Form an LLC in Illinois
Everything you need to know about forming an LLC in Illinois. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Business Name
Select a unique name that includes 'Limited Liability Company,' 'LLC,' or 'L.L.C.' and is distinguishable from existing Illinois entities. Use the Illinois Secretary of State's free online business name search tool to verify availability before filing.
30 minutes
Reserve Your Business Name (Optional)
If you are not ready to file immediately, you can reserve your chosen business name for 90 days by filing an Application to Reserve a Name with the Illinois Secretary of State for a $25 fee. This step is optional but recommended if you need time to prepare.
15 minutes
Designate a Registered Agent
Appoint a registered agent who has a physical street address in Illinois and is available during normal business hours to receive legal documents and official correspondence on behalf of your LLC. The agent can be an individual member or a professional registered agent service.
15 minutes
File Articles of Organization
Submit the Articles of Organization (Form LLC-5.5) to the Illinois Secretary of State online via the SOSDirect portal, by mail, or in person. The filing fee is $150, and you must provide the LLC name, registered agent information, principal address, and organizer details.
1-2 hours
What's Next After Filing
Once your LLC is officially formed, you'll want to complete these important steps:
- •Draft an Operating Agreement — Although not legally required by Illinois law, drafting an Operating Agreement is strongly recommended to define member roles, ownership percentages, profit distribution, voting rights, and management structure. This internal document helps prevent disputes and establishes credibility.
- •Obtain an EIN from the IRS — Apply for a free Employer Identification Number (EIN) from the IRS online at IRS.gov, which is required to open a business bank account, hire employees, and file federal and state taxes. Single-member LLCs without employees may still need an EIN for banking purposes.
- •Register for Illinois State Taxes and Licenses — Register with the Illinois Department of Revenue via MyTax Illinois if your LLC will collect sales tax, withhold employee income taxes, or is subject to other state taxes. Additionally, obtain any required local business licenses, permits, or professional licenses applicable to your industry.
Advantages
- ✓Personal liability protection shields members' personal assets from business debts, lawsuits, and obligations incurred by the LLC.
- ✓Pass-through taxation by default avoids double taxation, with profits and losses reported on members' personal income tax returns rather than at the entity level.
- ✓Flexible management structure allows LLCs to be member-managed or manager-managed, providing operational versatility without the rigid formalities of a corporation.
- ✓Illinois has a straightforward formation process with online filing available through the SOSDirect portal, making it accessible for entrepreneurs to form and maintain their LLC.
Considerations
- •Illinois LLCs are subject to a $75 annual report fee and must file every year to remain in good standing, adding ongoing administrative and financial obligations.
- •Self-employment taxes (15.3%) apply to active LLC members' share of earnings since they are not considered employees, which can result in a higher overall tax burden compared to S-Corp election.
- •The Illinois LLC Act provides less well-established legal precedent compared to states like Delaware or Nevada, which may be a consideration for businesses seeking investor funding or complex ownership structures.
Annual Obligations
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