Starting LLC in Illinois: Peculiarities & Detailed Manual
Want to start an LLC in Illinois? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Illinois, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Illinois LLC: The Notion & Essence
Many Illinois business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Illinois puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Illinois’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Illinois obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Illinois’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Illinois and will help you to start an LLC. The agent can be an Illinois resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of Illinois notifies:
As stated in the announcement of the Secretary of Illinois State, the LLC Act demands all LLCs to found and maintain a registered office/agent in the state of Illinois to supply a public recording of the personal data and address of the business owner.
If not obeyed, you risk having your LLC dissolved. If things go even worse, the state may not be able to inform you about the lawsuit against your LLC. This will lead to a judgment against personally you and your business with the charge you didn’t defend yourself.
A registered agent guarantees an excellent reputation for your Illinois LLC. Also, if your business gets worse, Illinois can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Illinois, you must file the Articles of Association with the Illinois State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
Price of Forming an LLC: As far as you are concerned about the prices necessary to set up an LLC, you will be charged $150.
Required Time: normally, it takes up to 10 working days before the state of Illinois processes the necessary paperwork for an LLC formation and mails the documentation to the recipient. Nevertheless, if you can’t wait so long, there’s an option to speed up the formation.
Paying an extra $100, you can have your deal completed in only one working day. Mind that the formation of an LLC is counted from the day all the required paperwork is submitted and completed accurately.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Illinois, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
An LLC owner faces both federal and state taxes. Taxes on a state level depend on the essence of the business. You see, if you own a partnership or a sole proprietorship, you will be requested to pay the income taxes on your tax returns. And yet, in the case of forming corporations, corporate income taxes of the state will be levied. Find out more about this tax form in the state of Illinois here.
So that an LLC operates on a legal basis in Illinois, the owner is to register it for taxes with the state either through filling out and mailing in Form RED-1 or using MyTax Illinois. The latter is far more preferable as it’s significantly quicker and easier. If you determine to opt for Form RED-1, you will have to wait up to 8 months before the taxes get registered.
Another ordinary tax form for an LLC in this state is the sales tax. It’s usually issued from retailers of precious items. The current rate for this tax is 6.25%. Get more information on the matter here.
Since employing workers to your LLC in Illinois, you will have to start paying income withholding and unemployment insurance taxes. These taxes levied from all LLCs build up the state unemployment insurance. The withholding taxes can be paid either once per week or month. Find the due dates for present-day withholding taxes here.
If you think this is all, we have to disappoint you. There are yet several other taxes an LLC owner has to pay, including taxes for car rental, gas, watercraft use, etc. Use the complete listing of taxes in Illinois to determine particularly which ones apply to your business.
Through MyTax Illinois, you can get rid of the daunting task of finding and registering all the taxes applicable to your LLC. We’d strongly recommend using the portal to streamline the process of your LLC taxation.
Local Tax Business Demands
The local taxes are to be paid per location of the LLC in Illinois. All local taxes, including the additional sales taxes, property taxes, and many others, are highly essential. Find all of them here and never overlook any.
Stage №6: Getting Business Licenses & Permits
In Illinois, there is no united business license for all LLCs. And yet, the state upholds licensing for certain occupations that involve aviation, agriculture, and other spheres. To spot the federally-regulated industries that demand licensure, consult the Small Business Association.
Businesses in certain niches in Illinois require licenses and state permits. Among the target industries, you will find animal health, aquatic centers, etc. There are hundreds of such licenses, and one of them will apply to your business.
To find out this, browse the database of Illinois occupational permits and licenses. Just the same way, you are to consult the local clerk to see if any local permits or licenses are required, too.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Illinois Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Every LLC owner is supposed to report income. The form is to be filed yearly no matter if the business owner profited or lost money. To register and manage these reports and taxes easier, use the online portal of the state of Illinois. Find it here.
Referring to the services of a qualified accountant
An annual report with any changed data about the business taking place over the year is to be submitted, too. Before you complete the report online here to submit it, you must pay the fee worth $75.