5 Things to Consider When Incorporating an LLC in Chicago
Starting a Business: Exciting Endeavor with Great Potential, Great Responsibility3 min read
Starting a business can be an exciting endeavor with a great potential for success, but it also carries a great deal of responsibility. One of the most important steps that you can take to protect yourself and your business is to incorporate as an LLC. But with so many details to be aware of, what should you consider when setting up an LLC in Chicago? On top of registering with the State of Illinois, there are a number of important financial and legal issues that must be taken into account. Here are five of the most important things to consider when running an LLC in Chicago.
1. Double Taxation
When you incorporate an LLC, you become subject to two separate forms of taxation. Under an LLC structure, the income generated by the business is taxed as the income of the company. This is referred to as corporate taxation, and it requires the filing of corporate tax returns and the payment of corporate taxes. On top of this, any distributions of profits that are made to the business’ owners are also taxed—this is commonly referred to as double taxation.
2. Limited Liability Protection
An LLC is a legal entity that provides its owners with a certain level of protection from personal liability. This is referred to as limited liability protection, and it means that the personal assets of the owners—such as their homes, cars, and other possessions—cannot be used to satisfy business debts or legal judgments. This protection is not absolute, however, and some actions and certain types of debt can still expose a business owner’s personal assets to risk.
3. Ownership Management
When you incorporate an LLC, you are required to establish an operating agreement that outlines how the business will be managed and how decisions will be made. This is important for setting up the business as it allows you to create a framework for how the business will be run in the future. It is also important to note that various forms of ownership are permitted, including single-member LLCs, multiple-member LLCs, and “corporations within a corporation.”
4. Compliance With City and State Regulations
When setting up an LLC in Chicago, it is important to understand the various regulations and licensing requirements that must be met. In addition to registering with the Illinois Secretary of State, LLCs must comply with a variety of regulations in order to operate legally. These can include the requirements of the Illinois Department of Revenue, the local Chicago business permit office, the Department of Financial and Professional Regulation, and even the Illinois Department of Public Health.
5. Legal Representation
One of the most important pieces of advice to consider when setting up an LLC in Chicago is to find quality legal representation. Having experienced attorneys to help guide you through the process of setting up and running an LLC can help ensure that you are in compliance with all of the necessary laws and regulations. It can also help protect your business from potential liabilities and ensure that you are taking advantage of all of the legal benefits that come with being an LLC.
Incorporating an LLC is a major decision for many businesses, and it can be an exciting opportunity for success. But in order to maximize the potential of an LLC, it is important to understand all of the legal, financial, and regulatory considerations that come with the process. The five things outlined above are important issues to consider when incorporating an LLC in Chicago. By understanding each of them—including the double taxation structure, limited liability protection, ownership management rules, local and state regulations, and the need for quality legal representation—you may be able to make the most of the experience and bring your business the success you desire.