How to Start an LLC in Chicago
Starting a business is an exciting endeavor, but it also comes with a lot of time-consuming hoops to jump through5 min read
Starting a business is an exciting endeavor, but it also comes with a lot of time-consuming hoops to jump through. Setting up an LLC is one of the most efficient options, thanks to the liability protection it provides to business owners. But creating an LLC requires more steps than most entrepreneurs realize; in the city of Chicago, failing to adhere to the city’s LLC formation requirements can result in costly fines and other legal issues.
If you’re based in Chicago and starting an LLC, this guide is here to help you navigate the process. With the legal expertise of UpCounsel attorneys, you can rest assured that you’re setting up your LLC the right way—the first time.
What Is an LLC?
LLC stands for Limited Liability Company. An LLC is a legal business organization structure separate from the individual business owner. When you register an LLC, you are protecting yourself from being personally liable for any unpaid debts or other legal issues within the business.
Rather than operating the business under the legal identity of the owner, setting up an LLC essentially creates a separate legal entity that stands on its own. With an LLC, you can limit your liability to the amount of money you’ve invested in the business, protecting your personal assets and investments in the process.
What Are the Benefits of an LLC ?
Forming an LLC offers many advantages to small business owners:
personal asset protection
ability to transfer ownership
deductible business losses
separation from personal debts
which can help protect personal credit
Most importantly, forming an LLC in Chicago gives you the legal rights to operate your business in the city, then grow it and manage it in a safe and effective manner.
What Are the Steps to Form an LLC in Chicago?
Starting an LLC requires the completion of a comprehensive set of steps. In most cases, LLC formation requires filing with the state in which your business has its primary office, in this case, the state of Illinois.
Before you can even file with the state, however, there are a few steps you must take to prepare for LLC formation in the City of Chicago.
Step 1: Choose a Business Name
The first step to creating your LLC is to choose a business name. In the City of Chicago, you cannot use a name that has already been registered to an existing business. In addition, you may not choose any name that includes the phrases “incorporated,” “corporation,” “company,” or “LLC.”
Once you’ve selected a name, you can check with the Illinois Secretary of State to make sure it hasn’t been used already. Adhere to the guidelines and processes your state has in place, as this will help you avoid potential legal issues in the future. Choosing a name that is easily recognizable and distinct is an important factor for having a successful business.
Step 2: Select a Registered Agent
You must select a registered agent for your LLC. This person or entity is responsible for receiving paperwork and legal documents sent to your business, so make sure you choose someone who can be easily accessible.
In most cases, you can select yourself as the registered agent, as long as you have a physical address (not a P.O. box) in the same state in which you’re forming your LLC. However, if you’re not comfortable having this responsibility, you can choose someone else like a lawyer or accountant.
Once you have chosen a registered agent, make sure that they agree to take on the role and that they understand the various responsibilities associated with it.
Step 3: File Your Articles of Organization
Your next step is to file the Articles of Organization with the Illinois Secretary of State. This document is a legal document that outlines the purpose of your LLC and provides other important information such as the address of the business and the names and roles of any members involved in the company, if applicable.
You can find copies of the Articles of Organization online, which you can fill out and file in person or via mail. Once you have filed your Articles of Organization, the state will process your application and either approve or reject it within 60 days.
Step 4: Establish an Operating Agreement
Once your Articles of Organization have been approved, you must create an operating agreement to outline the organization’s internal procedures and policies. This document should list all of the rules and regulations governing your LLC, as well as the rights and responsibilities of each member involved in the business.
Be sure to include a clause in your Operating Agreement making sure that the laws of the state of Illinois and the City of Chicago are followed. It is also a good idea to include any clause required by your city regarding matters such as recordkeeping or filing of income taxes.
Step 5: Get an Employer Identification Number (EIN)
Your next step is to obtain an Employer Identification Number (EIN) from the IRS. This number is basically like a Social Security number for your business, and it allows you to open bank accounts, file taxes, and access other benefits.
You can apply for an EIN online or by phone. It is important to note that multiple members of your LLC may be required to share the EIN, so make sure to check with the IRS for more information and clarification.
Step 6: Get a Chicago Business License
Before your LLC can conduct any business in the City of Chicago, you must obtain a business license. Each business type requires a different license, so make sure that you research the types of licenses available in the city, and the documents you must provide for the application. The cost of a business license in the City of Chicago varies, depending on the nature of your business, but the average fee is around $100.
Step 7: Stay Compliant in Chicago
Once your LLC is up and running, it is important to comply with all state and local laws. This includes filing all necessary forms, paying state and local taxes, and meeting any other filing requirements imposed by the City of Chicago. The fines for non-compliance can be steep, so it is important to be on the lookout for changes in city and state laws that may pertain to your business.
Get Legal Support From UpCounsel
Starting an LLC in Chicago might sound complex at first. That’s why seeking the advice and assistance of experienced attorneys is a must for any business venture. Whether you need a one-time consult or an entire freelance legal department, UpCounsel’s network of experienced Chicago-based attorneys has you covered.
At UpCounsel, we are committed to providing high quality, cost-effective legal services for entrepreneurs. Our online attorneys have an average of fourteen years of experience and their profiles include ratings and reviews of recent work, so you can make the best choice for your legal needs.
Starting an LLC in Chicago is a multi-step process that involves research, paperwork, and tax filings. Taking the necessary steps to form an LLC can help you protect your personal assets, manage your business, and save money in the long run.
If you’re looking for skilled and experienced attorneys who can provide guidance and assistance throughout the LLC formation process, UpCounsel can help. With our high-quality, cost-effective legal services, you’re sure to make the most of your business venture.