If you own a business that was created in a state other than Illinois, you will need to qualify or register that business in Illinois if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Illinois) limited liability company (LLC) to do business in Illinois.
For Illinois purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Illinois. In other words, foreign doesn’t mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Colorado is a foreign LLC in New Mexico.
According to Illinois’s LLC Act, you are required to register your foreign company with the state of Illinois if you are “transacting business” in Illinois. What does this mean? Well, like most states, Illinois’s LLC Act does not specifically define what the phrase “transacting business” means in relation to foreign registrations.
However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents Generally speaking, physical presence and nexus are synonymous, and mean having:
Certain exceptions may apply and the rules get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state.
For more details, including some possible distinctions between physical presence and nexus, check Nolo’s articles on Internet Sales Tax: A 50-State Guide to State Laws.
Like most states, Illinois’s LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:
For the actual legal description of each of these items, check Chapter 805, Section 180/45-47 of the Illinois Compiled Statutes. You can also check Page 5 of the SOS publication A Guide For Qualifying Foreign Corporations, which is available on the SOS website. While the guide is intended for corporations, the list on Page 5 is identical to that in the LLC Act.
If your LLC’s only activity in Illinois is one or more of the listed items, you should not need to register with the state.
To register your foreign business in Illinois, you must file an Application for Admission to Transact Business with theIllinois Secretary of State (SOS). If you have a typical LLC, you will use Form LLC-45.5. If you have a a so-calledseries LLC (which are not covered here), use Form LLC-45.5(S). You can download a copy of either form from the SOS website.
To complete Form LLC-45.5, you must provide more or less the same information that you need to create an LLC in your home state. More specifically, for an Illinois Application for Admission, you need to provide:
You must submit the Application for Admission in duplicate to the SOS. The filing fee is $500.
If your LLC transacts business in Illinois without having been admitted, it cannot bring a civil lawsuit in the state. However, not being admitted does not invalidate business contracts made in the state and does not prevent your LLC from defending lawsuits in the state.
If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Illinois are similar. You will, however, have to use a different application form,Application for Authority to Transact Business in Illinois(Form BCA 13.15). See the Illinois SOS website for forms, information, and filing instructions for registering a foreign corporation in Illinois.