With the fifth-largest economy in the U.S., Illinois offers plenty of opportunities for small businesses—now with 1.3 million operating in the state. Limited liability companies (LLCs) continue to be popular options for new business owners, but there are a few considerations to keep in mind before forming one.
Here's everything to plan for—from the Secretary of State’s (SOS) filing requirements to expected costs—and how LegalZoom can help you start your Illinois LLC in just a few steps.
What is an Illinois LLC?
An LLC is a formal business structure registered with the Illinois SOS. It’s entirely separate from you as the owner, which comes with a few advantages not offered by a sole proprietorship.
The benefits of forming an LLC in Illinois
An LLC provides liability protection and tax options, among other benefits for small business owners. Most importantly, it protects your personal assets from most claims made against the business. You also have more flexibility in how you’re taxed—whether you report income on your personal return or opt to be taxed like a corporation.
Starting an Illinois LLC, in particular, can be beneficial if you’re involved in any of the following:
- Tech and innovation. Chicago is a great place for tech startup LLCs, especially because of the state’s Angel Investment Tax Credit Program (up to $2 million in funding).
- Agriculture and farming. LLCs are common structures for farming operations in counties like Macon, Champaign, and McLean, thanks to their liability protection.
- Professional services. Businesses in regulated industries (such as health care or accounting) often form professional limited liability companies (PLLCs) to meet state licensing requirements.
Above all, forming an LLC opens up more opportunities than operating as a sole proprietorship. In turn, you get practical advantages like personal liability protection and the elevated status of having a business with the LLC designation.
How to open an LLC in Illinois: 6 easy steps
LLC formation in Illinois is easy. Just follow these six steps, and you'll be on your way. Or, you can work with LegalZoom, and we’ll help you complete everything you need to get your LLC up and running—from choosing a name to filing your formation paperwork.
1. Name your Illinois LLC
First, you’ll pick a name for your LLC. Before you fall in love with an LLC name, it’s a good idea to conduct a business name search through the Illinois SOS’ database to confirm availability.
According to the SOS’ guide for LLCs, the name must be distinguishable from other LLCs, corporations, and names already reserved by other businesses. In addition to using the search tool, you can call the Illinois SOS’ Department of Business Services at (217) 524-8008 to see if your name is available.
Keep in mind your name must include the designations “Limited Liability Company,” “LLC,” or “L.L.C.” On the other hand, the name can’t include the following:
- Words like bank, assurance, or insurance
- Names in bad taste or decency
- Any terms associated with other business entities, such as "Corporation," "Corp.," "Incorporated," "Inc.," "Ltd.," "Co.," "Limited Partnership," or "LP"
It's important to do a trademark search, too. This involves researching similar names to ensure your business can’t be confused with an already established company—whether in Illinois or elsewhere in the U.S.
Once you land on a preferred LLC name, you can reserve it with the Illinois SOS for 90 days by filing Form LLC-1.15 and paying a $25 fee.
2. Choose your registered agent
A registered agent is a person or company authorized to receive service of process and other official legal documents on behalf of your LLC. In other words, a registered agent will be the main contact person for documents sent from the state of Illinois relating to your LLC.
If you are sued or subpoenaed, for example, a registered agent must be available to receive and reply to notices in a timely manner.
You can appoint yourself as your own registered agent or enlist an employee. Illinois registered agents must meet the following criteria:
- Be an Illinois resident or a company that’s authorized to conduct business in the state
- Have a street address in Illinois
- Be on-site and available to accept documents during regular business hours
You can also use an online legal service provider like LegalZoom to get a registered agent for your Illinois LLC, which is especially helpful if you won’t always be around to accept documents or prefer to keep your address out of public records.
3. Prepare and file articles of organization
The LLC articles of organization may sound a little foreboding, but it's actually a simple, fill-in-the-blank document that lists the purpose of the business. You’ll file the articles of organization with the Illinois SOS, which is where the $150 filing fee comes in. If needed, you can pay an extra $100 (for a total of $250) to expedite the process within 24 hours.
You can either complete it online or fill out and mail Form LLC–5.5 to the address listed on the first page. To prepare your articles for a standard LLC, you'll need the following information:
- Your LLC’s name and business address
- The purpose of the LLC (can be a general statement or outline specific purposes)
- When the articles become effective (usually the day of filing, but you can extend the effective date up to 60 days later)
- The name and address of the LLC's registered agent
- Whether the LLC's duration will be perpetual or for a specified period
- The names and addresses of the initial manager(s), including any members with this authority
- The name, address, and signatures of the organizer(s)
If approved, the LLC becomes a legal business entity, and you should receive a confirmation certificate from the state. However, keep in mind this is only for standard LLCs. If you want to establish a series LLC in Illinois, you must use Form LLC 5.5(S) to file your articles and pay a $400 filing fee. Once your articles have been accepted, you can establish additional series by filing Form LLC–37.40 with the Illinois SOS.
Building a business is enough work as it is. We'll help you start your LLC with confidence.
