Creating an LLC in Chicago: Everything You Need to Know
Forming an LLC in Chicago doesn’t have to be a daunting task, but a number of factors should be taken into consideration4 min read
Forming an LLC in Chicago doesn’t have to be a daunting task, but a number of factors should be taken into consideration. From understanding the legalities of establishing a business in Chicago, to enrolling in the necessary taxes, to obtaining licenses and permits, there are a number of steps that need to be taken to ensure the smooth operation of a company in Illinois. To help make the process easier, this guide will provide an overview of the key steps of creating an LLC in Chicago and how to get started.
An LLC, or limited liability company, is a legal business structure that combines elements of both corporate and partnership law. As such, it’s a highly popular choice of business structure among entrepreneurs, especially those who are seeking to secure their personal assets by minimizing their exposure to potential losses and debts. An LLC grants its members limited personal liability for debts incurred by the company, while still affording members the advantages of operating a corporation, such as centralized management, flexibility in how business decisions are made, and the ability to acquire capital from outside investors.
In Chicago, forming an LLC is relatively straightforward and follows many of the same steps as forming a company in many other states. Here are the key steps to take when setting up an LLC in Chicago.
Choose an Appropriate Name and CrimCheck for Your LLC
The first step to forming an LLC in Chicago is to select an appropriate and unique name for the business. Each state’s business structure policies require that businesses file with an LLC’s unique legal name.
When selecting an LLC name, consider the following requirements:
• The business’s name must include a designated ending, such as “Limited Liability Company” (LLC) or “LLP” (limited liability partnership).
• The name cannot include any language that would imply the business is something that it’s not authorized to be, such as banks, insurance companies, or professional corporations.
• The name must be distinguishable from any other business names in the state, including past and present business names.
When selecting an LLC name, run a criminal background check to ensure that the name is available and hasn’t already been registered by someone else.
File LLC Formation Documents
The next step is to file the required formation documents with the Illinois Secretary of State. The documents needed to form Illinois LLCs include the LLC Articles of Organization, which is the basic document that defines the LLC’s purpose, ownership, management structure, address, and other organizational details.
The Articles of Organization must be signed by at least one LLC member and filed with the Secretary of State’s office. The filing fee is $150. The filing process typically takes about five business days to complete, although expedited filing services are available for an additional fee of $50.
Obtain an EIN for Tax Purposes
LLCs are responsible for filing their own taxes, even if there is only one owner. Every LLC is required to have a federal tax identification number (EIN) to use for filing taxes and opening a bank account, among other purposes. To obtain an EIN, a business must file an application with the Internal Revenue Service (IRS). The application process is relatively straightforward, though the company will need to have the organizer’s name, Social Security Number, and the business’s mailing address and tax information available when filing the application.
Register with the Illinois Department of Revenue
In Illinois, all LLCs are required to register with the Illinois Department of Revenue in order to obtain a Certificate of Registration. The filing fee is $25, and the certificate is valid for two years and must be renewed every two years. To complete the registration, the LLC must provide information such as the LLC name, address, federal tax identification number (EIN), and other pertinent information.
Obtain Necessary Licenses and Permits
In Chicago, businesses are required to obtain the necessary business licenses and permits in order to legally operate. The type of license and permit requirements vary based on the type of business being established and the activities that will be conducted. Additionally, different cities and counties may require additional permits, so it’s important to research the requirements in your area.
Create an Operating Agreement
An operating agreement is an internal document that outlines the LLC’s organizational structure, ownership, and operating procedures. An operating agreement is not required to form an LLC in Chicago, but it is highly recommended, as it provides important guidelines to guide the LLC and its members and can help to avoid misunderstandings or disputes in the event of legal issues or disputes.
Forming an LLC in Chicago is relatively straightforward, but there are a number of steps and considerations that need to be taken into account in order to ensure the business is in accordance with state and local laws and regulations. By taking the necessary steps outlined in this guide, you can establish a strong foundation for a successful business in Chicago.