Secretary of State of Illinois Corporations: Everything to Know
The Secretary of State of Illinois corporations formation process involves multiple steps.3 min read
2. Recordkeeping and Meetings
3. Compliance Requirements
The Secretary of State of Illinois corporations formation process involves the following steps:
- Choosing a name for your corporation.
- Filing an Articles of Incorporation.
- Designating a registered agent.
- Creating a records book for your corporation.
- Drafting corporate bylaws.
- Appointing initial directors.
- Holding an initial board of directors meeting.
- Issuing stock.
- Complying with state reporting requirements.
- Complying with tax and regulatory requirements.
- Filing as a foreign corporation, if applicable.
Initial Steps to Form a Corporation in Illinois
Your business's name must include one of the following:
You may also use an abbreviation for one of those designators. Your corporation's name must be unique and distinct from existing business names in the state.
You legally create a corporation by filing an Articles of Incorporation with the state, which must include the following information:
- Corporation's name and address
- Purpose of the corporation
- Registered agent's name and address
- Number of shares the corporation can issue
- Type of consideration you'll receive for shares
It costs $150 to file your articles, plus an initial franchise tax payment.
You must have a registered agent, also known as an agent for service of process, resident agent, or statutory agent. This is a person or company that accepts legal paperwork on behalf of your corporation. The registered agent must either be a resident of Illinois or a company authorized to conduct business in the state. All registered agents must have a physical street address to receive legal mail and documents, and they must consent to fill this role before being designated.
Recordkeeping and Meetings
In your corporate records book, you'll keep the following:
- Stock certificates
- Stock certificate stubs
- Minutes of shareholder and director meetings
You should store your corporate records book at your business's main office.
Draft corporate bylaws, which lay out the ground rules on how to run your corporation. This is an internal document that you don't file with the Secretary of State. Legally, you don't have to have bylaws, but it's recommended that you have them. They're helpful for establishing operating rules for your corporation and demonstrating to the IRS, banks, and others that your business is legitimate.
The individual who signed the Articles of Incorporation is known as the incorporator. This person appoints initial directors. These first directors serve on the board until the first shareholder meeting. At this time, the shareholders will elect the board members for the next term.
At the first directors meeting, the directors may do the following:
- Adopt bylaws
- Appoint officers
- Choose a corporate bank
- Set the fiscal year
- Authorize issuance of shares
- Select an official corporate seal and stock certificate form
The incorporator or any director has the responsibility of keeping minutes. If your corporation will be an S-Corp, the directors must approve this election.
Issue stock to your shareholders. It's not a legal requirement in most states to issue paper stock certificates, but many small corporations do this.
Your corporation has to file an annual report with the state. You must file by your company's anniversary date. Otherwise, the state will impose late-filing penalties.
You'll have to comply with certain regulatory and requirements, such as the following:
- You must obtain an Employer Identification Number, also known as an EIN or federal tax ID number, from the IRS. It's free of charge.
- You must file 2553 with the IRS to elect S-Corp status.
- You might need to obtain certain state or local business licenses, depending on your location and type of business.
For any corporations registered out of state but wishing to conduct business in Illinois, registering to do business in Illinois is required. You must also designate a registered agent who has a physical location in Illinois. File an application that grants authority to do business in the state and include a certified certificate of existence from your home state. It costs $150 to file.
To legally create a corporation, you must follow the required steps. Each state may have slightly different requirements, so it's important to make sure you're familiar with the ones in Illinois if that's where you wish to incorporate.
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