Last Updated on June 13, 2022 by Fair Punishment Team
Starting an LLC in Illinois is fairly simple. The process involves filing a form called a Certificate of Formation (Form I-900), paying a $100 fee, and then waiting for 6 months before being officially formed.
Once you’ve filed your Form I-900, you’ll also need to pay a $200 annual renewal fee.
A feasibility checklist helps determine whether there is enough money available to start up a business. It includes information about the market, competitors, products/services, and how much capital is needed to get started.
A Business plan is a detailed description of what you want to do, who your customers are, how you will make money, and how much money you need to succeed.
A financial statement is an analysis of your financial position, including assets, liabilities, equity, and cash flow.
It shows how much money you have coming in, how much you owe, and how much you have leftover after paying debts.
LLCs are often confused with sole proprietorships or partnerships. They provide several benefits over these other forms of businesses, such as limited liability protection, tax advantages, and asset protection.
What Do You Need To Consider?
The first thing you’ll need to do when starting up an LLC in Illinois is open a checking account. This is where all incoming and outgoing payments related to the company will be deposited.
You can use any bank that you choose; however, it’s best if it has at least two ways of receiving funds: A personal check from a customer, and a wire transfer.
The next step is to set up a corporation. In order to incorporate, you’ll need to complete a form called Articles of Incorporation or Organization (Form ORC).
This document contains information about the name of your company, its purpose, how many shareholders are allowed, what type of entity you’re creating, and more.
After incorporating, you’ll need to apply for an Employer Identification Number (EIN). An EIN is similar to a Social Security number, but is used by businesses instead of individuals.
It’s important to get this number because, without one, you won’t be able to obtain loans or credit cards.
After obtaining an EIN, you’ll need to prepare a federal income tax return for your company. This is known as a corporate tax return.
While preparing the return, make sure you list all the company’s employees, their salaries, and any dividends paid out.
Once you’ve prepared your taxes, you’ll need to send them to the IRS. After they receive your return, the IRS will issue a receipt showing that the company was officially incorporated.
At this point, you’ll need to submit a copy of the receipt to the Secretary of State.
Now that your company is officially incorporated, you’ll need to select a state ID number. This number will appear on your checks and invoices.
Your state ID number will also allow you to print off your company documents.
Naming Your Illinois LLC
An LLC is a legal entity created under state laws. To form an LLC in Illinois, you need to register the business name with your Secretary of State and pay filing fees.
In addition, businesses that specifically require any professional certification, including any doctors and certified lawyers, should use the PLPC designation. In Illinois, LLCs are treated differently than corporations.
An LLC does not need to file articles of organization with the Secretary of State. It is not subject to the same restrictions as a corporation.
However, if your company is incorporated in another state, you may want to incorporate in Illinois instead of starting over in a different state.
You may reserve a name for $25. However, you must pay an additional $100 to register the name as a service mark or trade name.
To start your new business, you first need to create a company name. Choose a name that includes the word “Limited” and “Liability”.
Make sure the name does not already exist as a registered business in Illinois. Check the state’s website to see if any other businesses share the same name.
Registering An Agent
Every LLC that is authorized and enabled to operate and function in Illinois may appoint a registered and certified agent.
A company actually can also be directly appointed as a registered agent if it is actually authorized to directly conduct business in the state of Illinois and has a physical location in Illinois.
You should consider registering an LLC in Illinois if you want to protect your personal assets.
There are many benefits to having an LLC registered in Illinois. As an example, if you get into trouble with the law, you won’t lose your personal property because it will still be protected by the LLC.
In addition, the LLC will provide liability insurance for any damages caused by the LLC.
You should register as a resident agent if you are an individual living in Illinois. An LLC may choose to appoint a resident agent who lives in another state but provides services within Illinois.
The agent must be on-call and accessible during normal working hours.
Filing Your Articles Of Organization
Once you’ve submitted your articles of organization, you should wait about one week to ten days before contacting the state to see if your articles were accepted.
If they weren’t approved, you may want to contact the state again or ask someone who knows what to do. You can get more information on how to file articles of organization here.
The articles of organization must be prepared and filed with the Illinois Secretary of State. This is done by filling out an online form and sending it via mail.
The articles of organization must include the following: Name of company, address of the principal place of business, registered agent, date of formation, and a number of shares.
The LLC is formed as an independent legal business entity. It has been created by the organizers, who are named its managers.
The LLC is registered with the Secretary of State. The LLC’s duration is perpetual. The LLC’s registration expires after 5 years.
The LLC’s organizers are the first managers. The LLC has two managers. The LLC’s organizers’ names are listed as the first managers.
