What process should I use if I want to form an LLC in Illinois state? How much will it cost me to start an LLC in Illinois? How long will it take for the limited liability company to be approved?
Most entrepreneurs struggle with these questions and more before deciding to start an LLC business in Illinois.
However, starting an LLC business in the state of Illinois is a seamless process that shouldn't scare you. The process is also quite affordable.
If you want to learn the process of LLC formation in Illinois state, follow our step by step guide and get started with the process today. But, first get familiar with the best LLC formation services out there and, more importantly, chose the right state to form your LLC. For example, look at the LLC forming guide in Maryland, nearby North Carolina here, or Ohio in this post. You can also check out how seamless it is to form an LLC in Colorado in this review.
How Much Does It Cost to Start an LLC in Illinois?
As mentioned earlier, starting an LLC in Illinois is an affordable process.
But before you can decide to start an LLC, it will help a lot if you consider all the costs involved in the process. This can include the cost of renting office space, purchasing office furniture, and paying employees.
Also, there are start-up costs associated with LLC formation in the state of Illinois.
There are two methods you can use in starting your limited liability company (LLC) in Illinois. You can do it yourself, or you can hire the services of an LLC service. The latter will cost you some fees, which can range depending on the LLC service.
Also, you need to file Articles of Organization, which you can do by mail or online. For online filing, you'll pay a $250 filing fee, while the hard copy option will cost $150. If you wish to expedite the process and have your documents approved faster, you can pay an additional $100.
The best thing is that the articles' filing is a one-time event, and you don't have to pay the filing fee again.
Before registering the LLC, you need to get a name for the business. You can reserve a name for 90 days and pay a $25 reservation fee. If you choose to use a fictitious name instead of the business's official name, you'll pay $30 per year.
Finally, there is a $75 filing fee for filing your annual report. If you file the report late, you incur an additional $60 as a penalty.
How Long Does It Take for an LLC to be Approved in Illinois?
After filing your Articles of Organization, you'll wait for ten to fifteen business days for the Illinois state to process and approve your LLC.
Once the LLC is approved, you'll get a stamped and approved copy of the Articles of Organization and a welcome letter. The welcome letter will include the file number of your LLC.
The approved documents are sent by mail to the registered agent's address.
How to Start an LLC in Illinois
Follow these steps to form an LLC in Illinois:
Choose a Name for Your Illinois LLC
The first and most crucial step in forming an LLC in Illinois is getting a name for the business. The name should be unique and distinguishable from other business entities' names in the Illinois department.
According to Illinois law, the LLC name should have the following prases or abbreviations as the last words:
- Limited liability company
The abbreviations Co. and Ltd are not allowed in the Illinois state. Also, the name should not include words such as Corp, Incorporated, Corporation, and Inc.
You can check with the Illinois secretary of state to see if your choice of name is similar to any other small business in the state. You can also check your LLC business name's availability by checking the Secretary of State Business Services name database.
You can also reserve a name for 90 days by filing an Application to Reserve a Name (Form LLC 1.15.) The filing fee for reserving the name is $25.
The name you choose shouldn't confuse the LLC business with any other government agency such as State Department, FBI, or the Treasury. If you use a restricted word such as a bank, attorney, or University, you'll require more paperwork. You will also need a registered person to be part of the LLC.
If you don't want to use your business's official name in the real world, you can come up with a trading name. The trade name is also known as a fictitious name, assumed name, or DBA (Doing Business as.) To use a DBA, you need to register online or by mail (by filing an Application to Adopt, Change, Cancel, or Renew an Assumed Name) with the Illinois secretary of state.
Get a Registered Agent
After getting a business name, you should proceed to get a registered agent, who is also known as a resident agent or an agent for service of process. Look more closely at the top picks in our IncFile review, Rocket Lawyer, or Zen Business registration service. While here, you can also check out or Zen Business vs LegalZoom comparison.
