Form Your US Company in Illinois
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Form Your US Company in Illinois
If you’re starting a business in Illinois, the best business structure for you is almost certainly a Limited Liability Company (LLC). An LLC is a particularly popular type of business structure both in the US and across the world as it provides personal legal protection to its members, should the company ever be sued.
If you reside in and/or plan to operate a business in Illinois, you will need to form an Illinois LLC. Below, we will take you through our easy step-by-step guide on how to start an LLC in Illinois so you can start doing business as soon as possible.
How to Start an Illinois LLC
Step 1: Choose Your LLC’s Name
The first step when starting an LLC is to choose its name. Most new business owners have given the most thought to this step, but don’t worry if you haven’t. Your LLC’s name must be unique from other companies registered in Illinois, so you may find that your preferred name is already taken or is too similar to one that is.
The name of your company must also end with a designator that identifies it as an LLC. The designators you can choose from in Illinois are:
- Limited Liability Company
(Note: you can add a comma before the designator if you wish.)
Lastly, your LLC name cannot include any words or abbreviations that suggest it has a different business structure, such as “Incorporated”, “Inc.”, “Corporation”, “Corp”, “Co.”, “Limited Partnership”, “L.P”, or “Ltd.”. You should also avoid using any terminology that may lead people to believe it is affiliated with the government, such as “State Department.”
It’s best to brainstorm a few name ideas and then check if they are available. You can check their availability here.
Don’t worry if you aren’t one hundred percent sure about what you want to name your LLC as you have the option of filing under a DBA (“doing business as”) name later. This means that if you decide on a better name later on you can register a different name for your LLC online, or by filing an Application to Adopt, Change, Cancel, or Renew an Assumed Name by mail, with a $30 filing fee per year. You have the option to pay for five years at once for $150.
Optional: Reserve Your Business Name
New Jersey does not require you to reserve your business name before you move on to filing your Articles of Organization, but it is a good idea to reserve it if you aren’t yet ready to complete your company’s formation. If you don’t, another company could come along and use it.
It’s easy to reserve your LLC’s business name – simply file an Application to Reserve a Name, and pay the $25 filing fee. Your name will then be reserved for 90 days.
Step 2: Choose a Registered Agent
The next step is to choose a registered agent who can receive any “Service of Process”, i.e. legal documents, on your behalf. This is a legal requirement for all LLCs.
Your LLC’s registered agent must have an Illinois address and cannot be a PO Box or any other mailbox service.
You can be your own registered agent if you live in Illinois. If you cannot commit to being your own registered agent, you can elect a friend or family member to be it for you or choose a commercial registered agent. Most businesses choose a commercial registered agent because your LLC’s registered agent’s address will be available publicly, and most people do not want their address to be so readily available to strangers.
Commercial registered agents are businesses that will receive mail on your behalf and forward it to you physically or electronically for a small fee (usually around $15 a month).
If you are unsure whether you should be your own Registered Agent or not, you can check out our guide here.
If you decide a commercial registered agent is the best choice for your LLC, we can be your trusted registered agent in Illinois. Simply reach out to us and we’ll give you the information you need to move on with the next steps in this guide.
Step 3: File Your Articles of Organization
This is the big step! Your Illinois LLC will become a real legal entity when you file your Articles of Organization with the Secretary of State, Department of Business Services.
You can do this online or by mail for a filing fee of $150. The information that needs to be filed for your Illinois LLC is:
- the name of the LLC
- the principal office address of the LLC (your base of operations, whether that be your home or another location)
- the name and address of your Registered Agent (whether that be a company, a friend, or you)
- the purpose of your business – this just needs to be a simple statement that provides an overview of what your LLC will do
- the names and addresses of the LLC members
- your name and signature
To file by mail, you need to fill out Form LLC-5.5 and send in 2 copies of your Articles of Organization. Note that you cannot pay by personal check if you plan to do this, you need a certified check or money order made payable to “Illinois Secretary of State.”
To file online: Illinois Articles of Organization. Payment is made via card.
Illinois is one of the slowest states to approve your application, taking 10-15 business days. You can pay an extra $100 to have the process expedited and your application will be approved in 1-2 days.
