LLC Illinois: Everything You Need to Know
To form an LLC in Illinois, you are required to complete several important steps. The first step is to establish a company name with the Secretary of State.
A limited liability company, commonly known as an LLC, is a type of business structure that offers the pass-through taxation benefits of a sole proprietorship or partnership, as well as the limited liability advantages of a corporation. In order to form an LLC in Illinois, you are required to complete several important steps.
Decide on a Name
The first step when starting an LLC in Illinois begins with establishing a company name with the Secretary of State. You can choose any name you like, provided that it is not already taken. Check with the Illinois Secretary of State to see if your name is available. If it is available, you may wish to reserve your chosen name by filing Form LLC-1.15 with the Secretary of State Department of Business Services, and paying the filing fee, which is currently $300.
The name for your Illinois LLC must contain "LLC", "L.L.C.", or the words "Limited Liability Company". The name cannot contain the words "Incorporated", "Corporation", "Corp.", "Inc.", "Co.", "Limited Partnership", "Ltd.", or "L.P.”. Certain words or phrases that may cause confusion with federal or state agencies are also prohibited. Words indicating a professional title, such as ‘’Doctor” or “Attorney”, require proof of proper licensure. Words such as “Bank” or “Banc” will require filing additional paperwork as well.
Appoint a Registered Agent
Illinois, like most states, requires that you appoint a registered agent in the state of Illinois in order to form an Illinois LLC. The registered agent may be either a person residing in Illinois or a corporation registered to do business in the state. The registered agent is responsible for accepting service for any legal documents that may be served on the LLC.
Write Your Articles of Organization
An Illinois LLC is officially formed by filing its Articles of Organization (Form LLC-5.5) with the Secretary of State Department of Business Services and by paying the appropriate filing fee (currently $600 for filing online or $500 for paper filing). Your filing must include the following:
The name and address of your LLC.
The name and address of your LLC’s registered agent.
Whether your LLC will be manager-managed or member-managed.
The names and addresses of the initial manager or managers (if manager-managed) or of the initial members (if member-managed).
Statement of the purpose or purposes for forming your LLC.
Statement indicating the duration of the LLC (specified time period or perpetual).
Get an EIN from the IRS
If your LLC has more than one member, it must obtain an Employee Identification Number (EIN) to establish its tax identity with the IRS. This is true whether the LLC has employees or not. If your LLC has only one member, you must obtain an EIN if you have any employees or intend to be taxed as a corporation.
Register with the Illinois Department of Revenue
If your LLC will be selling goods and collecting sales taxes, it must register with the Illinois Department of Revenue.
Create an Operating Agreement
An operating agreement is not a legal requirement for forming an LLC in Illinois. It is, however, a good idea. An operating agreement is a legal document that outlines the rights and responsibilities of each member as well as the percentage of each member’s interest. It also provides for:
How the LLC will handle profits and losses.
Who will manage the LLC.
The voting power of each member.
The procedures for selling a member’s interest in the LLC or transferring interest in the event of a member’s death.
Depending on the nature of your LLC’s business, you may be required to obtain one or more local business licenses.
Keep in mind that your LLC will be required to file annual reports with the Secretary of State Department of Business Services prior to the first day of its anniversary month.
Your LLC must register with the Illinois Department of Employment Security if it has employees within the state. Your LLC is also required to inform the IRS and the state whenever it hires a new employee.