The registered agent can be a business entity or an individual responsible for receiving legal documents, a notice of lawsuits, and tax forms on the LLC's behalf. The registered agent is the government correspondence on behalf of your business, and he/she is the link between you and the government.
A registered agent must be a resident of the state of Illinois or a business entity, such as a registered agent service. Nothing stops you from electing yourself or another member of the LLC as the registered agent.
If the registered agent is a corporation, its Articles of Organization must allow it to act as a registered agent. The agent should have a physical street address in Illinois.
Can a foreign LLC operate in Illinois?
A foreign LLC willing to conduct business in Illinois should register with the secretary of state.
It should then appoint a registered agent, physically located in Illinois, for service of process. To register a foreign LLC, file an Application for Admission to Transact Business, Form 45.5, and pay a $150 filing fee. You file the application by mail.
The application should be accompanied by a Certificate of Good Standing from the LLC's home state. The certificate should be dated not more than 60 days prior to filing the application.
File Articles of Organization
You need to file the Articles of Organization, Form LLC-5.5 with the Secretary of State Department of Business Services. You can file the form online or by mail.
The Articles of Organization must include:
- The name of the limited liability company
- The address of the LLC
- Specify when the articles become effective (is it upon filing or at a later date)
- Name and address of the registered agent
- The purpose for which the limited liability company is organized
- A statement of the LLC's duration (perpetual or for a specified period)
- The names and addresses of the initial members, if the LLC is member-managed. Names and addresses of initial managers, if the LLC is manager-managed
- Name, address, and signatures of organizers
You should pay the state filing fee of $150 while filing the Articles of Organization.
Prepare an Operating Agreement
Preparing an operating agreement is not a requirement when forming an LLC in Illinois, but it is good practice to have one.
An LLC operating agreement is a legal document that establishes the ownership and operating procedures of the LLC. It ensures that the LLC business owners are on the same page in running and managing the business, which prevents conflicts in the future.
It outlines the powers, rights, duties, and the responsibility of members and managers in the Illinois LLC. The operating agreement also preserves your limited liability as it shows that the LLC is a separate business entity.
If you don't prepare operating agreements, the Illinois state will govern how your LLC business will operate.
Get an Illinois Employer Identification Number
An EIN is also referred to as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN.)
You get an EIN from the Internal Revenue Service (IRS), and it helps to identify your business for tax purposes. It is a social security number for the LLC.
You require an EIN for various reasons, including:
- Opening a business bank account
- Hiring employees
- Filing and managing federal and state taxes
If your LLC has more than one member, then you should get an EIN even if you have no employees. You should obtain an EIN for a single-member LLC if you intend to hire employees or have it taxed as a corporation instead of a sole proprietorship.
You get an EIN by filing an application on the IRS website. There are no filing fees involved.
What are the state business taxes in Illinois?
For most LLCs, income taxes are referred to as pass-through entities. They pass through the LLC to the members. The LLC doesn't pay federal income tax, but the members do.
In Illinois, the state imposes separate state taxes on the LLC.
File Annual Reports With the Secretary of State
Every LLC operating in Illinois must file an annual report with the Secretary of State Department of Business Services. You should make sure to file the report every year before the first day of the LLCs anniversary month. For instance, if you created your LLC on 17th June, your annual report due date is on 1st June.
You can file the report by mail using Form LLC 50.1, or you can file online and make sure you meet all the filing requirements. The filing address is:
The Secretary of State
Department of Business Services
Limited Liability Division
501 S. Second Street, Rm 351
Springfield, IL 62756.
Can I form a professional LLC in Illinois?
If you offer a professional service and wish to form a limited liability company, you will create a professional limited liability company (PLLC.) You must be registered and licensed to offer the professional service, and you can only offer the specified service.
Professional services include dentists, certified public accountants, attorneys, etc.
Do you want to start an LLC in Illinois? Worry no more. Here, we have a comprehensive guide on each step you need to take to register your business. You also got to learn about all the filing fees involved so that you can budget accordingly.