Top 5 Things to Consider When Creating an LLC in Chicago
Before Starting a LLC in Chicago, Become Familiar with Local Laws and Commit to Abiding by Them3 min read
Before diving into the business of starting a LLC in Chicago, business owners should familiarize themselves with relevant laws and commit to abiding by them. To ensure that owners do all the right things when creating an LLC, here is a guide to the top five considerations when setting up this type of business in Chicago.
1. Understand the Benefits
The foremost benefit of creating a LLC is the corporate shield. The corporate shield protects members from losing their personal assets, like cars or houses, if their LLC is sued. Limited Liability Companies are also able to contract with other businesses and provide services, hire employees, and pay taxes. A Limited Liability Company is similar to a corporation, but it is much less expensive and has much fewer formal requirements. Another benefit of developing an LLC is that it provides a tax vehicle, meaning you can take advantage of the pass-through taxation. This ensures that a business owner will not be paying double the taxes.
2. Choose a Business Name
In pursuit of setting up an LLC, it is essential that you come up with a business name that is suitable to your company’s identity. Think of a name that reflects the company values and appeal to your target market. Additionally, be sure to check the availability of your name by going to the Secretary of State website. Once you finalize and decide on the name, you can provide the name to the Secretary of State and reserve it for a certain period.
3. Draft an Operating Agreement
Although it is not a legal requirement, LLCs should draft an Operating Agreement in order to provide clarity and a unique set of rules and expectations of the operating company. This document should specify how the ownership is distributed, the rights of ownership, and the responsibility of each owner in regards to daily operating and decision making. While it is not a state requirement, it is still suggested to write an Operating Agreement for any limited liability company.
4. File Your Articles of Organization
Once the business name and Operating Agreement are finalized, it is time to submit the Articles of Organization to the Secretary of State. This document must list the name of the LLC, registered agent information, member details, management structure, and purpose of the LLC, among other things. Filing the Articles of Organization within the state of Illinois ensures that the LLC is tried and true within state law. Without filing with the Secretary of State, how can a business owner have full protection of the limited liability corporation?
5. Get All Necessary Licenses and Permits
The final step of creating a LLC is to acquire the appropriate licenses and permits. This depends on the nature of the business and the requirements of various state agencies. Oftentimes, the permit process is straightforward and simple but may involve completing and submitting an application form, filing information about the LLC, and paying fees.
Setting up a LLC in Chicago may seem daunting at first, but by following the steps previously mentioned, business owners can take comfort that they are doing all the correct things when creating a LLC. Ultimately, understanding the benefits of a LLC, coming up with a proper name, writing an Operating Agreement, submitting Articles of Organization, and obtaining relevant licenses and permits will help set up the business for success and ensure limited liability for members of the LLC.