulatory approval, and your name cannot be deceptively similar to an existing registered business name.

2. Appoint a Registered Agent

You must designate a registered agent for your business. A registered agent is a person or company who agrees to accept service of process notifications if the business is involved in a legal dispute. In Illinois, you are required to have a registered agent with a physical street address in the state. The agent must be available during regular business hours to receive important legal and tax documents on behalf of your company.

Check Out Our Registered Agent Service

3. File Your Articles of Organization

To officially create your LLC, you must submit a formal document to the state. This document is called the Articles of Organization in Illinois. You will file this paperwork with the Illinois Secretary of State. The filing can be completed online through the Secretary of State's business services portal or submitted by mail. When submitting your documents, be aware that Illinois requires you to designate whether your LLC will be member-managed or manager-managed directly on the Articles of Organization form.

4. Create an Operating Agreement

An operating agreement is an internal document that outlines how your business will be run, including ownership percentages, management structure, and operational procedures. Illinois law requires LLCs to have a written operating agreement, making this a mandatory step and not just a best practice. A well-drafted operating agreement protects your personal liability shield and prevents future disputes among members. You are not required to file it with the state, but you must maintain it as part of your company records.

Learn more about LLC Operating Agreements

5. Get an Employer Identification Number (EIN)

An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS for tax purposes. You will need an EIN to open a business bank account, hire employees, and file certain taxes.

Let Us Help You Retrieve Your EIN

Illinois-Specific LLC Details

While the steps above outline the general process, it is important to be aware of specific regulations in Illinois.

Annual Reporting

Illinois LLCs must file an Annual Report with the Secretary of State each year to remain in good standing. The filing fee is $75, and reports are due before the first day of the LLC's anniversary month: the month in which the LLC was originally formed. Filing late triggers a $100 penalty. LLCs that fail to file risk administrative dissolution, which strips the business of its legal protections and good standing status.

Personal Property Replacement Tax

While Illinois does not impose a franchise tax on LLCs, Illinois LLCs are subject to the state's standard income tax requirements, including a personal property replacement tax (PPRT) of 1.5% on net income, which is paid to the Illinois Department of Revenue.

Costs to Form an LLC in Illinois

Understanding the financial commitment is an important part of planning your new business.

Filing Costs: The primary expense is the fee to submit your Articles of Organization to the Illinois Secretary of State. In Illinois, this filing fee is $150.

Expedited Processing: Illinois offers 24-hour expedited processing for an additional fee, which can be useful if you need your LLC approved quickly.

Ongoing Costs: Maintaining your LLC requires ongoing compliance. In Illinois, this includes an annual report fee of $75, due before the first day of your LLC's anniversary month each year. Failure to file can result in administrative dissolution.

Optional Costs: You may also choose to hire a professional registered agent service or use document preparation services to assist with your paperwork and ongoing compliance requirements.

How Long Does It Take to Form an LLC in Illinois?

The timeline for officially establishing your business can vary. In Illinois, the typical processing time is 10 business days once your documents are received by the Illinois Secretary of State. Expedited 24-hour processing is available for an additional fee. Factors such as the filing method you choose and the current volume of applications can affect this timeframe. Planning ahead and ensuring all paperwork is complete and accurate can help avoid unnecessary delays.

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Frequently asked questions

What is an LLC?

An LLC, or Limited Liability Company, is a business structure that combines the personal asset protection of a corporation with the tax benefits and flexibility of a partnership

Is an LLC required to start a business?

An LLC is not required to start a business. Entrepreneurs can choose from various business structures, including sole proprietorships, partnerships, and corporations. However, forming an LLC offers several advantages, such as liability protection and tax flexibility, making it a popular choice for many small business owners

What is the difference between an LLC and a Corporation?

Ownership structure: LLCs are owned by their members which may also be managers, while corporations are owned by their shareholders
Management: LLCs offer more flexible management options, while corporations have a more rigid structure with directors and officers
Taxation: LLCs can choose their tax treatment, often opting for pass-through taxation, while corporations typically face double taxation
Paperwork and regulations: Corporations generally have more extensive recordkeeping requirements and stricter regulations compared to LLCs

Can a corporation start an LLC?

Yes, a corporation can start an LLC. In fact, many states allow various entities, including corporations, to be members (owners) of an LLC. This arrangement can be beneficial for corporations looking to create separate business units or subsidiaries with different liability protections or tax structures.

How much does it cost to start an LLC in Illinois?

The primary cost is the state filing fee of $150, paid to the Illinois Secretary of State when submitting your Articles of Organization. You should also budget for ongoing compliance costs, including the $75 annual report fee due each year. Optional costs such as expedited processing or professional registered agent services may add to your total.

Does Illinois require an operating agreement for an LLC?

Yes. Illinois is one of a small number of states that legally requires LLCs to maintain a written operating agreement under the Illinois Limited Liability Company Act. While you do not file this document with the state, you must have one in place. It should outline member ownership percentages, management responsibilities, and operational procedures.

What is a registered agent?

A registered agent is a person or company who agrees to accept service of process notifications if the business is involved in a legal dispute. In Illinois, your registered agent must have a physical street address in the state and be available during regular business hours to receive official documents on your company's behalf.