Open Corporation in Illinois: Everything You Need to Know
When you decide to open a corporation in Illinois, there are a number of considerations you need to make.4 min read
When you decide to open a corporation in Illinois, there are a number of considerations you need to make. This is a major decision and is not always the most ideal option for all business structures. However, it does provide many advantages for a business that wants to see growth.
Starting a Business in Illinois
Starting your own business in Illinois is easier than you may realize. You only need to file some quick and simple forms with the secretary of state, and just like that, you have a formed business.
Forming a corporation in Illinois will establish credibility with your customers, prevent other businesses from using your business name, provide protection over your own assets, makes sure that your business will go on once you or another owner passes away, and also provides some taxation benefits.
Deciding to Incorporate
There are several steps you should take once you decide to incorporate:
1. Research the why. Do you really need to incorporate? If you are a small business just starting out and you are the only employee, a sole proprietorship would be less expensive and an appropriate option rather than incorporation. If you have one partner, you can enter a general partnership without incorporating. A limited liability company is also an option if you want to have protection from the liability of the business. You will not have to file an additional tax return for your business with any of these options.
2. Check into what is required legally. Sole proprietorships, partnerships, and LLCs have different advantages and disadvantages when it comes to liability protection, saving money on your taxes, and dealing with profits and losses.
3. Have a meeting with your attorney and your accountant. It is smart to discuss your options and ideas with your legal and financial team before making a decision on your business structure. This is particularly important if you are forming a business with another person, as you want to avoid any issues or conflicts moving forward.
How to Form a Corporation in Illinois
The following are some things to keep in mind when you want to form a corporation in Illinois:
1. Choosing your corporate name. The name of your corporation needs to have the word “Corporation,” “Company,” “Limited,” or “Incorporated” in it, or an abbreviated version. The name should also be noticeably different from the names of other businesses that are on file presently with the Illinois Secretary of State. You can check for name availability using the online database located on the Secretary of State’s website. Keep in mind that this is a simple preliminary search. The state will decide if the name you want is different enough from other companies already in the registry. You can reserve your name for 90 days by filing a form BCA-4.10 with the state and paying a $300 fee. Before you create any signage or a website, make sure your name is approved.
2. Complete and file the Articles of Incorporation. Your corporation will be legal when you file Form BCA 2.10 with the state. The articles have to include your corporate name, address, and the name and address of the agent who will serve and process any transactions. They must also include the purpose of the corporation, the number of shares it can issue, and the money it will get for the shares. The filing fee is $150 in addition to a franchise tax payment that is $1.50 per $1,000 of paid-in capital in Illinois. The minimum tax is $25.
3. Name a registered agent for your corporation. All corporations in Illinois have to name an agent for service in the state. This is a person that will agree to accepting legal documents on behalf of the corporation should it be sued. He or she may be a person who lives in Illinois or in a domestic or foreign corporation that is allowed to conduct business in the state. He or she also needs a physical address in the state.
4. Create a corporate records book for the corporation. This is a book where you maintain all of the corporation’s important documents, such as minutes of the shareholder meetings, stock documents, and the like. This book should be held at the main office of your corporation. A simple three-ring binder is fine, but you can also order a corporate records kit if you prefer.
5. Prepare your corporate bylaws. The bylaws are the internal corporate documents that spell out the general rules for the operation of the corporation. They include items like the duties of the officers and directors, how they are chosen, as well as how the shareholder meetings are conducted.
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