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How to Start an Illinois LLC: Illinois and its Many Business Benefits
There are many requirements that go into getting your Illinois LLC up and running, some of which can be very overwhelming for new business owners.
However, with the right support, you’ll be able to successfully form your Illinois LLC so you can start doing business as a limited liability company. Below you will find an overview of each step for the state of Illinois:
What is an LLC?
Doing business as a limited liability company comes with a lot of responsibilities, but it also comes with many benefits. One of the major benefits is that your personal assets do not get intertwined with your business assets in the case of debts or lawsuits. This means that if your LLC is ever sued or goes into unmanageable debt, your personal bank accounts and property cannot be touched as compensation.
When you operate as an LLC business entity, you may have to go through some formalities, but you are able to access many benefits that can help the growth and longevity of your Illinois business.
The Illinois LLC formation process has eight easy steps:
1. Choose a name for your Illinois LLC
2. Select a Registered Agent
3. Obtain a Certificate of Formation
4. Create an LLC Operating Agreement
5. Get an EIN Number
6. Open a Business Bank Account
7. File Your LLC Taxes
8. File an Annual Report
1. Choose a Name for Your Illinois Limited Liability Company
When you choose a business name for your Illinois LLC, sometimes referred to as a trade name, you want it to be relatable to its industry while remaining professional for customers or clients.
Your business name must be unique. It cannot be too similar to other LLCs in the state of Illinois or your name will be rejected. In order to check if your ideal business name is available, you’ll need to conduct a name search through the Secretary of State website.
Conduct a Name Search through the Illinois Secretary of State Website
In order to do a proper name search with the Secretary of State, follow the directions below:
Step 1: Go to the LLC lookup for Illinois which is linked as a section of the Secretary of State website.
This is where you will choose the type of company structure you would like to perform an Illinois LLC name search for. Since you’re most likely looking to form an LLC, go ahead and click the LLC ticker to select this specific business entity for the name search.
If the name doesn’t return results, you can move ahead with the LLC organization process. Your ideal business name is available and can be used on your LLC application. If the Secretary of State website tells you that your chosen name is available, then you can proceed with forming your Illinois limited liability company with your chosen name.
If you need help to navigate this process with ease, contact the professional team at LLC Formations so we can help you choose the best name for your business.
2. Choose a Registered Agent for Your LLC in Illinois
The job of a registered agent is to collect all of the mail and important documents for LLCs. Your registered agent will be in charge of handling a lot of important information and deadlines, so you want to be sure that your chosen agent is reliable and has the proper availability.
Who Can Be a Registered Agent?
Anyone over the age of 18 is eligible to be your company’s registered agent as long as he or she has a legal street address in the state of Illinois. Your registered agent will also need to have availability during normal business hours so he or she can receive documents.
You don’t want to get stuck with a “fly by night” registered agent service. Quality results require quality contributions from a professional who can be trusted to handle important matters for your LLC. A popular option that many business owners choose is to hire a professional agency.
When LLCs choose this option, they have the added benefit of reliability and professionalism beyond the registration process. The agent assists with the formation process, but he or she is also responsible for important paperwork even after the LLC is formed. It’s well worth the small fee that professional agents charge.
If you need help with choosing a registered agent for your LLC, contact the professionals at LLC Formations.
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3. File the Articles of Organization for Your Illinois LLC
The Articles of Organization is a very important document that completes the registration process of your LLC. Also referred to as the Certificate of Formation, this document is what approves your business as a limited liability company in the state of Illinois. When you fill out the forms for the filing, you’ll need to include a few specific pieces of information on different areas of the document along with the fee.
Some things to include on the Articles of Organization are:
- LLC name
- Type of legal structure
- Registered agent’s name and office address
- Names of all members
- Effective date and dissolution date if applicable
How to Complete the Articles of Organization Filing
There are three ways to file your Articles of Organization with the Secretary of State, all of which require the same steps to be taken. You can file by mail, in person, or online. The fastest way to complete the Articles of Organization filing is online. When you file the forms online, you will get your approval almost immediately.
Applicants must also include the $150 filing fee with the registration forms. LLCs can pay the filing fee by check or money order if completing the filing by mail, and by credit card if filing online.
If you need assistance with completing your Articles of Organization so you can form your LLC, contact the professionals at LLC Formations to complete your filing.
4. Create an LLC Operating Agreement for Your LLC in Illinois
Each state has its own set of requirements when it comes to business services and the law, recordkeeping, and Operating Agreement requirements. Illinois is no different, and it seems like their approach over the years has helped them operate one of the most streamlined processes for managing the many limited liability companies within the state.
An LLC Operating Agreement is not mandatory for any LLCs within the state. However, it’s advised that one is created to solidify the structure and internal workings of your new startup company.
What is an Operating Agreement?
An Operating Agreement shows how LLCs plan to operate. Once an Operating Agreement is created and signed, it becomes a legal document that can be upheld by the law. Different from a sole proprietorship, an LLC has many legal inner workings and can have multiple members and managers within the LLC.
When there are multiple people involved in the LLC, it’s imperative to have the rights and expectations listed on legal documents. This keeps the LLC organized and effective, and it holds each of the members liable for their roles in the LLC.
If you go ahead and create one, make sure it aligns seamlessly with all requirements and protocols outlined.. If you want a template to use, you can find one specifically for your state at this featured resource or you can contact the professionals at LLC Formations so we can help create your Operating Agreement.
