How to Start a Business in Illinois Checklist

A detailed list to keep you on track while you launch your Illinois business.

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How to Start a Business in Illinois:

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How to Start a Business in Illinois:

There are several different ways of forming a business in Illinois. While corporations and limited liability companies can be formed online, other business structures, such as limited liability partnerships, must be registered by mail or in-person. Businesses operating in Illinois, including sole proprietorships, must be registered with the Illinois Department of Revenue.

1. 

Form your business.

1.1 

Review Illinois formation options.

Review Illinois formation options.

Illinois offers 5 ways of forming your business. Review these closely and pick the one that fits your business best.

1.2 

Name your business.

Name your business.

Before you can reserve a business name or register your business under a chosen name, you need to check whether the name is available for you to use.

Search the Corporation/LLC Database on the Illinois Secretary of State website or submit a Corporate Name Availability Request.

Once you have determined that your chosen business name is available to use, you can file an Application for Reservation of Name with the Secretary of State (SOS) to reserve the name for 90 days

If you need help finding a business name, be sure to check out NameSnack's free business name generator.

1.3 

Register an assumed business name.

Register an assumed business name.

Sole proprietorships, general partnerships, and professional services corporations that intend to operate under a name different from the business owner's full legal name must register with their county clerk's office.

LLCs, LLPs, limited partnerships, and corporations, on the other hand, have to register an assumed name with the Secretary of State and not the county.

Contact or visit your county clerk's office or the Secretary of State Office to get the correct assumed name application forms along with any other required documentation and instructions.

Fill out a Certificate of Assumed Name application form along with any other required paperwork.

Submit the completed and signed paperwork along with any required supporting documentation and a filing fee.

An assumed name is valid for 5 years from the day it was registered and may be renewed within 60 days before the right to use the assumed name expires. If the assumed name is not renewed before the 5 year anniversary of its registration, the right to use the name ceases. Renewals made on or after the day of expiration incur a penalty fee.

1.4 

Get an employer identification number.

Get an employer identification number.

Nearly all businesses will need to register for federal taxes by applying for an Employer Identification Number.

1.5 

Register your business in Illinois.

Register your business in Illinois.

To register a legal business entity in Illinois, you have to file the appropriate paperwork with the SOS and pay the applicable filing fee. Corporations and limited liability companies can be registered online.

To file Articles of Incorporation electronically, visit ilsos.gov/corparticles/, review the instructions, select continue, follow the prompts, and complete the registration process online.

To file Articles of Organization electronically, visit ilsos.gov/llcarticles, follow the prompts, and complete the online registration process.

Forms to register a limited partnership or a limited liability partnership must be obtained, completed, and submitted in-person or by mail.

If you have established a sole proprietorship or general partnership, and your business name is different from your full legal name, you will need to register an Assumed Business Name (DBA) with your county clerk's office.

1.6 

Obtain necessary permits and licenses.

Obtain necessary permits and licenses.

Most businesses in Illinois must register with the Illinois Department of Revenue (IDOR). IDOR licenses and registers retailers and businesses such as hotel operators and telecommunication providers. Depending on your business activities, you may be required to have additional permits or register with other state agencies.

Trucking companies, for example, must register with the Illinois Commerce Commission. Visit illinois.gov to search for licenses and permits that apply to your business.

Certain professional services, such as accountants, barbers, and, pharmacists, must be licensed by the Division of Professional Regulation of the main licensing agency for Illinois, the Illinois Department of Financial and Professional Regulation (IDFPR). You can find a complete list of the professions regulated by the IDFPR on their website.

You may also need to be licensed on a local level, as some communities have general business license requirements and other local regulations. Contact your city or county clerk for information on local business licensing and registration requirements.

Note that the City of Chicago has its own licensing requirements and application fees according to the industry you're in. For more information, go to www.chicago.gov.

2. 

Register your business for taxes.

2.1 

Apply for an Illinois Tax ID.

Apply for an Illinois Tax ID.

To conduct business in Illinois or with Illinois customers, businesses must register with the Illinois Department of Revenue (IDOR) and obtain a tax account number. You can register electronically, by mail, or in-person at a regional IDOR office.

To register by mail you must obtain the Illinois Business Registration Application Form (REG-1).

Obtain the forms for corresponding schedules that apply to your business.

Complete and sign the application form and corresponding schedule(s).

Mail the completed forms to the address indicated on the form.

Allow for 6 to 8 weeks processing time before you receive your certificate of registration and taxpayer ID in the mail.

Display your certificate of registration in a prominent location in the place of your business.

To register electronically, visit mytax.illinois.gov.

Click "Identify your business."

Complete and submit the online registration form.

Allow for 1 to 2 days processing time before receiving for taxpayer ID by email.

2.2 

Register for withholding tax.

Register for withholding tax.

If your Illinois small business has employees working in the state, you need to register for withholding tax. This can be done by completing the Illinois Business Registration Application and submitting it by mail, in-person, or online, as outlined in the previous step.

When completing the Illinois Business Registration Application to be submitted by mail, complete and attach the schedules relevant to your business.

2.3 

Register for sales and use tax.

Register for sales and use tax.

If your Illinois small business sells tangible personal property or provides other taxable services, you need to register for sales and use tax. This can be done by completing the Illinois Business Registration Application and submitting it by mail, in-person, or online, as outlined above.

When completing the Illinois Business Registration Application to be submitted by mail, complete and attach the schedules relevant to your business.

2.4 

Create an unemployment insurance account.

Create an unemployment insurance account.

If your Illinois small business has employees and pays at least $1,500.00 in total wages during a calendar quarter, you need to create an unemployment insurance (UI) account to pay UI taxes. This can be done by completing the Illinois Business Registration Application and submitting it by mail, in-person, or online, as outlined above.

