Here is an outline of the steps you need to follow in order to form an LLC in Illinois. You should also read the general section on forming an LLC for information that is applicable in any state.
1. Choose a business name for the LLC and check for availability.
- Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.
- Illinois law requires that an LLC name contain the words "limited liability company," "L.L.C.," or "LLC." Additionally, your business name must be distinguishable from other names on file with the Secretary of State, and may not contain any of the following terms: "Corporation," "Corp.," "Incorporated," "Inc.," "Ltd.," "Co.," "Limited Partnership" or "L.P." Other more obscure limitations apply -- see 805 Ill. Comp. Stat. 180/1-10 (scroll down) for details.
- Although you are not required to do so, consider registering your business name as a federal and/or state trademark.
2. Prepare and file articles of organization with the Secretary of State.
- The filing fee is $500. The Secretary of State's website has a simple, fill-in-the-blank form for the articles of organization. For general information on articles of organization, see the Articles of Organization page.
3. Negotiate and execute an operating agreement.
- Illinois does not require an operating agreement in order to form an LLC, but executing one is highly advisable. There is no set criteria for the content of an operating agreement, but it typically includes topics such as how meetings are conducted, how the company will be managed, what capital contributions are required from each member, and how profits and losses will be allocated. The operating agreement does not need to be filed with the state. Please see the Operating Agreement page for details.
4. Obtain any required local licenses.
- See the general section on forming a LLC for details.
5. Determine what tax and other regulatory obligations the LLC has, and take care of any necessary registrations.
- Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
- If you have an employee or employees in Illinois, you must register with the Illinois Department of Employment Security. You can find additional information on the Tax Registration Page of the Illinois Business Portal.
- All new business owners must register for business taxes with the Illinois Department of Revenue. For details, see the the Tax Registration Page of the Illinois Business Portal.
- Whenever you hire an employee in Illinois, you must inform both the IRS and the State of Illinois. The IRS details all of the necessary steps to complete, including verifying work eligibility and withholding allowances certificates, on its page entitled Hiring Employees. You can find information on what to do on the state level on the New Hire Reporting section of the Illinois Business Portal.
- If you have one or more employees in Illinois, you must carry workers' compensation insurance. You may choose to obtain workers' compensation insurance for yourself, but you do not need to. (If you have a workers' compensation policy for your employees, you must contact your insurance company if you DO NOT want to be covered.)
- As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
6. Open a bank account for your business.
- It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your business. You will probably need a Tax ID number (EIN), a copy of the articles of organization, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.
- Illinois LLCs must file an file an Annual Report with the Secretary of State at the end of every business year. The filing fee is $250.
- Illinois requires certain documents to be kept at an LLC's principal place of business. A list of the required documents is located in 805 Ill. Comp. Stat. 180/1-40 (scroll down).