How to set up an LLC in Illinois

An LLC, or limited liability company, is a popular business structure because it legally separates the business from its owners, shielding them from personal liability. LLC members can also enjoy tax benefits as the company profit or loss flows onto their personal tax returns, allowing them to avoid corporate taxes. 

LLCs are established and governed at the state level, so each state’s process and laws will vary. In this article, we’ll walk you through how to set up an LLC in Illinois.

Featured LLC service offers

ZenBusiness

Learn More

Via ZenBusiness’ website

Free version available

Yes

Lowest published package price

$199

Live chat

Yes: Human

LegalZoom

Learn More

Via LegalZoom’s website

Free version available

Yes

Lowest published package price

$249

Live chat

Yes

Northwest Registered Agent

Learn More

Via Northwest’s website

Free version available

No

Lowest published package price

$39

Live chat

Yes

Steps to start an LLC in Illinois

Starting an LLC in Illinois may seem like a complicated process, but it becomes easier to tackle when you break the task down into smaller steps. Here’s what to do:

1. Name your LLC 

Your business name identifies your company and signals to the world what your LLC does and who it serves. There are many best practices to remember regarding how to name your business, like making it catchy and easy to remember. There are also many Illinois-specific rules you must follow, such as:

• It must be different from other registered business names.
• It must contain ‘Limited Liability Company,’ ‘L.L.C.’ or ‘LLC.’
• It cannot include ‘Corporation,’ ‘Corp.,’ ‘Incorporated,’ ‘Inc.,’ ‘Ltd. Co.,’ ‘Limited Partnership’ or ‘L.P.’
• It cannot imply a connection with the banking or insurance industries.
• It cannot be offensive to the general public.

You can check if your business name is available by calling the Secretary of State’s Department of Business Services or using the Business Entity Search tool on the department’s website. Bear in mind that while your chosen name may initially appear to be available, a final determination will be made when you file your articles of organization. 

John N. Wood, Esq., managing attorney at Grant Park Law, advised new business owners to look toward the future when choosing an LLC name. “If you are planning to operate or sell your product in more than one state, a quick search of the federal trademark registry would also be a prudent step.”

If you discover the perfect name for your LLC but aren’t quite ready to create your entity, you can reserve the name through the state for 90 days. It costs $25 to file the corresponding form.

2. Choose a registered agent 

A registered agent receives official correspondence (usually legal or financial-related) on behalf of your company. Illinois requires your LLC to maintain a registered agent with a registered office for as long as your business exists. Your LLC’s registered agent can be an LLC member, manager, organizer or employee. 

If not, the registered agent must reside in Illinois or be a business entity authorized to operate there. The registered office must be physically located in Illinois (a P.O. box alone won’t suffice), with an address identical to the business office address of the registered agent.

Pro Tip: If you want this responsibility handled by an entity outside your company, check out the best registered agent services to start your search.

3. Submit articles of organization 

Submitting articles of organization officially forms your LLC. Illinois requires you to include the following information when you file:

• LLC name and address.
• Effective date of your business formation (may be up to 60 days after submitting your articles of organization).
• Name and address of the LLC’s registered agent.
• Purpose or business objective of the LLC.
• The LLC’s term of existence (assumed to be indefinite unless otherwise noted).
• Names and business addresses of LLC managers.

Article seven is optional and provides a space for members to list special provisions they want officially recorded.

You can file your articles by mail or online. However, you can only use the online form if your articles don’t include special terms, like a specific LLC purpose or optional provisions. If you submit your articles on paper, you must submit two copies – one of which must be original.

The state of Illinois charges $150 to file articles of organization. You can request expedited processing in person, increasing your cost to start your LLC by $100.

New LLC reporting requirement alert 

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has implemented a new reporting requirement for all non-exempt LLCs starting on January 1, 2024. 

The requirement is called the Beneficial Ownership Information (BOI) report and it is estimated to only take about 20 minutes to complete. 

Here’s what you need to know:

• LLCs formed before January 1, 2024 have until January 1, 2025 to file.
• LLCs formed between January 1, 2024 and January 1, 2025 have 90 days to file from the confirmed date of the businesses’ registration.
• New LLCs formed after January 1, 2025 will have 30 days to file from the confirmed date of formation.

For all details, FAQs and to file, visit FinCEN’s BOI website. 

4. Create an operating agreement

An operating agreement is a separate document that stipulates how your LLC will run. It includes information about profit and loss distribution, company meetings and company dissolution.

Wood explained, “While you are not required to have an operating agreement to register your LLC, the operating agreement is, by far, one of the most important documents you will have for your new business. If there is more than one owner, it becomes almost imperative to prevent long-term issues.”

He added, “Should your business become liable as a result of litigation, this document may assist you in proving that it is, in fact, a separate entity from yourself and not just an alter ego. [It can] help you maintain the personal liability protection you sought by forming a Limited Liability Company in the first place.”

5. Apply for an EIN

An employer identification number (EIN) identifies your business for tax purposes. You may also need one to open a business bank account, secure a commercial loan, hire employees and complete other mission-critical tasks. 

You can obtain your LLC’s EIN for free from the IRS website. You’ll receive your new EIN immediately after completing the online form. 

6. Open a business bank account

A business bank account separates the company’s money from individual LLC member-owned funds. This separation of cash can help maintain the legal distinction between the entity and the business owners, which is critical in the event of legal action against the company.

Wood explained that the new business owners should take this separation very seriously. “They should never deposit their business revenue into their personal account, and they should not pay business expenses with a personal check.” 

A business checking account can also help you effectively track and manage your LLC’s cash flow. Plus, it makes tax time much easier since you won’t have to worry about which expenditures are company-related and which are personal.

7. Apply for business licenses or permits (as necessary) 

Your LLC may require business licenses or permits to operate depending on what your company creates, sells or does. For example, in Illinois, grain dealers, pet shop owners, plumbers, liquor manufacturers and a host of other company types must all be licensed to conduct business. Plus, if your company handles materials that could pollute the environment, you’ll likely need a permit to keep the doors open.

Each license and permit has a different application process and cost. Therefore, it’s wise to contact the state for guidance.

8. Register with the state’s Department of Revenue 

Illinois mandates that all new businesses register with the Department of Revenue to obtain a state tax identification number. That way, your LLC can file tax returns and remit tax payments as required. You can register online through the MyTax Illinois portal, by mail or in person at a Department of Revenue office.

9. File your annual report 

You must file an annual report with the state to keep your LLC active. Each year, the report is due before the first day of your LLC’s anniversary month. For example, if you registered your business in August, you should file your report by the end of July. 

The state will send a pre-filled report to your LLC’s registered agent two months before the final report is due. If you miss the deadline, you’ll have to pay a fine on top of the regular $75 filing fee. You can typically file your annual report quickly and easily on the state’s website.

Find the best LLC services for Illinois: Best LLC services

Featured LLC service offers

ZenBusiness

Learn More

Via ZenBusiness’ website

Free version available

Yes

Lowest published package price

$199

Live chat

Yes: Human

LegalZoom

Learn More

Via LegalZoom’s website

Free version available

Yes

Lowest published package price

$249

Live chat

Yes

Northwest Registered Agent

Learn More

Via Northwest’s website

Free version available

No

Lowest published package price

$39

Live chat

Yes

Frequently asked questions (FAQs)