Illinois S Corp Formation

Illinois S Corporation Formation

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Steven S.

Steven Stark

297 reviews
For over 30 years, Steven Stark has offered counsel to non-profit organizations and private companies. He has a passion for helping small businesses in particular since he himself started several businesses of his own in New York and Florida. He understands the importance of small businesses having a reliable attorney to advise them about legal matters from their inception.
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Joshua G.

Joshua Garber

209 reviews
Representing notable clients like Tesla and the City of Los Angeles, Josh Garber excels at helping clients with employment and labor laws. Many of his past clients have had great success using Josh for employment agreements and Division of Labor Standards Enforcement (DLSE) hearings. With his practical advice, he has even helped clients avoid going to court.
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Richard G.

Richard Gora

157 reviews
Looking for an attorney with experience? Richard Gora is the exact attorney you want. Having defended over 100 cases both in state and federal courts and working with clients from around the globe, Richard has an array of different experiences. His services are wide-ranging and include business litigation, securities litigations, employment litigation, and business counsel. Prior to founding Gora LLC, he worked for Finn, Dixon & Herling LLP for eight years.
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Joe B.

Joe Brennan

2 reviews
I am a senior corporate/regulatory/technology attorney, with 15+ years of experience that includes both in-house (General Counsel) and law firm roles. And I have deep exper... read more
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Noam R.

Noam Raz

5 reviews
Noam Raz has a specialized focus advising individuals and companies based in the United States or Israel that have legal matters or transactions made across the border. Because Noam is fluent in both Hebrew and English as well as both American and Israeli culture, he is in a unique position to offer advice to companies in both countries. Additionally, he is licensed as an attorney in Israel, Illinois, and Michigan.
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Patrick J.

Patrick Jones

55 reviews
Patrick Jones has 17 years of experience as a business attorney and has represented numerous corporate clients, including AirHelp, Slobbr and several Fortune 500 companies. He is licensed to practice law in Illinois and in Arizona. Patrick has extensive experience in debt and bankruptcy, as well as in legal research and writing. He founded his own law firm, PMJ PLLC, in 2015 and is of counsel at Freeman Law.
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Caleb S.

Caleb St.-Jean

24 reviews
After working for more than five years in software development and technology consulting, Caleb St.-Jean earned his JD from the Chicago-Kent College of Law. As a patent attorney at the Law Office of Caleb St.-Jean, he is committed to seeing long-term success for his clients. He provides small companies with individualized strategies and better business ideas at an affordable price.
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Ric G.

Ric Gruber Jr

With an impressive entrepreneurial resume and education, Partner and COO of Pasky Gruber LLC, Ric Gruber, Jr. offers tremendous value to his clients. With an LL.M. in Information Technology and Privacy Law, his practice focuses on transactional IP and other IP related issues, privacy compliance, and advertising law. A successful franchisor, he also advises clients on franchise law and hospitality.
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Thomas J.

Thomas James

2 reviews
Thomas practices in Civil Litigation, Commercial and Corporate matters, Federal-State and Local taxation, Estate Planning and Asset Protection, Entity Formation, and other Business matters. Before setting up his private practice, he worked at a national law firm in Chicago and the United States Marine Corps as a Judge Advocate. He currently works out of three offices in Illinois.
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Jonathan G.

Jonathan Grossman

12 reviews
Jonathan Grossman is a business attorney and an entrepreneur. He has eight years’ experience and have worked with some of the leading law firms in the United States. He has a degree in law, which he obtained from the University of Kansas School of Law. Jonathan is licensed to practice law in Illinois and New York. He operates his own law firm and have also worked as a patent counsel at Fresenius Kabi USA for three years before starting his own business.
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Why use UpCounsel to hire a Illinois S Corporation Formation Attorney?

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Why use UpCounsel to form an S Corporation in Illinois

Starting an S Corporation in Illinois with a business startup attorney on UpCounsel is easy, informative, and cost-effective. In just three simple steps, our S Corporation attorneys will help you protect your business and personal assets, and help you organize your business for state and federal compliance for an S Corporation.

When forming an S Corporation in Illinois with UpCounsel, the attorney you choose to help you will conduct a business name search for your Illinois S Corporation and assist you in preparing your S Corporation Operating Agreement, along with providing other legal services based on your needs. Once your Articles of Incorporation have been prepared and successfully filed with the Illinois Secretary of State Department of Business Services, your Illinois S Corporation has been formed and begins its existence as a corporate entity.

However, a corporation does not register as an S Corporation with the Secretary of State. It registers as a corporation with the state and then may file for S Corporation status with the IRS. S Corporation status is a taxation category which provides income tax advantages to small businesses.

Choosing a Company Name for Your S Corporation

One of the first steps in the process of forming your S Corporation is to choose your business name.

The business name that you choose must contain the word "Corporation", "Company", "Incorporated", "Limited", or an abbreviation of one of those words. It must be distinguishable (not the same as or deceptively similar to) the name of an S Corp or foreign S Corporation reserved or registered.

Your S Corporation name may contain the name of one or more members.

