What is a Business License in Illinois?

A business license in Illinois is an essential first step to starting and managing your own business. This guide will tell you everything you need to know for starting a business in Illinois and hopefully will make the whole process seem a little less daunting.

Illinois Small Business Information

When starting an Illinois small business, there are many great resources that will help the process run a little smoother. One of the best resources for starting and managing a small business in Illinois is the IDOC or Illinois Department of Commerce and Economic Opportunity’s website which includes valuable links to business guides and other pertinent publications related to purchasing, marketing, and financing a business.

In addition, the SBDC or Illinois Small Business Development Center is a fraction of a national network center that works closely with the IDOC. The development center provides personal assistance when it comes to management assistance and business advice such as business planning, marketing, and financial guidance. You can find a link to the SBDC on the IDOC website’s homepage.

Another key resource is the Small Business Administration or SBA’s website. On their website, you’ll find upcoming events, timely news, and business resource guides that are directly related to the business process in the state of Illinois. There is a guide for small businesses that is specific to the Illinois area that can be downloaded directly from their website. The SBA’s district office is located in Chicago.

Get One Or More Business Licenses

There are several different scenarios when it comes to Illinois business licenses; some businesses don’t require a license and some require at least one and maybe more permits and licenses. The requirements vary depending on the city or county in which the business is located. Generally, the regulatory licenses and permits cover employment and environmental issues and are issued accordingly by various state agencies. Environmental permits are issued by Illinois’ Environmental Protection Agency while the employment licenses are issued by Illinois’ Department of Labor. More information can be found at www.illinois.gov under the Registration, Licenses, and Permits section. Not only are permits and licenses state issued but some businesses require locally-issued ones as well. For example, Chicago follows its own requirements when it comes to business licenses. The requirements vary depending on the city or county. Be sure to check the city or county’s website for more information as well.

File Records For Your Form of Business

Not only do some businesses require permits or licenses but some, like corporations and LLC’s must file organizational documents with the SOS or Illinois Secretary of State. For more information on these documents, go to http://www.cyberdriveillinois.com/ and check the Secretary of State website under the section of Business Services.

Obtain Professional Licensing

There are many occupations and professions as well that are required for licensing in the State of Illinois. This particular sector is regulated by the IDFPR also known as Illinois Department of Financial and Professional Regulation. Professions and occupations are also regulated by the corresponding state regulatory boards. The IDFPR has a whole section of Professions Regulated by that particular organization. Visit http://www.idfpr.com/profs/proflist.asp for detailed information regarding licensing requirements for dozens of professions and occupations and click on the corresponding item.

Register an Assumed or Fictitious

Choosing a business name is another important part of the initial process of starting your own business. For the most part, business names, especially if operating under any name other than that of the owners, an assumed name, must be registered with the state. Assumed names are also known as DBA, a trade name, or a fictional name. After the initial registration, the name of the business can be changed at a later date.

Corporations, LLC’s, and limited partnership businesses operating with an assumed name must register under the SOS while sole proprietors and partnerships need to register assumed names with the corresponding county clerk. In order to change or cancel an assumed business name, simply file Form BCA-4.15/4.20, Application to Adopt with the SOS and include the fee for filing. For additional information, go to the Assumed Name Adoptions section of the SOS website. Also, be sure to check the website for that city or county.

Register a Trademark or Service Mark

Business names aren’t necessarily the only faction of a business that should be registered with the state. Service marks and trademarks should go through the registration process as well. Trade names, trademarks, and service marks uniquely identify a business, service, or product. The legal definition takes it one step further noting that these components distinguish it from competitors. For more information, check out the section, Trademark/Service Mark Publications/Forms, on the SOS website under Registration and Protection of Trademarks and Servicemarks: A Digest of Illinois Law.

Additional Information

To register a name, the business owner should do an entity search on the SOS website to make sure the name doesn’t already exist. Once that has been determined, Form TM/SM-15, Trademark or Service Mark Application, needs to be filed along with the filing fee. This form can be found under the section of Trademark/Service Mark Publications/Forms.

Frequently Asked Questions

  • Do I Need To Register My Business In Illinois?

Most businesses are required to register with Illinois. Limited partnerships, LLC’s, and corporations must register with the state while sole proprietorships and general partnerships must register with the city or county the business is operating under if the name of the business is not the same name as its owners.

  • What Licenses May Be Required By The State?

There are different licenses and permits available in Illinois. Some of the licenses required by the state are the Illinois Department of Labor license or permits, liquor licensing, and licenses and regulations by profession. Farm Labor Certificates, child labor work permits, Street Trades Certificate of Registration, among others, are just some of the permits that would fall under the Illinois Department of Labor license or permits. To check out licenses and regulations by profession, visit the Illinois Department of Financial & Professional Regulation’s website at www.idfpr.com and click on the related profession.

