How to Start an LLC in Illinois (Step-by-Step Guide)

Forming a Limited Liability Company (LLC) in Illinois is straightforward and can protect your assets while allowing your business to thrive.

To establish your LLC successfully, you must choose a unique business name, designate a registered agent, and file Articles of Organization.

But there’s more.

The state filing fee for forming an LLC in Illinois is $150. You will also need to pay an annual fee of $75 to keep your LLC active yearly.

This guide compiles all the information you need to start an LLC in Illinois today.

What Are the Steps to Start an LLC in Illinois?

To start an LLC in Illinois, you need to:

• Step 1. Choose and search for a unique name
• Step 2. Choose a registered agent in Illinois
• Step 3. File Articles of Organization with the Secretary of State
• Step 4. Create an Operating Agreement
• Step 5. Get an EIN from the IRS
• Step 6. Register with the Department of Revenue
• Step 7. File annual reports

The first five steps are the most critical steps you must follow, while the rest comes later.

But let us dive more in-depth into these steps so I can show you how to get them:

Step 1: Select a Unique Name for Your Illinois LLC

Choosing a unique name for your LLC in Illinois is the first step to getting started. This is important because no two businesses in the state can have the same name.

Use the Illinois Secretary of State’s Business Entity Search tool. This lets you check if your desired name has already been taken. Your name must include “limited liability company” or abbreviations like “LLC” or “L.L.C.” Make sure to use only English letters, Arabic, or Roman numerals.

Do not use words like Ltd., Limited Partnership (or L.P.), Incorporated (or Inc.), or Corporation (Corp.). Avoid phrases that might mislead people into thinking your business is tied to a government agency.

Look at the federal patent and trademark database to ensure no one else has claimed your name as theirs.

Refer to the Illinois naming guidelines for a full rundown of the rules. These outline all the naming restrictions your corporation must adhere to.

After narrowing down your options, you can submit an inquiry form for corporate name availability to the Secretary of State. They will conduct an internal LLC search and email you to confirm if your desired company name is available. Each form allows you to check up to three names.

Step 2: Select an Illinois Registered Agent

In this step, you will choose an Illinois registered agent. This person or business is your LLC’s official contact regarding legal matters. They receive critical legal documents, tax notices, and other official mail.

Who Can Be a Registered Agent?

You have a few options for who can be your Registered Agent in Illinois:

• You: You can act as your registered agent, but remember you must be available during business hours to receive documents.
• A Family Member: A trusted family member can be your registered agent.
• An LLC Formation Service: Professional services offer expertise in handling official correspondence and ensuring compliance with state regulations.
• A Lawyer: A legal service firm can also serve as your registered agent, providing additional legal support if needed.

Requirements for Illinois Registered Agents

Illinois law requires registered agents to have a physical street address, not just a P.O. Box. The address must be where the agent can consistently receive legal documents and official mail during regular business hours.

Additionally, the registered agent must be at least 18 years old and available to accept service of process. This means they must be present to handle any legal notices or court documents delivered to the LLC.

What registered agents do I recommend for Illinois?

I highly recommend Northwest registered agent services for obvious reasons.

They offer a range of benefits that set them apart, including a free year of registered agent service, which helps you save (about $300) on initial costs.

You’ll receive a complimentary operating agreement essential for outlining your LLC’s internal structure. My favorite part? Northwest also allows you to use their office address for your LLC filing, keeping your address off public records and enhancing your privacy.

Their free email forwarding service ensures you stay on top of important correspondence, and their exceptional customer support is always available to assist you whenever needed.

Step 3: File Illinois LLC Articles of Organization

Filing the Articles of Organization is critical in forming your LLC in Illinois. This form provides essential details such as your LLC’s name, address, registered agent, and members’ or managers’ names to the state.

To file your Articles of Organization in Illinois, follow these steps:

Step #1. Complete the Form: Obtain and complete the Articles of Organization form (Form LLC-5.5) from the Illinois Secretary of State website.

Your Articles of Organization must contain:

• Name of your LLC: Choose a unique name that follows state rules.
• Business address: This is your LLC’s primary location.
• Effective date: Specify when you want your LLC to start (can be immediate).
• Registered agent: Name and address of your LLC’s registered agent.
• Purpose: You can include a general statement about what your LLC does.
• Duration: State whether your LLC is perpetual or has a specific end date.
• Names and addresses: List initial members and managers, if applicable.
• Organizer’s details: Include the organizer’s name, address, and signature.

Step #2: File Online or by Mail: You can file your Articles of Organization online through the Illinois Secretary of State website or by mailing the completed form to:

Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62756

Step #3: Pay the Filing Fee: The filing fee is $150. For online submissions, pay by credit card.