4. Create an LLC operating agreement
An LLC operating agreement can be described as a blueprint for your business' management structure and member responsibilities.
The state of Illinois doesn't require you to create an LLC operating agreement, but it is recommended for small business owners. It establishes clear rules for everyone involved, which may help protect your company’s liability status and prevent future disputes. Some states, such as New York, require an LLC to have an operating agreement.
Even a single-member LLC in Illinois will likely benefit from an LLC operating agreement. The document will help single-member LLCs anticipate both growth and obstacles in the future of the business. If you’re laying the groundwork, beginning with a single-member LLC operating agreement template can jumpstart the process.
However, don’t rely solely on a one-size-fits-all approach. Considering the legal nuances of this agreement, it makes sense to use an online service provider like LegalZoom or work with an attorney to prepare your operating agreement.
5. Get an employer identification number (EIN)
An EIN is a unique nine-digit number assigned by the Internal Revenue Service (IRS) for business tax reporting purposes. The EIN is also called a federal employer identification number, but in all cases, its purpose is to assist with the following:
- File and manage taxes at the state and federal level
- Open a business bank account so you can keep your LLC and personal finances separate
- Hire employees
While you can obtain an EIN online through the IRS directly, LegalZoom can help you complete the application if you’d like some help.
6. Register for Illinois business taxes and licenses
All LLCs that conduct business in Illinois or interact with Illinois customers must register with the Illinois Department of Revenue (IDOR). You can either visit MyTax Illinois to register online or mail Form REG–1 to the IDOR.
In addition, you should review other IDOR tax registration forms that may apply to your business and complete them as needed. This may include the following:
- Sales and use taxes
- Income tax withholding
- Specialty taxes (e.g., liquor or tobacco sales)
If hiring employees, you’ll also need to obtain an unemployment compensation number through MyTax Illinois.
Although Illinois doesn’t have a general business license, your local government authorities may have their own requirements, so be sure to research the regulations before opening for business (more on this later).
LegalZoom helps you handle every step—from choosing a business name to filing paperwork with your state.
How much does an Illinois LLC cost?
At the very least, you’ll pay $150 to start an LLC in Illinois, which covers the state’s filing fee. However, the costs can increase if you opt for expedited processing or related professional services, such as meeting with an attorney or an accountant. You should also budget for ongoing costs to keep your LLC compliant, such as filing annual reports.
Here’s a breakdown of some common expenses.
Illinois SOS filing fees
- Articles of organization: $150 (+$100 for expedited processing)
- Name reservation (optional): $25 (+$50 for expedited processing)
- Series LLC articles of organization: $400 (+$100 for expedited processing)
Related costs
- Operating agreement: $0–$750 or more
- Registered agent services: $100–$500
- DBA (“doing business as”) registration fee: $150
- Annual report filing fee: $75 (+$50 for expedited processing)
You should also consider the costs of obtaining any required local licenses or permits, which depend on the registrations you need and where you’re located.
How long does it take to form an Illinois LLC?
You can usually complete the articles of organization in a few hours or less, but the SOS will take additional time to review your application. These are the typical processing times for Illinois LLCs.
Standard filing times
- Online: Five to 10 business days
- Mail: Seven to 14 business days (considering additional mailing time)
Expedited filing
- Filing fee: $100 extra
- Expedited timing: 24 hours
Your confirmation will be sent once the document is examined and approved by the Department of Business Services.
Do you need a business license for your Illinois LLC?
While Illinois doesn’t have a general business license, it’s still wise to research the requirements for your city and county. To expedite this process, you can sign up for LegalZoom’s Business License Report and Management, and we’ll look into the federal, state, and local licensing requirements for your Illinois LLC.
You can also research these requirements yourself by contacting your local government offices. For reference, here’s where you can find the general business licensing information for Illinois' five most populous cities and counties.
Cities:
Counties:
Additionally, you may need a professional license if you operate in a regulated industry, such as healthcare, cosmetics, or engineering, among others. These licenses are handled by the Illinois Department of Financial and Professional Regulation (IDFPR), which has a list of regulated professions and an online portal to apply.
After acquiring your licenses, be sure to note any renewal requirements and deadlines to keep them active. If you have any questions about the compliance requirements for your LLC, you might also reach out to a business attorney through LegalZoom’s network or find one in your area.
Starting a business takes courage. LegalZoom makes sure the legal details don’t stand in your way, from the day you register until the day you retire.
Common mistakes to avoid when creating an Illinois LLC
As you start your LLC, keep these common mistakes in mind to avoid issues and delays with the Illinois SOS:
- Incomplete documentation. Many applications are rejected due to missing signatures, incorrect payment amounts, or illegible handwriting, so double-check all forms and required fields before submitting yours.
- Naming issues. Your chosen LLC name must be distinguishable from names already on file with the SOS and include an approved designation. However, you’ll want to avoid any restricted words (e.g., “bank” or “insurance”) unless your business actually offers that service.
- Invalid registered agent address. Illinois requires a physical street address for your registered agent office—a P.O. box number alone is not acceptable. Keep in mind you can use a professional registered agent service if you’d like to keep your physical address confidential.