5. Get an EIN for Your LLC in Illinois
When you form an LLC, you’ll need to obtain an EIN, also called an employer identification number. Unlike a sole proprietorship, the LLC business structure allows for many benefits, one of them being an EIN. An EIN is essentially like a social security number for an LLC that all tax information is registered under and is essential for doing business as an LLC.
LLCs can apply for an EIN through the IRS without being charged any application fee or filing fee. Having an EIN streamlines many business services because of what the EIN offers LLCs. When you have an EIN, you can open a business bank account for your Illinois LLC, you can pay employees through payroll, and you can access specific types of business licenses and permits.
You can submit your information directly to the IRS through the EIN application online or you can apply by mail. The EIN registration process should be fairly quick if applying online. If you need help with filing for your EIN, contact the team at LLC Formations so we can help you get past this part of the process.
6. Open a Business Bank Account for Your LLC
When you form an LLC, it’s important that you set up a separate bank account specifically for your business so you can retain the liability protection offered by the LLC structure. When you mix your personal finances, you could jeopardize the benefits offered to law-abiding businesses and thus waive your liability protection.
There are many benefits offered to LLCs when they open a business bank account. It’s easier for LLCs to stay within the requirements of the law because everything is organized within the same business account.
Additionally, when you form an LLC and open a business bank account, it’s easier to streamline many business services, such as organizing income, obtaining business licenses, and paying members and employees from the business account.
Opening a business bank account is as simple as following these 3 steps:
1. Upon approval of all submitted proof and records, you’ll make the initial deposit where you’ll also be presented with a bank resolution to sign off on. This is where the change starts taking place, as it’s your initial contractual obligation. Some banks will require the names of all members to be on the account opened so be sure to check with your specific bank.
2. Compile all of the important documents and keep them secure and make sure. It’s wise to have them analyzed by a financial expert capable of spotting any risks.
3. Organize your plan for how the finances of the operations itself will run, in the most self-sufficient manner possible to minimize overhead without sacrificing the results.
See how simple it is? It’s simply a matter of putting in the necessary work. Contact the professionals at LLC Formations if you want to know about the best banks in your area for your specific type of business.
7. Tax Guides for Illinois-based Businesses and Entrepreneurs
The Illinois Department of Revenue created the ultimate digital resource for businesses needing to simplify their dealings with taxation. You can go to the website for more information on the types of tax you may be liable for when doing business in Illinois. These are the most common types of tax:
- Sales and use taxes
- State business taxes
- State employer taxes
You can find the updated processes, tax rates, and more here on the state’s official website. Keep in mind that it’s usually mandatory for employers to cover worker’s compensation insurance in addition to paying the relevant taxes for your Illinois business.
8. File an Annual Report
When you form a limited liability company, there are additional requirements to be aware of even after the LLC is formed. Each year, every LLC is required to file an Annual Report with the Secretary of State in order to maintain your LLC’s Certificate of Good standing and to keep your liability protection.
Your Annual Report needs to include important information about your business in the state of Illinois. You should include the names of all of the LLC members, your LLC’s income statement, your office address, your registered agent, and other relevant information about your business services.
How Can LLC Formations Help You?
Forming an LLC isn’t easy, and it takes a lot of work to grow your business. However, with the right support, the process can at least be a lot easier. Let the professionals at LLC Formations help you save time and energy by filing articles and applications for you. This way, you can solely focus on growing your Illinois LLC.
We have another great article about starting your Indiana LLC.
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When you go about handling the legality of starting your own business, you want to make sure that you’re following the correct procedures. Here are some common questions and their answers in order to help you grow your LLC.
A: In most situations, the LLC owner(s) report income on their personal tax filings as self-employed individuals. There are some situations that require different attention to ensure the best outcome possible for both agencies as well as taxpayers in the state.
A: This must be handled directly with the Illinois Secretary of State since they're the regulatory authority with jurisdiction over handling these specific kinds of matters with limited liability companies and their members. LLC-5.25 is the form that is used to file an LLC amendment for your LLC.
A: The only thing that you need to keep in mind is that you need a physical address for your business, a local Illinois telephone number, and a registered agent living within the state.
You may have to manage multiple entity filings, as each state that you transact in requires a new one.
A: All personal assets of owners are treated separately from the assets of the LLC itself. This helps ensure that entrepreneurs don't lose everything they own outside of the business. If another type of corporation is filed for, owners can get sued for their personal assets in order to cover any losses incurred by it.
A: Getting your LLC reinstated in the Land of Lincoln is possible, but the process must be followed strictly to ensure the outcome plays to your advantage rather than a disadvantage. Here are the steps you must take if you need to reinstate your LLC:
- Obtain and complete the LLC Reinstatement form or complete the filing online.
- Catch up on any missed reporting fees accrued during the absence.
- Pay all past-due taxes immediately and show proof we're moving forward.
- Keep all reference numbers and sensitive info for account ownership documented.
- Stay in the loop and await further details directly from the Illinois Secretary of State.
A: The filing fee will be around $250 if you resubmit everything all together. If you decide to file in a different manner, you can expect to tack on at least a $50 filing fee to that price tag.
A: An LLC member is the owner(s), their partners, as well as anyone else involved directly with the executive operations of the company and has rights within the company.
A: There's nothing complicated about how owners of an Illinois limited liability company get paid, but it's different than alternate company structures. Owners aren't to take out a salary of any kind from the company. Instead, the profits and losses run through each LLC member directly, which also adds to their responsibilities respectively.