Once your articles are filed, the state will review and approve them. This process usually takes a few business days. After approval, your LLC is officially recognized, and you can start your business activities, obtain your EIN, open a bank account, etc.

Step 4: Prepare the Illinois LLC Operating Agreement

An Illinois LLC operating agreement is an internal document that outlines how your business will operate. While it’s not required by law, having one is beneficial.

This agreement specifies essential details like:

• Ownership rights: Who owns what percentage of the LLC?
• Profit sharing: How profits will be distributed among members.
• Daily operations: Who will handle day-to-day management?
• Transferring ownership: How members can sell or transfer their shares.
• Dissolution: The process for closing the LLC if necessary.
• Voting procedures: How decisions are made within the LLC.
• Financial accounting: Guidelines for keeping track of finances.

Creating an operating agreement helps ensure that all members understand their roles and responsibilities, which can prevent misunderstandings later.

Even as a single-member LLC, having an operating agreement is smart. This document can protect you if there are claims about mixing personal and business finances. It shows a clear separation between your assets and the LLC.

In short, an operating agreement is a solid way to lay out the structure of your business and safeguard your interests.

Step 5: Obtain EIN for Your LLC

An Employer Identification Number (EIN) is a unique nine-digit number the IRS assigns. It serves as your business’s Social Security Number. Obtaining an EIN is essential for your Illinois LLC formation.

You will need an EIN to open a bank account, hire employees, file taxes, and apply for business licenses and permits.

How to Apply for an EIN:

• Online: Visit the IRS website. This is the fastest way to get your EIN.
• By Mail: Fill out Form SS-4 and send it to the IRS. This option takes longer.
• By Fax: You can also fax the completed Form SS-4.
• Phone: U.S. residents can call the IRS at 1-800-829-4933 to apply.

How Much Does It Cost To Get EIN?

Obtaining an EIN is free. However, some services charge $100 or more to help you with the entire process.

How Does it Take to Obtain my EIN?

• Online: Get it immediately.
• By Mail: Expect 4 to 6 weeks.
• By Fax: Usually within 1-2 weeks.

Step 6: Register with the Illinois Department of Revenue

You must register with the Illinois Department of Revenue (DOR) to operate your LLC in Illinois. This is an essential step before starting your business activities.

You can register your LLC online through MyTaxIllinois or by filing Form REG-1 by mail.

After processing your registration, the DOR will issue you two crucial documents: Certificate of Registration and Taxpayer ID.

A certificate of registration acts as a general business license in Illinois. The Taxpayer ID differs from your federal Employer Identification Number (EIN) and is used for state tax purposes.

Both the Certificate of Registration and Taxpayer ID are provided at no cost.

In addition to the Illinois Certificate of Registration, which serves as a general business license, your LLC may also need to register for industry-specific taxes. All the necessary forms are on the Department of Revenue’s Business Registration Forms page.

Remember that additional paperwork may be necessary if your business sells specific goods, such as liquor or tobacco. Also, specific local licenses or permits might be required based on your LLC’s activities or location.

Always check with local authorities to ensure compliance.

Step 7: File an Annual Report

As an Illinois LLC, you are required to file an Annual Report each year. This is essential to keep your LLC in good standing with the state.

The cost to file the Annual Report is $75 annually.

Your Annual Report is due before the first day of your LLC’s anniversary month. For example, If your LLC was formed on June 16, your report is due before June 1 each year.

Your first Annual Report must be filed the year after your LLC was approved. For example, if your LLC was approved on August 12, 2024, the first report is due before August 1, 2025.

You can file your LLC’s Annual Report either by mail or online. If you file by mail, the Illinois Secretary of State will take 10-15 business days to process your report. On the other hand, filing online allows for immediate processing.

When filing by mail, the state doesn’t automatically send a confirmation. However, if you include two copies of your report along with a self-addressed stamped envelope, they will send one.

If you file online, you can save and print a confirmation page and receive a confirmation email from the state.

It’s important to note the penalties for late filings. If your Annual Report is 60 days late, a $100 penalty will be added to the $75 fee, bringing the total to $175. If the report is 180 days late, the Secretary of State will administratively dissolve your LLC.

To help you stay on track, the state will mail Annual Report forms and reminders to your Registered Agent 45 days before the due date.

If you plan to file online, you can ignore the forms that accompany the reminder.

What are the Different Methods To Start an Illinois LLC?

Starting an LLC in Illinois can be done in several ways. Each method has advantages and disadvantages, so you can choose the one that best fits your needs.