By using UpCounsel, you can choose several business names in order of preference. Your attorney of choice can then conduct a name check for your Illinois S Corp before filing to see which names are available. Once you have chosen an available name, your chosen S Corporation attorney can help you properly register your name with the State of Illinois.

Requirements for Forming a Illinois S Corporation

Articles of Incorporation: When forming an S Corporation in Illinois, the Articles of Incorporation must be filed with the Illinois Secretary of State Department of Business Services. Illinois state law requires that certain information be included in your Articles of Incorporation when forming your Illinois S Corporation.

This information must include:

  1. The S-Corp's name and address.
  2. The S-Corp's registered agent's name and address.
  3. The purpose for which the S Corporation is organized.
  4. The number of shares the corporation is authorized to issue and the consideration (money or property) the corporation will receive for the shares.

Additionally, a Illinois S Corporation formation generally requires inclusion and/or consideration of the following:

S Corporation Qualification Requirements: For a corporation to qualify as a S Corporation for tax purposes, it must meet the following requirements:

  1. Must be a domestic corporation.
  2. Have only allowable shareholders including individual, certain trusts, and estates; and may not include partnerships, corporations or non-resident shareholders.
  3. Have only one class of stock
  4. Have no more than 100 shareholders
  5. Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).

Additionally, a Illinois S Corporation formation generally requires inclusion and/or consideration of the following:

S Corporation Operating Agreement: Although the S Corporation Operating Agreement is not required with the Articles of Incorporation, it is a good idea for every S Corporation with more than one member to have one. The Articles of Incorporation may contain restrictions or prohibitions on the power of the members to adopt, amend, or repeal an operating agreement.

Membership: A S Corporation must have one or more members.

Eligibility Requirements: A natural person or an entity.

Procedure for Membership: The member may acquire an interest in the S Corporation directly from the S Corporation at the time of formation and, after formation, at the time provided in and upon compliance with the Articles of Incorporation or the operating agreement or, if not provided, only upon the vote of a majority in interest of the S Corporation members, excluding the vote of the person acquiring the membership interest, and only when the person becomes a party to the S-Corp's operating agreement.

Business Licenses: Business licenses and/or permits are required for most S-Corp's offering specific professional services. Contact the Illinois State Corporations Commission for specific licenses.

Resident Agent needed for a Illinois S Corporation

Remember every Illinois S Corporation must have a registered agent in Illinois, which is the person or office designated to receive official state correspondence and notice if the company is "served" with a lawsuit. The statutory agent may be an Illinois resident or business entity authorized to do business in Illinois. If the registered agent is a corporation, its articles must authorize it to act as an agent. The registered agent must have a physical Illinois street address.

Illinois Secretary of State

Once you create an S Corporation in Illinois, the Illinois Secretary of State will require that certain recurring responsibilities and duties be fulfilled. The most important of these are explained below.

For further information, contact the Illinois Secretary of State.

Recurring Responsibilities and Duties for Illinois S Corporations

Annual Report: Each S Corporation shall provide an annual report to the Illinois Secretary of State Department of Business Services regarding its financial condition to each of its members. The report must be filed by the S-Corp's anniversary date and the filing fee is $75.

Incorporator's Statement: Each S Corporation must keep in its records a signed "Incorporator's Statement" showing the names and addresses of the initial directors who will serve on the board until the first annual meeting of shareholders.

Filing Fees for a Illinois S Corporation

The filing fee is $150 plus an initial franchise tax payment assessed at rate of $1.50 per $1,000 of paid-in capital represented in Illinois. The minimum initial franchise tax is $25. Also, the general fees for filing and reserving a S-Corp's name is $300. These fees can change so it would be best to check with the Illinois Secretary of State Department of Business Services on what the latest fees are. You may pay these fees in many different forms including cash, check, money orders, or debit and credit cards.

Taxes for a Illinois S Corporation

A Illinois S Corporation is a special type of corporation created through an IRS tax election. An eligible corporation can avoid double taxation (once to the corporation and again to the shareholders) by a corporation with a Subchapter S designation by the IRS. A corporation must file a Form 2553 to elect "S" status within two months and 15 days after the beginning of the tax year.

Owners of the S Corporation report business losses or profits on their personal tax returns, and therefore the business itself is not taxed. Each shareholder is responsible for paying taxes on their pro rata share of the S corporation's items of income, deductions, and credits (through a Schedule K-1 form).

Illinois state law follows federal law for income tax purposes. Therefore if a corporation is classified as an association taxable as a S Corporation for federal income tax purposes, so will it be taxable as a corporation for state tax purposes.

Federal Income Tax: An S Corporation does not pay federal income tax.

Illinois State Income Tax: Illinois does not impose an income tax on businesses. However, Illinois S Corporations are Subject to Illinois' replacement tax at a reduced rate.

Federal Tax Identification Number: Your corporation will need to obtain a federal tax identification number, which is also known as an Employment Identification Number (EIN). You do not need to get a new EIN after the corporation choose to become a S Corporation. An EIN is similar to an individual's social security number. You will need an EIN for your S Corporation as long as there is one member, even if the S Corporation does not have employees. For certain tax filing requirements the attorney you choose on UpCounsel can help prepare your Federal Tax ID Application, if you have not done so already.

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