Form an S-Corp in Illinois
Everything you need to know about forming an S-Corp in Illinois. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Corporate Name
Select a unique name that complies with Illinois naming rules and includes a required designator such as 'Inc.', 'Corp.', or 'Incorporated'. Conduct a name availability search on the Illinois Secretary of State's business entity database to confirm the name is not already in use.
30 minutes
Appoint a Registered Agent
Designate a registered agent with a physical street address in Illinois who is available during normal business hours to receive legal and official documents on behalf of the corporation. The registered agent can be an individual Illinois resident or a qualified registered agent service.
30 minutes
File Articles of Incorporation
Prepare and file Form BCA 2.10 (Articles of Incorporation) with the Illinois Secretary of State, either online, by mail, or in person. The filing must include the corporate name, registered agent details, number of authorized shares, and incorporator information, along with the $150 filing fee.
1-2 hours
Adopt Corporate Bylaws
Draft and adopt corporate bylaws, which govern the internal management, procedures, and rules of the corporation including director and officer roles, meeting procedures, and shareholder rights. While not filed with the state, bylaws are legally important and should be maintained in the corporate records book.
2-4 hours
What's Next After Filing
Once your S-Corp is officially formed, you'll want to complete these important steps:
- •Hold Organizational Meeting and Issue Stock — Conduct an initial organizational meeting of the board of directors to elect officers, adopt bylaws, authorize the issuance of stock, and handle other organizational matters. Issue stock certificates to initial shareholders and record the transactions in the corporate minutes.
- •Obtain EIN and File IRS Form 2553 for S-Corp Election — Obtain a federal Employer Identification Number (EIN) from the IRS at no cost, then file IRS Form 2553 (Election by a Small Business Corporation) to elect S-Corporation tax status. The election must be filed no later than 2 months and 15 days after the beginning of the tax year the election is to take effect; Illinois automatically conforms to the federal S-Corp election.
- •Register for Illinois State Taxes and Licenses — Register with the Illinois Department of Revenue for applicable state taxes including Illinois income tax withholding, sales tax (if applicable), and unemployment insurance. Obtain any required local business licenses or permits from the city or county where the business will operate.
Advantages
- ✓Pass-through taxation avoids federal double taxation, with corporate income and losses reported on shareholders' personal tax returns
- ✓Shareholders who are employees may reduce self-employment tax liability by splitting compensation between reasonable salary and distributions
- ✓Provides limited liability protection, shielding shareholders' personal assets from corporate debts and legal liabilities
- ✓Illinois automatically recognizes the federal S-Corp election, simplifying the state-level tax treatment process
Considerations
- •S-Corporation eligibility is restrictive: limited to 100 shareholders, only U.S. citizens or resident aliens as shareholders, and only one class of stock is permitted
- •Illinois imposes a Personal Property Replacement Tax of 1.5% on net income, adding a layer of state tax not faced by S-Corps in all states
- •Greater administrative burden compared to sole proprietorships or partnerships, including requirements for bylaws, board meetings, corporate minutes, and annual reporting
Annual Obligations
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