DIY LLC Formation in Illinois

You can choose to form your LLC by yourself. This DIY approach involves filing the necessary paperwork, including the articles of organization, directly with the Illinois Secretary of State.

Pros:

• Cost-Effective: You only pay the state fee of $150 for processing.
• Complete Control: You handle all aspects of the formation and can customize everything.
• Learning Opportunity: You gain knowledge about the process

Cons:

• Time-Consuming: Learning the requirements and completing the forms can take time.
• Complexity: You must ensure all forms are correctly filled out.
• Privacy issue: If you serve as your registered agent, you risk having your address out there.
• Lack of Guidance: You might miss the necessary steps.

Using a Professional/Online LLC Formation Services

You can also use online services that specialize in LLC formation. These services streamline the process and often offer additional features.

Pros:

• Convenience: They handle filing for you, saving you time.
• Additional Services: Many offer extra services like registered agent services and operating agreements.
• User-Friendly: Most platforms have easy-to-understand instructions.
• Support Available: Many offer customer service for questions.
• Privacy benefits: Most services allow you to use their address for free, so your address doesn’t get compromised

Cons:

• Additional Costs: These services usually charge fees on top of the state’s filing fee.
• Variable Quality: Some services may not be as reliable as others.

Hiring an Attorney

Another option is to hire a business attorney to form your LLC. This method involves getting professional legal advice tailored to your business needs.

Pros:

• Expert Guidance: An attorney can provide customized advice and answers to your questions.
• Customization: Your LLC can be tailored to your specific business needs.
• Support with Complex Situations: Ideal for businesses with unique circumstances.

Cons:

• Higher Costs: Hiring an attorney can be significantly more expensive than other options.
• Less Control: You may have less direct involvement in the formation process.
• Dependence on Others: You may rely heavily on the attorney’s schedule.
• Potential Delays: The process may take longer due to attorney workloads.

What is The Cheapest Alternative Way to Form an LLC in Illinois?

If you’re looking to start an LLC in Illinois on a budget, the most affordable option is to do it online. By filing the Articles of Organization directly with the Illinois Secretary of State, you can keep costs between $150 and $230, depending on your needs.

This DIY approach helps you avoid the extra fees of hiring a service or lawyer, saving you money for other business expenses.

However, while DIY is cost-effective, it requires some effort. You’ll need to understand all the forms and regulations, and missing a detail could delay your application or create problems later.

Consider using a registered agent if you prefer not to handle everything yourself.

They can make the process smoother by ensuring you receive important documents and helping you stay compliant with state requirements. Although this adds a bit to the cost, it can provide valuable support and peace of mind.

Who Provides the Best LLC Services in Illinois?

There are a myriad of Illinois LLC services from which to choose. Choosing the wrong one can affect your Illinois LLC formation timeline—I know this from my experience using a few and researching a dozen over the years.

Here are some top-rated options you should consider:

Best Illinois LLC Service	Google Rating	LLC Formation Cost	Registered Agent Fee
Northwest Registered Agent	4.7/5	$39	Free for 1 year
Doola	4.6/5	$0 (plus state fees)	$297/year
Tailor Brands	4.4/5	$0 (plus state fees)	$199/year
ZenBusiness	N/A	$0 (plus state fees)	$199/year

Besides, the fact that other services bill you for their registered agent in the first year, and Northwest offers it for free, is a HUGE plus for me.

Northwest Registered Agent stands out for Illinois LLC formation. They provide practical services, keep costs clear, and prioritize customer experience. You won’t encounter hidden upsells, making it a reliable choice for your business needs.

How Much Does It Cost To Form an LLC in Illinois?

Forming an LLC in Illinois costs around $150, which covers the Illinois LLC formation fees. However, there are other fees you need to be aware of.

Here’s a breakdown of the entire Illinois LLC costs:

Requirement	Cost
New LLC Filing Fee (Articles of Organization)	$150
Name Reservation	$25
LLC formation service	$39 (via Northwest)
Registered Agent Fee	$0 (via Northwest)
Illinois Annual report	$75/yearly
Total Estimate	$250 – $290

When forming a new company in IL, budgeting about $250-$290 for the first year is ideal. Then, if you want to go further, you can get other bells and whistles like a virtual mailbox, custom website, trademark services, premium EIN services, etc.

The initial cost of starting your LLC is $150. After that, you must pay $75 annually to keep your LLC active.

By tracking these fees, you can ensure your LLC remains compliant with Illinois regulations while planning for future expenses.

