How to Get Started on LLC Taxes in Chicago
Understanding the complexities of LLC taxes in Chicago can be daunting4 min read
Understanding the complexities of LLC taxes in Chicago can be daunting. That’s why enlisting help from experienced business lawyers is essential for successfully managing tax liabilities. Empowered with locally-informed counsel, you can more accurately file your taxes and ensure that your LLC remains compliant with both state and federal regulations.
In this article, we will discuss the steps to getting started on LLC taxes in the city of Chicago, Illinois. This includes the need to register your LLC with the State of Illinois, the various types of LLC taxes applicable to businesses in the state, and guidance on best practices for staying on top of changing tax regulations. We will also include frequently asked questions about LLC taxes in Chicago and how UpCounsel can help resolve your tax questions.
Registering Your LLC with the State of Illinois
The first step to getting started on your LLC taxes in Chicago is to register your LLC with the State of Illinois. You can do this by filing the articles of organization with the Illinois Division of Corporations. Depending on your LLC structure, you may also need to submit additional documentation, such as scheduling meetings, appointing members, and drafting an operating agreement.
Once you have registered with the state, you will then be able to obtain your LLC number and targeted permits and licenses. These will be required when you file taxes for your business.
Types of LLC Taxes in Chicago
As a business owner in Chicago, it’s important to understand the various taxes that are applicable to your LLC. These include both state and federal taxes, as well as potential local taxes.
The most common state taxes applicable to LLCs in Illinois include income tax, franchise tax, and sales tax. The state of Illinois has an individual income tax rate of 4.95 percent and a corporate income tax rate of 6.82 percent. The franchise tax rate is .0625 percent for businesses with an LLC structure. And finally, the state sales tax rate is 6.25 percent.
At the federal level, LLCs are subject to self-employment taxes, employer taxes, and excise taxes. The self-employment tax rate is 15.3 percent, which includes both Social Security and Medicare taxes. Employers are responsible for paying both the employee and employer portions of Social Security and Medicare taxes as well as the federal unemployment tax. And depending on your industry, you may also be liable for certain excise taxes.
In addition to state and federal taxes, LLCs in Chicago may also be subject to local taxes, such as the city’s business tax. Businesses with taxable income may face a flat tax rate of 1.25 percent. It’s important to note that businesses not based in the city of Chicago may also be liable for this tax.
Best Practices for Staying Current on LLC Taxes in Chicago
Given the complexities of LLC taxes in Chicago, it’s important to stay up to date on changes in the tax code. The best way to do this is to work with experienced lawyers that understand the local regulations. With their help, you can more accurately prepare and file your taxes and avoid potential fines or penalties.
UpCounsel can provide you with access to a network of experienced business lawyers in Chicago. Whether you need a one-time consult or an entire freelance legal department, UpCounsel’s team of experienced legal professionals has you covered. From small businesses to the Fortune 1000, UpCounsel’s team of attorneys is trusted by companies of all sizes to provide quality and cost-effective legal services.
Frequently Asked Questions (FAQs)
To help you become more informed, we have included a list of frequently asked questions about LLC taxes in Chicago below.
Q: Who is responsible for filing LLC taxes in Chicago?
A: The LLC is responsible for filing taxes in Chicago. It’s important to note that the taxes may require different filings for the LLC and the owners. It’s also important to recognize that LLCs can be subject to both state and federal taxes, as well as potential local taxes.
Q: Does my LLC need to pay property taxes in Chicago?
A: Yes, your LLC may be liable for property taxes if it owns real estate or other tangible properties in the city. The property tax rate in Chicago is based on the assessed fair market value of the property.
Q: Are sales taxes applicable to LLCs in Chicago?
A: Yes, LLCs in Illinois are subject to sales taxes. The state sales tax rate is 6.25 percent. It’s important to keep in mind that the cities and counties in Illinois may also impose additional sales taxes.
Managing LLC taxes in Chicago can be a complicated process. It’s important to understand the various tax liabilities you may be subject to, as well as stay up to date on changes in the tax code. Working with experienced business lawyers that understand the local regulations is the best way to ensure that you are more accurately preparing and filing your taxes.
UpCounsel can provide you with access to experienced business lawyers in Chicago. The attorney profiles of UpCounsel’s community members includes ratings and reviews of their recent work. To learn more, contact UpCounsel today.