Illinois LLC – How to Start an LLC in Illinois in 2024 (Step-by-Step Guide)

Last Updated on 2 months by Komolafe Bamidele

People who own small businesses and want to start their own businesses often choose to set up a limited liability company (LLC). 

As a business owner, an LLC protects your assets and lets you avoid double taxes on your business income through pass-through taxation. In Illinois, you are making an LLC, which can be a great way to set up your business officially and save money on taxes.

Do you want to do it yourself, or do you need some extra help? This complete guide will tell you how to form an Illinois LLC, including state-specific information and everything you need to know to keep your business going for years. 

How to Start an LLC Business in Illinois

Step 1: Choose a Name

When you first start your business, choosing the right name for your Illinois LLC is very important. Before you file any creation paperwork, you should make sure that the name you want for your business is available and follows Illinois’s rules for names.

To check for and reserve an Illinois LLC name, follow these steps:

• You can check if something is available in the Illinois Secretary of State business information. Your LLC name can’t be the same as any other business name in Illinois.
• Before you decide on a name, make sure the domain name is still available. Buying the name locks in your brand for the future, even if you have yet to plan to have a website.
• You can hold a name for 90 days by sending in the Name Reservation form. In the meantime, this stops anyone else from taking the name.

Illinois has rules about what names are okay for LLCs, such as:

• Must have “Limited Liability Company,” “LLC,” or “L.L.C.” in it.
• You can’t use words like “bank” or “university” without permission.
• It can’t be confusingly close to names that are already in use.

Step 2. Hire a Registered Agent

You must hire a registered agent service in Illinois to receive formal papers for your business. An agent can be a person living in Illinois or a company allowed to do business in Illinois. As the listed office, the person must have a physical address in the state.

You or an employee of yours must do certain things to be a registered agent. It is against the law for LLCs and companies in Illinois to be their registered agents. 

You can also give someone else power of attorney to act for you. It depends on the service, so read reviews and ask questions. You can spend as much as $300 or as little as $49.

Step 3: File the Articles of Organization

LLCs file the Articles of Organization, while businesses file the Articles of Incorporation. Even though the difference is slight, you should still file for the correct type of business company. 

You must fill out Form LLC-5.5 and send it to the Secretary of State before filing Articles of Organization for your LLC. Filling out the form costs $150.

You should make checks due to the “Secretary of State” and not your name, as the Secretary of State asked. You should get a certified check, cashier’s check, money order, or bank draft to pay the filing fee.

Step 4: Get An Employer Identification Number (EIN)

An EIN, also known as a Federal Employer Identification Number (FEIN), is a number that the Internal Revenue Service (IRS) gives to your LLC and that other government departments use to find your LLC.

You should still get an EIN even if you don’t have any workers. This is because it lets your business open a business bank account, file taxes, apply for business licenses and permits, and pay its employees (if you have any).

Remember that the Illinois Secretary of State does not give out EINs. Instead, the federal IRS does. It is free to apply for an EIN. However, it would be best to ensure your LLC registration is valid before you ask for an E.I.N.

You can use your SSN (Social Security Number) or ITIN (Individual Taxpayer Identification Number) to apply for an EIN online. Applying for an EIN by mail or fax is another way, but it generally takes longer than applying online.

Step 5: Create an Operating Agreement

An operating agreement spells out the rules and guidelines for how your Illinois LLC will be set up and run on the inside. Even though Illinois law doesn’t require it, this is a crucial step to setting up an LLC.

Some important things to list are:

• Duty of each member
• Shares of profits and losses
• Adding and taking away members
• Changing some terms
• How to dissolve something

For LLCs with more than one partner, the operating agreement is significant for keeping disagreements about business issues within the company from happening. A running agreement also gives single-member LLCs credibility, which is helpful.

Step 6: Open a Bank Account

Obtaining liability protection for your assets is crucial to creating an L.L.C. To do this, you should open a business bank account that handles all business expenses and revenue. 

To do this, take your articles of organization and your EIN to the bank. The banker will verify that the company is legitimate in the state and open the account under the business’s legal name. 

Remind yourself not to mix your personal and business assets, as this could muddy the lines of liability protection and expose your assets to creditors.

The Cost of Forming an LLC in Illinois.

There are many benefits to establishing an LLC in the Land of Lincoln. Still, it’s essential to take its costs into account. The first filing cost in Illinois is $150, and that is where your adventure starts. 

Like many other jurisdictions, Illinois mandates that LLCs submit an annual report and pay a $75 charge. This ongoing cost guarantees that your LLC stays in good standing and complies with state laws. 

Even though Prairie State is among the most incredible places to form an LLC, you should be mindful of these expenses before you set out on your LLC adventure.

Start Your LLC with Northwest Registered Agent

Conclusion

Forming an LLC in Illinois may be a fulfilling experience for business owners. Still, it can also be a daunting one. 

But don’t allow the difficulty of creating an LLC to stop you from pursuing your entrepreneurial goals in Illinois.

By following these steps, you may complete the procedure and take advantage of the tax flexibility and personal responsibility protection.