Pros and Cons of Forming an LLC in Illinois

6 Important Things To Do After Forming Your Illinois LLC

Once you have formed your LLC in Illinois, you must complete essential steps to ensure smooth operations. These steps help protect your business, meet legal requirements, and set you up for success.

1. Research the Best Licenses and Permits for Your Business

Illinois does not require a state-issued general business license. However, every LLC must register with the Department of Revenue to legally operate in the state. This registration is free.

You will receive a Certificate of Registration and a Taxpayer ID from the DOR upon registration.

The Certificate of Registration is a substitute for a general business license, while the Illinois Taxpayer ID is distinct from your LLC’s federal EIN.

However, depending on your industry and location, your business may require a state-level occupational license or a municipal license or permit, with fees varying widely.

For example, licenses in densely populated counties, especially those with large cities, typically cost more than those in rural areas, and regulated industries, like childcare, often have higher fees than general business licenses.

However, your LLC may not need any licenses or permits, meaning your Illinois business license cost could be $0.

You can find this information on your local government’s website. Make a checklist of what you need to get and whether there are filing fees. Ensure you stay compliant to avoid fines and interruptions in your business.

2. Create Business Accounts for Your LLC

Opening a separate bank account for your LLC is essential for keeping your business finances organized and distinct from your funds. This separation simplifies your accounting and helps safeguard your assets by clearly distinguishing between personal and business transactions.

When choosing a bank, look for one that offers business-friendly services, such as waived fees, free online banking, and other features that can benefit your business. To open the account, be prepared to provide your EIN and a copy of your Articles of Organization.

A dedicated business account streamlines your financial management and simplifies tax preparation.

Having all your business transactions in one place lets you easily track your income and expenses, ensuring everything is well-organized and accessible when tax season rolls around.

Consider applying for a business credit card, which can help with cash flow and build your business credit. Good business credit is essential for future loans and financing.

3. Understanding Illinois Tax Requirements and Managing Your Taxes

Understanding tax obligations is vital for business owners. Your LLC structure affects how you file taxes. Most LLCs are “pass-through” entities, meaning income is reported on your tax return.

Illinois LLCs must also pay the Illinois Department of Revenue 1.5% of their net income, known as the Personal Property Replacement Tax.

Keep track of deadlines and necessary forms to file. Consulting a tax professional can help you manage your taxes effectively and remain compliant.

4. File Your Annual Report

In Illinois, all LLCs are required to file an annual report with the Secretary of State. This report keeps your business information current, including your registered agent and business address.

Your Annual Report is due before the first day of your LLC’s anniversary month every year and costs $75.

If your Annual Report is 60 days late, a $100 penalty will be added to the $75 fee, bringing the total to $175. If the report is 180 days late, the Secretary of State will administratively dissolve your LLC.

To help you stay on track, the state will mail Annual Report forms and reminders to your Registered Agent 45 days before the due date.

5. Get Business Insurance For Your LLC

Just as you wouldn’t leave your home without coverage, your LLC also needs the right business insurance to guard against potential risks and liabilities. Insurance protects your company’s assets and ensures financial stability in case of unforeseen issues or legal claims.

Your insurance needs will vary based on your business operations.

For example, general liability insurance covers risks such as slip-and-fall accidents or property damage if your LLC operates from a physical storefront.

Conversely, if you run your business as a consultant and work remotely, you might only need professional liability insurance to cover potential service errors or omissions.

Assessing your business needs helps you choose the appropriate coverage to protect your LLC.

6. Setup Your Business Online Presence (Optional)

Building an online presence helps attract customers. Start by creating a professional website. This platform allows you to showcase your services and connect with customers.

Also, secure a domain name that reflects your business and is easy to remember. This is a crucial step before creating a website.

Even if you aren’t ready to launch a complete website, claim your domain and create social media accounts. This way, you can start engaging with potential customers early.

Social media is a cost-effective way to promote your business and increase visibility. Platforms like Facebook, Instagram, and LinkedIn can enhance your visibility.

Illinois LLC vs. S Corp vs. Partnerships vs. Sole Proprietorship vs. Corporations

When starting a business, you can choose from several types of structures. Each has its benefits and features.

Here’s a breakdown:

Sole Proprietorship

An Illinois sole proprietorship is the most straightforward way to start a business. Imagine you’re running a lemonade stand on your own. You make all the decisions and keep all the profits.

However, there’s no legal separation between you and your business. If your lemonade stand faces financial trouble or legal issues, your assets, like your car or home, could be at risk.

It’s easy to set up and manage, but it does leave you personally responsible for any business debts.

Partnership

An Illinois partnership involves teaming up with one or more people to run a business.

