Illinois S Corp Formation

Illinois S Corporation Formation

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Steven S.

Steven Stark

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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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Richard Gora

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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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Joshua Garber

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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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Cynthia Pietrucha

Cynthia Pietrucha is a licensed Illinois attorney who provides legal counsel to businesses and individuals. With particular expertise in the area of employee rights and employment law, she has represented both employees and employers. In addition, she is experienced in contracts as well as aspects of business and entertainment law. Cynthia holds a J.D. from Northern Illinois University College of Law.
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Jonathan Decatorsmith

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Chicago tax attorney Jonathan Decatorsmith has been practicing tax law for more than 30 years. Prior to joining the Law Offices of Chicago-Kent, Decatorsmith was a senior t... read more
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Charles Muscarello

Attorney Charles Muscarello works as a principal at and co-founded Denker & Muscarello, LLC. The law firm focuses on litigation and business law and specializes in helping privately held companies whether it is a startup, family owned or corporation. Mr. Muscarello has represented many well-known companies and has won a high number of cases throughout litigation.
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Rick Cummings

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Rick Cummings has 38 years’ experience and is a strategic attorney. He has worked at some of the world’s top international law firms and financial institutions as a senior counsel, including the International Consulting Organization, the Federal Banking Agency and the International Food Company. Rick’s main area of focus is commercial contracts, but he also has experience in dealing with securities, mergers and general business operations. He is the principal of his own law office.
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Daniel Regan

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As Daniel himself likes to say, Regan Law LLC is in the "business of business." His boutique law firm works with a variety of businesses and individuals in a variety of different business areas including estate planning, general business representation, M&A, and commercial litigation. His goal is to maximize profits for his clients while mitigating any legal risk they might incur.
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Jeffrey Hood

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Experienced corporate and commercial attorney with history of providing exceptional service for all types of clients. I will work with you to resolve your legal problems an... read more
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Clara Duffield

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Clara Duffield is a transactional attorney with more than 14 years of experience. She specializes in financial-related legal matters, with a primary focus on financial transactions. Clara is licensed to practice law in Illinois and obtained her Juris Doctor degree after graduating from the University of Chicago. Clara is also experienced in drafting, negotiating and reviewing commercial contracts, and she often represents startup businesses.
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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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