Form a Partnership in Illinois
Everything you need to know about forming a Partnership in Illinois. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Partnership Type
Decide between a General Partnership (GP), Limited Partnership (LP), or Limited Liability Partnership (LLP). General partnerships require no state filing, while LPs and LLPs must register with the Illinois Secretary of State.
1-2 hours
Select and Verify a Business Name
Choose a unique business name and search the Illinois Secretary of State's business name database to confirm availability. LLPs must include 'Limited Liability Partnership' or 'LLP' in the name; LPs must include 'Limited Partnership' or 'LP'.
30 minutes
Draft a Partnership Agreement
Create a written partnership agreement outlining each partner's roles, profit and loss sharing, decision-making authority, and dissolution procedures. While not legally required in Illinois, a partnership agreement is strongly recommended to prevent future disputes.
2-5 hours
Designate a Registered Agent
Appoint a registered agent with a physical Illinois street address to receive legal and official documents on behalf of the partnership. The registered agent must be available during normal business hours.
30 minutes
What's Next After Filing
Once your Partnership is officially formed, you'll want to complete these important steps:
- •File Formation Documents with the State — For an LP, file a Certificate of Limited Partnership (Form LP-101) with the Illinois Secretary of State. For an LLP, file a Statement of Qualification (Form LLP-5.5) online or by mail with the required $100 fee. General partnerships do not file with the state.
- •Obtain an EIN and Register for Taxes — Apply for a Federal Employer Identification Number (EIN) from the IRS at no cost, which is required for tax filing, banking, and hiring employees. Register with the Illinois Department of Revenue for any applicable state tax accounts, such as sales tax or employer withholding.
- •Obtain Licenses, Permits, and Open a Bank Account — Apply for any required local or state business licenses and permits relevant to your industry or municipality. Open a dedicated business bank account to keep partnership finances separate from personal funds.
Advantages
- ✓Simple and inexpensive to form, especially general partnerships which require no state filing or fees
- ✓Pass-through taxation avoids double taxation — profits and losses flow directly to partners' personal tax returns
- ✓Flexible management structure with no board or officer requirements mandated by state law
- ✓LLPs provide personal liability protection for partners from the negligence or misconduct of other partners, making them ideal for professional service firms
Considerations
- •General partners in a GP or LP face unlimited personal liability for business debts and obligations, putting personal assets at risk
- •Partnerships dissolve automatically upon the death, withdrawal, or bankruptcy of a general partner unless the partnership agreement provides otherwise
- •Raising outside capital is more difficult than with a corporation since partnerships cannot issue stock or shares to investors
- •Self-employment taxes apply to general partners on their full share of partnership income, which can be a significant tax burden
Annual Obligations
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