Think of it as joining forces with a friend to open a café. You share the profits and responsibilities, and you both make business decisions.

However, like a sole proprietorship, each partner is personally liable for any business debts or legal issues. If the business encounters financial trouble, your assets could be at risk, too.

Partnerships are relatively easy to set up but require clear agreements between partners to avoid conflicts.

LLC (Limited Liability Company)

An LLC offers a blend of flexibility and protection.

Picture it as a protective umbrella over your lemonade stand. This structure separates your assets from your business, so if your LLC faces legal issues or debts, your personal belongings are generally safe.

LLCs are more formal than sole proprietorships or partnerships but offer management and tax treatment flexibility. They are ideal for small—to medium-sized businesses that want liability protection without the complexity of a corporation.

S-Corporation

An S Corporation is a more structured business form.

Think of it as a business where owners are shareholders, much like a small-scale company with multiple investors. It protects liability and allows profits to pass through to your tax return, avoiding double taxation.

This means you report the income and losses on your tax return, which can be beneficial for tax purposes. However, S Corps have stricter operational requirements and formalities compared to LLCs.

Corporation

An Illinois corporation is the most complex structure, suitable for larger businesses aiming for significant growth. Imagine a big company with many shareholders. A corporation offers robust liability protection and is a separate legal entity from its owners, meaning your assets are protected.

Corporations can raise capital more efficiently by issuing stock and can offer employee benefits.

However, they come with extensive regulatory requirements, formalities, and paperwork, making them more suitable for businesses with significant resources and expansion plans.

My Final Thoughts: Forming an LLC in Illinois

To start your LLC in Illinois, follow these steps:

• Choose a name for your LLC.
• Select a registered agent.
• File your Articles of Organization (Form LLC-5.5).
• Create an Operating Agreement (optional but recommended).
• Obtain an EIN (Employer Identification Number).
• Register with the Department of Revenue
• File Annual Report

Regarding costs, the state filing fee for forming an LLC in Illinois is $150. You will also need to pay an annual fee of $75 to keep your LLC active yearly.

Forming an LLC can protect your assets and simplify your business operations. These steps ensure you comply with state regulations while setting up your business for success.

Learn More About Starting an LLC in Illinois

If you need additional help to start an LLC in Illinois, check out these valuable resources:

Frequently Asked Questions

Can I change my registered agent in Illinois?

Yes, you can change your registered agent in Illinois. You must file a form with the Illinois Secretary of State and pay any associated fees to do so.

How do I change my Illinois LLC’s name?

You can apply with the Illinois Secretary of State to change your LLC’s name. This fee-based process requires you to ensure the new name meets state regulations.

How do I renew my Illinois LLC?

Renewing your LLC involves filing an annual report with the Illinois Secretary of State. This report is due by the anniversary of your LLC’s formation date.

How do I dissolve an LLC in Illinois?

To dissolve an LLC in Illinois, you must file Articles of Dissolution with the Secretary of State. You must also settle any debts and notify your members and creditors.

How do I add a member to an Illinois LLC?

You should update your operating agreement to add a member to reflect the change. Unless specified in your contract, no formal paperwork is needed with the state.

How do I add a DBA to an LLC in Illinois?

To add a DBA (Doing Business As) to your LLC, file an Assumed Name Registration form with the county clerk where your business operates. There is typically a small fee for this filing.

Can a minor own an LLC in Illinois?

Yes, a minor can own an LLC in Illinois. However, they will need an adult to act on their behalf in legal matters and filings.

What is the Cost of the Illinois Annual Report?

The cost of filing the Illinois Annual Report is $75. This fee is required to keep your LLC in good standing.

Does LLC expire in Illinois?

An LLC does not expire in Illinois if you file your annual report and pay any required fees. Failure to do so may result in administrative dissolution.

Can a non-resident open an LLC in Illinois?

Yes, a non-resident can open an LLC in Illinois. You must designate a registered agent with a physical address in Illinois.

Can I buy a house or car with my LLC in Illinois?

Yes, you can buy property or vehicles in the name of your LLC. This can help protect your assets and provide potential tax benefits.

Can you have multiple businesses under one LLC in Illinois?

You can run multiple businesses under one LLC in Illinois by using DBAs for each business. However, be aware of the potential risks and liabilities.

Is Illinois an excellent state in which to form an LLC? Is it worth it?

Depending on your business needs, Illinois can be a good state for forming an LLC. Consider factors like state fees, tax regulations, and your business goals.

Can one person form an LLC in Illinois?

Yes, one person can form an LLC in Illinois. This is a single-member LLC, a standard business structure for solo entrepreneurs.