Form a S-Corp in Illinois
Everything you need to know about forming a 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 business name that complies with Illinois naming rules, including a required designator such as 'Inc.', 'Corp.', or 'Incorporated'. Verify availability using the Illinois Secretary of State's business name search tool at ilsos.gov.
30 minutes
Appoint a Registered Agent
Designate a registered agent with a physical Illinois street address (P.O. boxes are not accepted) to receive legal documents and official notices on behalf of the corporation. The registered agent can be an individual Illinois resident or a qualified registered agent company.
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 fee is $150, plus an initial franchise tax calculated at $1.50 per $1,000 of paid-in capital allocated to Illinois (minimum $25).
1-2 hours
Obtain an EIN from the IRS
Apply for a Federal Employer Identification Number (EIN) through the IRS website at no cost, which is required for tax filing, opening a business bank account, and payroll purposes. This can be done immediately online and the EIN is issued instantly.
15 minutes
What's Next After Filing
Once your S-Corp is officially formed, you'll want to complete these important steps:
- •Elect S-Corporation Status with the IRS — File IRS Form 2553 (Election by a Small Business Corporation) to elect S-Corp tax treatment, ensuring all shareholders meet eligibility requirements (U.S. citizens or residents, maximum 100 shareholders, only one class of stock). The election must be filed by March 15 for it to take effect for the current tax year, or within 75 days of incorporation.
- •Adopt Corporate Bylaws and Hold Organizational Meeting — Draft corporate bylaws governing internal operations, then hold an initial organizational meeting of the board of directors to adopt bylaws, appoint officers, issue stock, and address initial corporate formalities. Illinois does not require bylaws to be filed with the state, but they are legally important for corporate governance.
- •Register for Illinois State Taxes and Licenses — Register with the Illinois Department of Revenue for applicable state taxes (including Illinois personal property replacement tax of 1.5% of net income for S-Corps) via MyTax Illinois, and obtain any required local business licenses or permits relevant to your industry and municipality.
Advantages
- ✓Pass-through taxation avoids federal double taxation, with income and losses reported on shareholders' personal returns, though Illinois imposes a 1.5% Personal Property Replacement Tax at the entity level.
- ✓Shareholders who are active in the business can reduce self-employment tax liability by splitting income between a reasonable salary and S-Corp distributions, which are not subject to FICA taxes.
- ✓Provides limited liability protection, shielding shareholders' personal assets from business debts and legal judgments.
- ✓Established corporate structure with clear governance through bylaws, a board of directors, and officers, which can enhance credibility with investors, lenders, and customers.
Considerations
- •Strict IRS eligibility restrictions limit S-Corps to 100 shareholders, one class of stock, and only U.S. citizens or permanent resident shareholders, restricting growth and investment flexibility.
- •Illinois imposes an annual franchise tax and a 1.5% Personal Property Replacement Tax on net income, adding costs compared to some other states and entity types.
- •More administrative burden than an LLC, requiring formal corporate formalities such as annual meetings, minutes, bylaws, and stock issuances to maintain liability protection and S-Corp status.
Annual Obligations
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