How to Start an LLC in Chicago? 5 Things to Consider
When you decide to start a business, forming a limited liability company (LLC) is often the best option3 min read
When you decide to start a business, forming a limited liability company (LLC) is often the best option. An LLC offers some of the most important benefits of a corporation – the protection of limited liability. But a major advantage of an LLC is the ease of administration. Like all forms of business, forming an LLC involves certain steps in order to ensure that it is legally incorporated and compliant with state laws. The process can be particularly complex when starting an LLC in Chicago as its compliance obligations can be more complicated due to the special rules of local government. Therefore, it is essential to weigh the pros and cons before committing to establishing an LLC in the Windy City. Here are some of the most important factors to consider when starting an LLC in Chicago.
1. Choose the Right Structure
The first step in forming an LLC in Chicago is to select the right structure. An LLC is a type of corporate entity that limits the personal financial liability of its owners, known as members. An LLC is typically structured as either a ‘single-member LLC’ or a ‘multi-member LLC.’ The choice of which structure to pursue depends on the distinct needs of the founders. Generally, single-member LLCs are less complicated and require fewer formalities. Multi-member LLCs, however, are often chosen in order to bring in additional funding sources or to split ownership responsibilities.
2. Write an Operating Agreement
An LLC Operating Agreement is a document that outlines the internal operations and stated rules for the LLC, including the rights and responsibilities of the members and how the business will be conducted. Although it is not a required legal document, it is highly recommended that any LLC operating in Chicago have an Operating Agreement as it is a legal document outlining how the business should be managed. An Operating Agreement can greatly reduce potential legal issues, and will also help to define roles and responsibilities within the LLC.
3. Obtain Licenses & Permits
Before you can commence with business operations, once your LLC is formed and approved, you must register for certain local, state, and federal permits and licenses. This is an important step for any business, but particularly so for Chicago-based LLCs. Depending on the type of business activities you plan to undertake, the exact set of licenses and permits required will vary. For example, restaurant owners in Chicago must obtain a Food Service Sanitation Certificate, and financial advisors must register with the Securities and Exchange Commission.
4. Obtain Necessary Insurance
Obtaining neccessary insurance is a key consideration in forming an LLC in Chicago. All businesses need insurance coverage of some kind, and the exact kind of insurance required will depend on the industry. For any LLC operating in a health-related field, professional liability, general liability, and malpractice insurance are necessary. In any other business, general liability and umbrella policies are usually sufficient. It’s important to shop around for the best insurance coverage to suit your business needs.
5. Consult a Business Attorney
Business lawyers are invaluable resources in the LLC formation process. Not only can they help ensure that the initial documents are drafted correctly, they can also provide advice on the legal implications of each step of the LLC formation process. In Chicago, where the business regulations are especially complex, it is particularly important to have a lawyer assist you in forming your LLC. Business lawyers are often able to provide guidance on the process and serve as a sounding board for the myriad issues you might face as a business owner.
In the end, forming an LLC in Chicago requires careful thought and proper planning. From drafting an Operating Agreement to obtaining licenses and permits, and consulting a business lawyer, the process can be complicated. Considering the above factors will help you ensure that you proceed with forming an LLC in the Windy City as smoothly and efficiently as possible.