  • What type of information will be needed or asked for on the license application?

There are certain questions that will be included on the business license application. Some of these include:

  • Business Name
  • Employees
  • How Many Employees
  • Legal Status (Individual, Sole Proprietor, Corporation, Etc.)
  • Taxpayer Identification Number (EIN)
  • List Of Goods/Services
  • Date Business Established
  • Business Address
  • Owner Names And Addresses
  • Business Type (Wholesale, Retail, Service, Construction, Manufacturing)
     
  • How do I Register my Business?

If you make any business transactions in the State of Illinois or with customers in Illinois, you must register with the Illinois Department of Revenue. This includes sole proprietors (husband, wife, civil union, or individual), government agencies withholding for Illinois employees, and exempt organizations. You can register electronically via MyTax Illinois or fill out and mail Form REG-1 which is the Illinois Business Registration Application. This form is available on our website, by calling 1-800-356-6302, or by stopping by one of our offices. There may be corresponding schedules to complete as well. Registering electronically takes approximately one or two days to process while snail mail takes approximately 6 to 8 weeks.

After the application has processed, you will receive a certificate of registration and taxpayer ID. If any information changes after registration, call 217-785-3707, to avoid incorrect processing of tax bills and notices.

Any questions regarding taxes, please contact Central Registration Division, Illinois Department of Revenue, PO Box 19030, Springfield, IL  62794-9030 or go to http://tax.illinois.gov/AboutIdor/QandA.htm and submit a question.

  • How to Incorporate in Illinois?

Following are the steps required in incorporating in the state of Illinois:

  1. You must select a unique name for your business. The name may include the words Co., Company, Corporation, Corp., Incorporated, Inc., Ltd., or Limited. There are certain words that are restricted from use in a business name in the state of Illinois such as Engineer, Insurance, Engineering, Union, Banking, Bank, and Banker. If the chosen name of the business is different from the owner’s legal name, you must register that name with the county clerk’s office.
  2. Once the name is established, you must then file, with the Illinois Secretary of State, your Articles of Incorporation. The articles should include directors, corporate information, stock, incorporators, and registered agents.
  3. To open an account from the bank or to hire employees, go to incorporate.com to apply for a federal EIN or Employer Identification Number.
  4. There are fees associated with incorporating in Illinois. There is a franchise tax which is $1.50 per $1,000 on the paid-in capital with a minimum tax of $25. The fee to incorporate in Illinois is $125.00 with an additional fee for expedited filings.
  5. Before hiring any employees or making any sales or purchases, you must complete the REG-1 State of Illinois Business Registration Application with the Illinois Department of Revenue. This Certificate of Registration must be in a visible location at your place of business.
  6. An annual report must be filed by all corporations with the Illinois Secretary of State on the first day of the month of the incorporation anniversary with the company officers’ signatures. An extension may be filed if necessary and then the extension date replaces the original anniversary date. The fee for this filing is $75.00.
  7. A Cumulative Report will also need to be filed if there are any changes regarding shares issued or capital paid-in. This may incur additional franchise taxes and fees.
  • Does My Business Name Need To Be Reserved?

You do not need to reserve a name, however, this practice does ensure that the desired business name is still available when filing.

  • If Incorporated In Illinois, Does My Principal Office Need To Be Located Within The State?

No, the principal office can be stationed outside the state of Illinois.

  • Do I Need To Turn My Bylaws In To The State?

No, bylaws are not required to be submitted, however, they are a great resource or blueprint when establishing your company.

  • Does Illinois Have Any Requirements When It Comes To Publication Or Other Filing Follow-Ups?

No, you do not need to publicize your business registration for Illinois and there are no other requirements.

Starting Your Own Small Business

There are several things to keep in mind when starting your own small business.

  1. There is no required government filing to operate a business if you are the only owner of the business, otherwise known as a sole proprietor. All that is required is to report the profits and losses from the business on your tax return, IRS Form 1040, Schedule C and pay consequential federal and state income taxes if there is a profit.
  2. If there are business partners, the business becomes a partnership and running the business is a shared responsibility usually outlined in a partnership agreement. In this case, partner's share in the profits and losses.
  3. Other ways to start a small business are to either operate as a LLC, limited liability company, or to incorporate the business. Forming a LLC or corporation helps protect you personally from debts and liabilities that stem from the business. Even businesses with one owner or shareholder can be set up as a corporation or as a limited liability company.

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