Starting a business is a difficult task, whether in Chicago or elsewhere. There is paperwork to file, licenses to obtain, and legal issues that must be taken into account. Each of these tasks carries its own challenges, but one of the first steps is the most important: deciding what kind of entity your business should be. One popular choice is the limited liability company (LLC).

In this guide, we’ll discuss the benefits of forming an LLC, what criteria must be met to qualify for it, and the steps needed to make it happen. After reading this guide, business owners based in Chicago should be able to decide if an LLC is the right choice for their needs, and the knowledge they’ll earn should simplify the process of filing for one.

What is an LLC?

A limited liability company (LLC) is a type of legal structure used by many businesses in the United States. It’s a hybrid of a corporation and a partnership, offering the advantages of both with fewer downsides. The benefit of having an LLC is that it limits the liability of the owner(s) and offers strong protection for personal assets.

An LLC is not a separate entity, like a corporation, but it is recognized as a separate entity by the Internal Revenue Service (IRS). This separation of personal and business assets limits the personal legal liability of the business owner(s). For example, if a business is sued, the only assets that can be used to settle the judgment are the ones belonging to the business.

Benefits of an LLC

An LLC offers several advantages to small businesses, particularly in the area of taxation. The LLCs themselves are not taxed, so profits are only taxed when they’re distributed to the owners as income. This helps business owners save money on taxes.

In addition, LLCs are very flexible when it comes to ownership and governance. LLCs can have any number of members, and each member can have an unequal share of the business. For example, one person can have a 10% stake in the business, while another can have a 30% stake. This provides flexibility to business owners who want to divvy up the company in a certain way.

Finally, LLCs are relatively easy to maintain. There are relatively few bureaucratic hurdles to jump through when creating and maintaining an LLC. This makes it an attractive option for small businesses who want to get up and running quickly and efficiently.

Forming an LLC in Chicago

Forming an LLC in Chicago is relatively straightforward and can usually be done within a matter of weeks. The first order of business is to register the LLC with the Illinois Secretary of State, which can be done online. Once the LLC has been registered, the owners must create an operating agreement that outlines the roles and responsibilities of each member. This should be filed with the LLC registration and submitted to the Secretary of State.

The LLC must then apply for an Employer Identification Number (EIN). This can be done online on the IRS website. The EIN will be used to identify the LLC for tax purposes.

Once the basics have been taken care of, it’s time to apply for any local licenses or permits that may be required. These will vary depending on the type of business and the location in Chicago. Business owners should consult with their local government to determine what kinds of permits and licenses are necessary.

Finally, business owners should consult with an attorney to make sure their LLC is set up correctly and to answer any questions that may arise. It’s important to hire an attorney who is well-versed in the laws and regulations of the state (or city) of Chicago, as each state and city may have different legal requirements.

In summary

Forming an LLC is a great way for business owners to protect their personal assets, save money on taxes, and provide flexibility in terms of ownership and governance. Chicago business owners should consult with an experienced attorney to ensure that their LLC is set up correctly and in accordance with local laws and regulations. By following these steps, entrepreneurs should have their LLC up and running in no time.

Topics:

LLC,

LLC formation,

legal counsel