How to form an LLC in Illinois in 6 easy steps
If you’re an entrepreneur in the state of Illinois, deciding to start your own business is an exciting step toward manifesting your dream occupation. While there are several ways to start, one of the most common methods is forming an LLC, or Limited Liability Company. Here we outline the required steps to forming an LLC in Illinois to help you launch your new company as quickly and efficiently as possible.
1) Check if your business name is available
The first step to forming an LLC in Illinois is to secure a name for your new business entity. Once you have an LLC name selected, verify the LLC name is available by searching the Illinois Secretary of State website, revealing if other similar company names exist.
In Illinois specifically, there are a few requirements for properly establishing the name of your LLC. To start, words like “Limited Liability Company” or abbreviations like “LLC” or “L.L.C.” must be included as a designator at the end of your company name. The company name must not contain any verbiage that could mistake it for a government agency—such as “State Department” or “FBI”—however, it may include words like “Attorney” or “University,” for which you may have to fill out additional paperwork.
Your business name must also not contain words such as “Corporation,” “Incorporated,” or “Limited Partnership,” nor abbreviations such as “Ltd.,” “LP,” “Co.,” “Corp.,” or “Inc.” It must be distinguishable from any other Illinois business entity. If you have any questions or are unsure of Illinois’ LLC naming guidelines, be sure to consult the Illinois Secretary of State Cyberdrive, which will provide a comprehensive list of all naming requirements.
With the desired name of your LLC cleared with the Illinois Secretary of State, you’ll then want to check if the LLC name is available as a domain name, should you want to create a website. Even if you have no plans to build a website, owning the domain name is great for crafting a placeholder webpage to accept business inquiries—and at the very least—preventing people unaffiliated with your business from purchasing the domain.
2) Claim your name
As the next step to your Illinois LLC formation, you’ll be required to select an Illinois registered agent—a person or business located in the state of Illinois—who will act as your business’s representative and handle the legal paperwork for your company. The Illinois registered agent must have a registered street address in the state of Illinois, so you can be your own registered agent if you live in the state. However, most people choose to have a registered agent service act as their registered agent.
Once you’ve determined who will be serving as your LLC’s registered agent, you’ll then need to file your LLC Articles of Organization with the Secretary of State. You can file Articles of Organization online or by mail for a nonrefundable filing fee of $150. The information you’ll be asked to provide on the form includes the name of your LLC, street address, the names and addresses of the business managers and company organizers, your principal place of business, office address, the purpose of your LLC, and the effective date of the LLC.
If your company is an existing LLC that you’re setting up in the state of Illinois, you’ll need to fill out a Foreign LLC form in addition to the Articles of Organization. The Foreign LLC form also costs $150 in state fees and must be filed with a “Certificate of Good Standing” from the state in which your parent company is registered.
After you’ve submitted your Articles of Organization and any other required forms specific to your business structure, expect to have your paperwork processed in 7 to 10 days, with the official forms mailed to your address on file.
3) Write your operating agreement
The State of Illinois does not require LLC owners to submit an LLC operating agreement; however, drafting an operating agreement could prove extremely beneficial to your LLC’s success.
An LLC operating agreement is a legal document that outlines the management and operating structure of an LLC and is intended to act as protection for all people who have a vested interest in the company. For sole proprietorships, this protection extends to personal liability and any injuries sole proprietors may sustain while working.
Suppose you do not have an operating agreement in place. In that case, your LLC will be subject to the basic Illinois laws governing LLC management, which may not accurately protect your particular business structure.
Another benefit of drafting an operating agreement is that it helps legally separate your personal assets from your business assets in a court of law. By taking time to write an operating agreement, you’re protecting your personal assets at zero cost to yourself. The operating agreement is also useful for mitigating conflicts between business owners and LLC shareholders.
4) File your Statement of Information
The Statement of Information—also known as an annual report—is a form the state of Illinois requires LLCs to file with the Secretary of State each year, confirming that the LLC is still active. Similar to Articles of Organization, the Statement of Information can be filed online or via mail for a filing fee of $75. The due date of the annual report is the first day of the anniversary month in which your LLC was founded. So, if your LLC business formation was on May 22nd, 2021, your annual report is due May 1st each year.
5) Pay your taxes
As a newly registered LLC in the state of Illinois, you’ll also want to register your company with the IRS, which is a requirement for most LLCs to file tax returns. Registering with the Internal Revenue Service is a fairly straightforward process. It involves requesting a Federal Employer Identification Number—or Federal Tax Identification Number—which is essentially a Social Security Number for businesses.
If your LLC is a single-member business with no employees, you will not have to register for a Federal Employer Identification Number. However, if your LLC has multiple employees or multiple members, you must apply for a Federal Employer Identification Number. You can apply for a Federal Employer Identification Number on the IRS website, and once approved, you’ll be able to open a business bank account for your LLC.
Opening a business bank account will allow you to do things like manage your LLC payroll or apply for a loan. To do so, all you’ll need are your Articles of Organization, your Federal Employer Identification Number, and a driver’s license.
6) Wrap up other regulation and sales tax requirements
Congratulations! You’re almost an established LLC in the state of Illinois. Your final steps will vary depending on how your LLC is doing business and whether you have employees.
If your LLC has employees, you’ll need to pay unemployment taxes, purchase workers’ compensation insurance, and report new LLC employees to the Illinois Department of Employment Security. You must report new or rehired employees within 20 days of each hire or rehire; this is mandated by both the State of Illinois and the federal government. Additionally, all LLCs with employees must withhold payroll taxes from their employees’ wages and pay the employer share of payroll taxes—some paid to the federal government and some to the State of Illinois.
LLCs in Illinois must pay the annual personal property replacement tax, which amounts to 1.5% of an LLC’s income. If you’re a single-member LLC, you are exempt from paying this tax. If your LLC is registered as an S corporation, it is taxed as a pass-through entity, in line with the default taxation for LLCs. If your LLC is registered as a C corporation, it must pay both Illinois corporate tax and federal corporate tax.
Get LLC insurance in minutes by following these steps
Since you’ve spent so much time, money, and energy securing the necessary materials and documents to start your LLC, it only makes sense that the final step for launching your new business is to protect your entity with LLC insurance. While there are various LLC insurance options for you to choose from, Huckleberry is one of the easiest companies to use for setting up coverage smoothly and efficiently. The process is simple:
1. Go to Huckelberry.com and select “Instant Estimate.” From there, you can get quotes for LLC insurance and other types of insurance coverage custom-tailored to fit the needs of your specific business.
2. Enter the type of professional service your LLC is involved in, which will help Huckleberry customize your insurance options.
3. Answer a few basic questions about the nature of your business to help refine Huckleberry’s insurance option results for you.
4. Within minutes, you’ll receive a quote for several different small business insurance options.
5. Crunched for time? Use the quick rate estimator for a ballpark figure on your insurance cost.
You’ve now successfully learned how to form an LLC in the state of Illinois. For added protection from whatever comes your way, it’s important to purchase a quality small business insurance policy to keep you and your assets safe and secure.
For all of your small business insurance needs, check out Huckleberry. With a quote in just a few minutes, Huckleberry is redefining the ease with which you can purchase business insurance and the peace of mind that comes with knowing you and your business are protected for the long haul.