When completing the Illinois Business Registration Application to be submitted by mail, complete and attach Schedule REG-UI-1.

3. 

Report employees to the state and obtain mandatory insurance.

3.1 

Report new hires.

Report new hires.

All employers must report new hires to the Illinois Department of Employment Security (IDES) within 20 days of employment. You can report new employees by mail, fax, or online.

Information needed to complete a new hire report:

  • Employer's Federal Employer Identification Number.
  • Company name.
  • Company address.
  • Employee's social security number.
  • Employee's name.
  • Employee's home address.
  • Date of hire (the employee's first day of work for pay).

Complete the form.

Mail or fax the form to the address/number provided at the bottom of the form.

To report new hires online, you need to register an account on the Illinois Department of Healthcare and Family Services' Child Support Services webpage with your Federal Employer Identification Number.

3.2 

Get workers' compensation insurance.

Get workers' compensation insurance.

Almost all businesses are, by law, required to have workers' compensation insurance. Insurance is generally purchased through private firms or agents. Employers must display a notice in the workplace that indicates the specific insurance carrier and explains workers' rights under the law.

3.3 

Display mandatory posters.

Display mandatory posters.

Employers are required to display certain posters pertaining to employees' rights under the Wage Payment and Collection Act, the Child Labor Law, and others in the workplace. These posters are available from the Illinois Department of Labor. Visit www2.illinois.gov/ to find out which posters you need.

Illinois Business Types:

1. Sole proprietorship.

A sole proprietorship is the easiest way to form a business in Illinois, as it does not have to be registered with the state and is taxed as a pass-through entity. While the owner has complete control of the business and is the sole recipient of the profit, they are also fully liable for any debts and losses incurred by the business.

In Illinois, sole proprietorships must register with the Illinois Department of Revenue and, if they want to operate under a name that differs from the owner's full legal name, an assumed business name must be registered with the local county clerk's office.

2. General partnership.

An Illinois general partnership is similar to a sole proprietorship in the way it is formed, operated, and taxed. If a general partnership wishes to use a name other than its legal name to operate in Illinois, it must register an assumed business name with the local county clerk's office.

While a partnership agreement is not legally required for a general partnership in Illinois, it is advisable. A partnership must obtain a Federal Employer Identification Number, regardless of whether it has employees or not, and must register with the Illinois Department of Revenue.

3. Limited partnership.

An Illinois limited partnership (LP) is a business composed of general partners and limited partners. The general partner is responsible for the management of the business while limited partners invest in the business but are not actively involved in its management. LPs are typical in the real estate, oil and gas, and equipment leasing industry.

Illinois limited partnerships must be registered with the state by filing a Certificate of Limited Partnership either by mail or in-person. As with a general partnership, it is advisable to draft a partnership agreement to clearly define the roles, responsibilities, and rights of the general and limited partners.

4. Limited liability company.

Limited liability companies (LLC) are legal business entities that afford the owners limited liability and can opt for pass-through taxation. This business structure is more flexible than a corporation as it allows the owners to participate in the management of the business.

An Illinois LLC must be registered with the state and is member-managed unless the company's operating agreement makes other provisions. If an LLC intends to provide a professional service, the individual engaged in the profession must be licensed by the Illinois Department of Financial and Professional Regulation.

5. Corporation.

A corporation is the most complex way to form a business and is subject to double taxation. An Illinois corporation is a distinct legal entity that is owned by shareholders who elect a board of directors to manage the business. The advantages of this business structure include the easy transfer of ownership and limited liability.

Corporations must be registered with the Illinois Secretary of State. General for-profit corporations can be registered online while professional corporations, medical corporations, close corporations, and business corporations with a specific purpose cannot be filed online and must be registered by mail or in-person.

Illinois Business Filing Fees:

Type of Filing

Fee

Corporation - Articles of Incorporation

$150.00

LLC - Articles of Organization

$150.00

Certificate of Limited Partnership

$150.00

Statement of Partnership Authority

$25.00

Register Assumed Business Name

Varies by county/city

FAQs:

How much does it cost to register a business in Illinois?

Registering a legal business entity in Illinois costs $150.00. The cost to register an assumed business name in Illinois varies according to your city or county, but you can expect to pay between $5.00 and $50.00.

What permits do I need to start a business in Illinois?

Not every Illinois business is required to have a license. However, many types of businesses must get one or more licenses or permits. You can apply for various business licenses via www2.illinois.gov.

Is Illinois a good place to start a business?

Small businesses in Illinois have a strong early startup survival rate and are a vital part of the state's economy, employing 2.5 million people, nearly 20% of the state's population. A large and diverse pool of skilled labor, attributed in part to a dense population and highly regarded universities, makes Illinois an attractive destination to start a small business.

Do small businesses pay sales tax in Illinois?

Yes. Depending on your line of business, you may have to pay sales, excise, and utility taxes. For more information, go to www2.illinois.gov.

How do I register my small business in Illinois?

You will need to file articles of organization with the Secretary of State and register with the IRS so that you can pay federal and state taxes.

Where are the best places to start a business in Illinois?

  • Itasca.
  • Deerfield.
  • Oak Brook.
  • Lincolnshire.
  • Peru.
  • Burr Ridge.
  • Lisle.

Are there any specific rules for an LLC in Illinois?

Yes. If you are forming an LLC you will need to file Articles of Organization with the SOS, along with the filing fee. Your LLC must meet the naming and formation requirements of the state, which you can view on the SOS website.

How much does it cost to set up an LLC in Illinois?

It costs $150.00 to file articles of organization for an LLC in Illinois.

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