How to Create an LLC: Frequently Asked Questions
It's no secret that creating an LLC (limited liability company) is an important step for many entrepreneurs and business owners3 min read
It's no secret that creating an LLC (limited liability company) is an important step for many entrepreneurs and business owners. But many people aren't sure of the process or what documents they will need to create the LLC. With so many laws and regulations, it can be difficult to know where to start. Chicago-based business owners in particular need to make sure they are mindful of the city and state regulations and ensure they register properly. To help, here are some of the frequently asked questions answered about creating an LLC in Chicago.
What is an LLC and why should I create one?
An LLC is a business entity that allows its owners to have limited liability for the debts and obligations of the business. By creating an LLC, you can protect your personal assets from risks and liabilities related to the business. This also limits the amount of paperwork and filing requirements needed to start a business, as compared to a corporation or partnership.
How do I register my LLC in Chicago?
The first step in forming an LLC in Chicago is to choose a unique name. The name must include “LLC” or something similar, as well as the words “Limited Liability Company” or “Ltd. Liability Co.”. Afterwards, you must file an LLC Articles of Organization with the Illinois Secretary of State. This document must include the LLC name, the county where the LLC is located, the agent for service of process and the LLC purpose. Once the Articles of Organization are approved, certified copies should be obtained for proof of the LLC's existence.
What other documents should I create for my LLC?
An Operating Agreement is required for an LLC in Chicago. This document sets forth how the LLC will be managed and operated. It should include names of the members, how profits and losses will be allocated, how decisions will be made, how the LLC may be dissolved, and more. It is important to have this written agreement to ensure that all members are on the same page and understand the obligations of their role. Additionally, to stay compliant with federal and state laws, an LLC must also create an Employer Identification Number (EIN) with the IRS. You can obtain an EIN through the IRS website, free of charge.
How is an LLC taxed?
LLCs in Chicago are generally taxed as pass-through entities. This means that the business profits and losses are reported on the members' individual tax returns. The LLC itself does not pay taxes, but the members are responsible for paying taxes on the profits from the business. Depending on the number of members and the type of LLC, however, the LLC may be required to pay taxes. It is important to speak to an experienced business lawyer, to make sure that you understand the applicable taxes and make the necessary filing on time.
Can a business lawyer help me create an LLC in Chicago?
Yes. The process of forming an LLC and meeting all of the requirements can be complicated and time-consuming. Business attorneys have extensive experience in the area of business formation and can assist in navigating the process. They can provide advice on the choice of LLC structure, drafting the required documents and filing the paperwork. Furthermore, business attorneys in the UpCounsel network have significant experience and expertise in Chicago-specific regulations related to LLCs.
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