- Missed compliance requirements. After formation, many owners forget to file annual reports or update the state when changing registered agent or member information. Mark these deadlines on your calendar to avoid penalties.
Why use LegalZoom for your Illinois LLC?
As the #1 business formation service with millions of LLCs created, LegalZoom is here for every step of your new business.
Here are some of the top benefits of working with LegalZoom:
- Comprehensive support. Take care of everything your business needs—whether filing paperwork, creating an operating agreement, identifying required licenses, registering a DBA, and more.
- Attorney-backed guidance. Use our guided tools to get help throughout the formation process, or you can even meet with a business attorney directly through our consultation plans.
- Credibility. With over 20 years of experience helping small business owners in all 50 states, LegalZoom is also the #1 online legal services provider—just see what our customers have to say.
Ready to form an LLC in Illinois?
By now, the only thing left to do is form your LLC, and LegalZoom is ready to take care of this with you today. But if you still need some time, just know that we’re here to help start your Illinois LLC when you’re ready.
LegalZoom can help you file your state's formation paperwork for as little as $0 + state filing fees.
Illinois LLC FAQs
Do you need an LLC to conduct business?
No, a small business owner may choose to create an LLC for its benefits to the company, such as protecting the owner's personal assets from claims against the business as well as tax advantages. The business assets and business debts of the company are separate from those of the business owner. The LLC is considered a separate entity from the owner.
Can you get an LLC yourself?
Yes, starting an Illinois LLC yourself is very doable. It's essentially an online form to fill out. You go to the website for the Illinois Secretary of State's office, which handles businesses in the state.
Some aspects, like finding an available business name, may take more time than many small business owners think. A lot depends on your comfort level with business formation and how much time you want to spend on it, rather than hiring a lawyer to do it for you.
How do you create an operating agreement?
You can find customizable templates online or create one yourself. Operating agreements outline who has the authority to act and sign contracts on behalf of the company. Once operating agreements are signed, they are legally binding. Operating agreements aren't required in Illinois, but they are still recommended. They will help avoid being subject to default laws in Illinois as well as practical issues such as disagreements with partners while running the business.
Can I reserve a name for my Illinois LLC that’s been used before?
The name of an administratively dissolved LLC is available for use by another LLC when three years have elapsed following the date of issuance of the notice of dissolution, according to the Illinois Secretary of State.
What are the annual reporting requirements for Illinois LLCs?
All Illinois LLC must file an annual report to maintain its existence, according to the Illinois Secretary of State.
Your due dates for annual reports will be different than other LLCs. The annual report is due before the first day of the LLC's anniversary month each year. The anniversary month is the month in which the LLC was organized.
For example, if the date of organization was Sept. 15, the annual report is due before the first day of September every year. A pre-filled version of the annual report will be sent to the registered agent approximately 60 days before the due date.
Failure to file an annual report by the due date will put the company in delinquent status. Failure to file an annual report within 60 days of the due date will put the company in penalty status, and it will be assessed a late filing penalty of $100. Failure to file an annual report within 120 days of the due date will cause the company to be administratively dissolved.
Most LLC annual reports may be filed online on the department's website.
How are LLCs taxed in Illinois?
LLC taxes in Illinois will depend on the LLC's federal tax election. Unless an LLC elects to be taxed as a C corporation (C corp), all Illinois LLC profits are passed through to the members. The members will pay Illinois and federal taxes, and federal self-employment tax, on their share of the profits, even if they do not actually receive a share of the profits.
An LLC taxed as a C corp pays Illinois corporate taxes on its profits, and each member pays state and federal income taxes on any profits that are actually distributed to the member.
Can I change my Illinois LLC’s name?
It's possible to change the name of your LLC in the future, but it does come with some paperwork. A name-change amendment may be filed online, according to the Illinois Secretary of State's office. Non-expedited service will be reviewed within 10 days of submission. Expedited service submissions will be reviewed for compliance within 24 hours (excluding weekends and holidays).
You might also consider registering a DBA for your LLC, which allows you to use a different name while operating under the name you originally registered with the state.
Will forming an LLC protect my personal assets?
Liability protection is one of the main reasons small business owners consider LLC formation or other options such as an S corporation. Your personal assets, such as your house or car, will be protected from seizure if you can't pay the debts you incurred. However, personal liability protection will not cover you for wrongdoing, such as injuring an employee during the course of business.
Can you really get an LLC for free?
There are a lot of claims online that you can get an LLC for free. Technically, you can get an LLC for free by doing the LLC paperwork to create a limited liability company yourself. However, the state registration fee in Illinois is $150. To maintain the LLC, Illinois law requires an annual fee of $75. There's no getting around these state requirements, despite what you may see online.
Is a single-member LLC the same as a sole proprietorship?
Unlike a sole proprietor, which is an unregistered business entity using, for the most part, the single owner's name, a single-member LLC registers the business entity with the state and separates the personal assets of the single owner from those of the business.
Anne Brennan contributed to this article.
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