The organizers sign the articles of organization. The LLC’s organizers also sign the Articles of Organization.
Creating An Operating Agreement
At the very minimum, LLC operating agreements should make sure to include the information as follows:
The purposes of your LLC, this is including what it does. Each member’s name and their address. The manager’s name and their address, specifically if the company is managed by the owners. Each member’s financial contribution to the actual business.
Each and every member’s direct ownership stake in your company is determined by the operating agreement. Procedures for admitting any brand-new members and electing managers are outlined in the operating agreement.
The exit strategy is spelled out in the operating agreement. Meetings are scheduled as needed. When a specific member wants to leave the business, the operating agreement spells out how to dissolve the entity.
In Illinois, LLCs are required to have an operating arrangement, but it’s a great idea to have one anyway. This document outlines the ownership structure and operations of your company. Having one helps avoid confusion and conflict down the road.
Obtaining An EIN Number
The last thing to remember before setting up an Illinois LLC is to obtain a federal EIN. You may have employees, and therefore need to pay payroll tax.
If you have multiple owners, you’ll need to file IRS Form SS-4. To avoid being taxed as a corporation, you should set up an S Corporation instead.
An employer identification number is a nine-digit number assigned by the IRS to help identify businesses for taxes purposes. It is essentially an SSN for a business. An EIN is sometimes referred to as a FEIN or FTIN.
An employee can be hired without having an employer identification number (EIN). The IRS does not require an EIN for a sole proprietorship. However, you can apply for an EIN by mail or fax.
The nine-digit Employer ID number (EIN) is used to identify your company for tax purposes. You may get this number by mail or online through IRS.com.
This number helps you file taxes at both the state and federal levels. In addition, it enables you to open a business bank account, hire employees, and pay payroll taxes.
Further Planning
If you plan on having employees, you’ll now need to decide whether you’d like to operate under a single-member LLC or a multiple-member LLC.
Multiple member LLCs are usually better suited for larger companies, since each shareholder is responsible for his or her portion of the overall debts.
However, single-member LLCs are easier to maintain since there is only one person who needs to pay the bills.
If you’d like to keep things simple, you may wish to opt for a single-member LLC.
To do so, you’ll need to file a Certificate of Limited Liability Company (Certificate of Formation) with the Secretary of State. Once filed, you’ll need to pay a fee of $100.
When filing the certificate of formation, you’ll need to include the following information:
- Name of the company
- Purpose of the business
- Names of the members
- Date of organization
- Address of the registered office
- Registered agent
- Principal place of business
- Jurisdiction in which the company is organized
- Type of company
- Whether it’s a domestic or foreign company
Once the Secretary of State has received your completed form, he or she will assign a registration identification number.
You can use this number when filing other forms such as annual reports and payroll withholding statements.
In addition to the above steps, some states require additional fees before forming an LLC. Fees vary depending on the state, but most of these costs fall within the range of $200-$300.
Frequently Asked Questions
Do I Need A Business License?
The state of Illinois requires you to obtain a business license if you operate a business. Local governments may impose additional requirements.
You should check with the local government for any additional requirements. The Illinois Department of Financial and Professional Regulation issues professional licenses.
If your LLC is involved in a professional field, such as medicine or law, you’ll need to obtain a certificate from the Illinois department before you can open your business.
Retailers that sell tangible personal properties or taxable services must register their businesses with the Department of Revenue.
The retailers are responsible for collecting sales and using taxes and reporting them to the state on a regular basis.
Business insurance helps you manage risks. You may be covered if someone sues you for damages because of an accident on your premises or because an employee was injured while working for you.
Your business is also protected if something happens to an employee who works for you. You’re covered if your employee gets sick or dies while he/she works for you.
You must carry this kind of insurance if you have any employees.
What Do I Need To Know About Paying Taxes?
An LLC is an entity that is treated as a pass-through style entity for tax-specific purposes. This allows owners to avoid having to pay corporate income taxes on their share of the company’s profits.
However, this means that the LLC itself doesn’t pay any income taxes. Instead, the owners are directly responsible for paying individual income taxes on their shares.
In addition, there is another tax called the personal property of the replacement form tax (PPRT). This tax is based on the value of the assets owned by the LLC. Owners who do not maintain a physical presence in the state are directly subject to PPRT.
An LLC that chooses to be taxed as a corporation may pay more taxes than an LLC that chooses to be treated as a sole purpose proprietorship.
The LLC pays both federal and state income taxes. The LLC also pays a higher replacement tax because it is considered a business entity.
An LLC must file an annual report with Illinois’ Secretary of State. This report includes the same information as the Articles of Organization, but it can also be filed online or by mail to the Secretary of State.
