How to Form a Corporation in Illinois
To establish a corporation in Illinois, here's everything you need to know.
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To form a corporation in Illinois, you need to take the steps set forth below. To find out what’s required to form a corporation in any other state, see Nolo’s 50-State Guide to Forming a Corporation.
1. Choose a Corporate Name
Your corporation's name must contain the word “Corporation,” “Company,” “Incorporated,” “Limited,” or an abbreviation of one of those words. Your corporation's name must be recognizably different from the names of other business entities already on file with the Illinois Secretary of State. Names may be checked for availability by searching the Business Services name database. You may reserve a name for up to 90 days by filing with the Secretary of State. The filing fee is $300.
2. Prepare and File Articles of Incorporation
Your corporation is legally created by filing Articles of Incorporation with the Illinois Secretary of State. The articles must include the corporate name and address; its purpose; the name and address of an agent for service of process; and the number of shares the corporation is authorized to issue and the consideration (money or property) the corporation will receive for the shares.
The filing fee is $150 plus an initial franchise tax payment assessed at rate of $1.50 per $1,000 of paid-in capital represented in Illinois. The minimum initial franchise tax is $25.
The articles may be filed online or by mail.
3. Appoint a Registered Agent
Every Illinois corporation must have an agent for service of process in the state. This is an individual or corporation that agrees to accept legal papers on the corporation's behalf if it is sued. A registered agent may be an individual who resides in Illinois, or a domestic or foreign corporation authorized to do business in Illinois. If a corporation, its articles must authorize it to act as an agent. The registered agent must have a physical street address in Illinois. The agent should agree to accept service of process on your corporation's behalf prior to designation.
4. Set Up a Corporate Records Book
Set up a corporate records book in which you keep all of your corporation's important papers, including minutes of director and shareholder meetings, stock certificates, and stock certificate stubs. Keep your corporate records book at the principal office of your corporation. You can use a three-ring binder as the corporate records book; or order a special corporate records kit through a corporate kit supplier.
5. Prepare Corporate Bylaws
Bylaws are an internal corporate document that set out the basic ground rules for operating your corporation. They are not filed with the state. Your corporation is not legally required to have corporate bylaws, but you should adopt them because they (1) establish your corporation's operating rules, and (2) help show banks, creditors, the IRS, and others that your corporation is legitimate. For corporate bylaw forms, see Nolo’s website or Incorporate Your Business, by Anthony Mancuso (Nolo). Corporate kits also typically contain sample bylaws.
6. Appoint Initial Corporate Directors
The incorporator—the person who signed the articles—must appoint the initial corporate directors who will serve on the board until the first annual meeting of shareholders (when the board members who will serve for the next term are elected by the shareholders). The incorporator must fill in an “Incorporator’s Statement” showing the names and addresses of the initial directors. The incorporator must sign the statement and place a copy in the corporate records book. The statement need not be filed with the state. For a sample Incorporator's Statement, see Incorporate Your Business, by Anthony Mancuso (Nolo).
7. Hold Your First Board of Directors Meeting
The first meeting of the corporation's board of directors should be held at which the directors can appoint corporate officers, adopt bylaws, select a corporate bank, authorize issuance of shares of stock, set the corporation's fiscal year, and adopt an official stock certificate form and corporate seal. The directors' actions must be recorded in corporate minutes prepared by the incorporator or any of the directors. Additionally, if the corporation will be an S corporation, the directors should approve the election of S corporation status. It is usually necessary to prepare the minutes over one or two weeks, and then send them to all the directors for their signature. For corporate meeting minute forms, see Nolo’s website or refer to Incorporate Your Business, by Anthony Mancuso (Nolo).
8. Issue Stock
Issue stock to each shareholder. Although not legally required in most states, small corporations usually issue paper stock certificates. Enter each shareholder's name and contact information in the corporation’s stock transfer ledger.
A share of stock in your corporation is classified as a security under state and federal securities laws that regulate the offer and sale of corporate stock. However, the federal government and all states exempt most small corporations from these laws. For example, federal law exempts "private offerings:" a non-advertised sale to a limited number of people (generally 35 or fewer). Most states have enacted their own versions of this SEC exemption. Visit your state securities office website for information about your state's securities laws. Links to all such offices can be found at the Contact Your Regulator web page of the North American Securities Administrators Association.
9. Comply with Illinois Annual Report Requirements
All corporations doing business in Illinois must file an annual report with the Secretary of State. Domestic corporations file Form C289, Domestic Corporation Annual Report. Foreign corporations file Form C288, Foreign Corporation Annual Report.
The report must be filed by the corporation's anniversary date or a late-filing penalty will be imposed. The report can be filed online or by mail. However, if your corporation owns property outside of Illinois and /or transacts business outside of Illinois, you must file by postal mail.
The filing fee is $75.
10. Comply With Other Tax and Regulatory Requirements
Additional tax and regulatory requirements apply to your corporation. These include:
EIN: Your corporation must obtain a federal employer identification number (EIN). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
S Corporation Filing: If the corporation wants to elect S corporation status for tax purposes, it must submit Form 2553 Election by a Small Business Corporation (signed by all the shareholders). The election should be filed within two months and 15 days after the beginning of the corporation's first tax year. See the IRS S Corporation Fact Sheet for details.
Business Licenses: Depending on its type of business and where it is located, your corporation may need to obtain other local and state business licenses.
11. Foreign Corporations Doing Business in Illinois
All corporations organized outside of Illinois must register with the Illinois Secretary of State to do business in Illinois. Foreign corporations must appoint a registered agent for service of process physically located in Illinois. To register, file an Application for Authority to Transact Business In Illinois. The application must be accompanied by a certified certificate of existence, no more than 90 days old, from the Secretary of State or similar official of the foreign corporation's home state. The form may be filed online or by mail. The filing fee is $150.
Before filing, make sure the LLC’s name is available in Illinois by checking the Illinois business name database. If the name is not available, the foreign corporation must adopt an assumed name for use in Illinois and submit with the application Form BCA 4.15, Application to Adopt An Assumed Name. An additional $25 fee must be paid when filing Form BCA 4.15.