Once your form has been approved, you’ll receive your approved and stamped copy of your Articles of Organization and a Welcome Letter. The letter includes your LLC Entity File Number. If you file online these documents will be emailed to you. If you mail in your forms, you will receive these documents via mail.
Step 4: Create Your Operating Agreement
Although this step isn’t a legal requirement in Illinois, it is strongly recommended that you create an Operating Agreement, especially if you have other members (AKA owners) within your LLC. This agreement is an internal document, so it will not need to be shared with anyone outside of your company.
Your Operating Agreement should provide details regarding the responsibilities and rights of each of the LLC members. You should aim to include:
- the name and primary address of the LLC
- the name and address of the Registered Agent
- the name of each member and their role within the company
- the purpose of the business
- the duration of the LLC, if you have decided on an end date
- an outline of how much money was invested by each member
- how ownership of the LLC is distributed
- how profit and loss will be handled and allocated
- how taxes will be paid
- procedures for taking on new members
- procedures for existing members leaving the LLC
- voting rights of members
The Operating Agreement will put down in writing the obligations of each member so that there are less likely to be legal issues within the company due to miscommunication, therefore, be sure to include anything that will prevent problems further down the line.
Step 5: Get Your EIN Number
Once your LLC has been formed, you will need to obtain your Employer Identification Number, otherwise known as an EIN, which is essentially a social security number for businesses – it’s your LLC’s federal tax identification number.
Your EIN will enable you to pay your tax, open a business bank account, handle payroll, and take care of other financial processes.
To apply for your EIN, click here. The process is fast and free.
Step 6: Annual Report and State Tax Registration
All LLCs based in Illinois must file an Annual Report with the Secretary of State each year at the beginning of their initial formation month. That means if your LLC was formed on December 10, your Annual Report must be filed by December 1 the following year and each year after. While this isn’t something you need to worry about now, you should put this date on the calendar since it is unique to your business.
You can file your Annual Report online here, or by mailing Form LLC-50.1 to the Illinois Secretary of State, with a filing fee of $75. If you miss the due date of your Annual Report you will be charged a $100 fine.
Some businesses in Illinois are required to pay specific state taxes or collect sales tax and so they will need to register with the Department of Revenue. To find out whether this is relevant to your LLC or to register, click here.
Step 7: Apply for Necessary Licenses and Permits
One of the last steps you need to complete before you can start trading is to acquire any necessary licenses and/or permits that your LLC needs to operate in Illinois.
The licenses or permits your business will need depends on the industry you are in and the purpose of your business so you should head to the Illinois Department of Commerce First Stop Business Information Center page for information.
You can also get in contact with the city clerk of your LLC’s municipality for advice on which licenses and permits you should apply for, as a quick phone call can clear up any confusion.
Step 8: Get Your Business Bank Account
As an Illinois LLC, you will need to create a separate bank account for all your business revenue. Although this is not a legal requirement within the US, it is essential to ensure that your personal and business assets always remain independent.
A business bank account will ensure that your personal assets are protected should your LLC get into any legal problems. After all, that is probably why you chose to structure your business as an LLC in the first place!
Use your new EIN to open your business bank account so you can start keeping your personal and business finances separate right from the beginning.
Step 10: Keep Essential Documents On-Site
It is important to be aware that it is a legal requirement to keep essential documents at the registered office of your LLC. The documents you need to possess there are:
- an up-to-date list of LLC member’s names and addresses
- a copy of your Articles of Organization, along with any amendments or actions
- a copy of your current Operating Agreement
- recent financial statements
If you are working from home this won’t be something you have to give much thought to, but if you’re working from another location, make sure you get this in place now.
Now that all the steps have been completed, your LLC is formed and you are ready to begin trading!
Let Us Do the Hard Work for You
Although the process of starting an LLC in Illinois is relatively easy, it can take up a lot of time filling in forms that could be better spent doing more exciting things, such as getting your services or products up to standard, working on your branding, or getting your marketing strategies ready.
Luckily, we are here to help! Forming LLCs is what we do each and every day, so let us take care of everything for you. All you need to do is spend a short time filling in our short form and allow us to do the rest, including registering your LLC’s name, filing your Articles of Organization, and getting your EIN for you.
Why not leave the boring stuff to us and get going on the fun stuff? To get started, click here.
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