A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC. For more information on how to form an LLC in any state, see Nolo's article How to Form an LLC.
Here are the six steps you need to take to form an LLC in Illinois.
Under Illinois law, an LLC name must contain as the last words, "limited liability company," "L.L.C.," or "LLC." The abbreviations "Ltd." and "Co." are not allowed in Illinois. The name must also not include the words "Corporation," "Corp.," "Incorporated," "Inc.," "Ltd.," "Co.," "Limited Partnership," or "L.P.”
Your LLC’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 Secretary of State Business Services name database. You may reserve a name for up to 90 days by filing an Application to Reserve a Name (Form LLC-1.15). The filing fee is $25.
Every Illinois LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’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 it's a corporation, its articles must authorize it to act as an agent. The registered agent must have a physical street address in Illinois.
An Illinois LLC is created by filing Articles of Organization, Form LLC-5.5 with the Illinois Secretary of State Department of Business Services. The articles must include:
The filing fee is $150. The articles may be filed online or by mail. Online filings are handled on an expedited basis within 24 hours.
All of the paperwork and procedural steps to start a limited liability company in Illinois can be done online using Nolo's Illinois Online LLC Formation application.
An LLC operating agreement is not required in Illinois, but is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.
For help creating an LLC operating agreement, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo) or use Nolo’s Online LLC. If an operating agreement is created, it need not be filed with the Articles of Organization.
Additional tax and regulatory requirements may apply to your LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
Business Licenses: Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses. For local licenses, check with the city clerk in which the business's primary place of business is located (or county if it is in an unincorporated area). For state licenses, check the Illinois Department of Commerce First Stop Business Information Center. For more information, see Nolo's article How to Get a Small Business License in Illinois.
Department of Revenue Registration: In some cases, for example if you will be selling goods and collecting sales tax or if you have employees, you’ll need to register with the Illinois Department of Revenue (IDOR). You can register either online (through the MyTaxIllinois website) or on paper (Form REG-1). For more information on state LLC tax registration, see Nolo's article Illinois LLC Annual Filing Requirements.
All LLCs doing business in Illinois must file an annual report with the Secretary of State. The report is due each year prior to the first day of the LLC's anniversary month (the month in which it was organized). For example, if your LLC was created on July 15 then your report would be due by July 1. The report can be filed online or by mail with Form LLC-50.1. The filing fee is $75. Filing a report late (more than 60 days after due date) incurs an additional $100 penalty. For more information on Illinois LLC annual reports, see Nolo's article Illinois LLC Annual Filing Requirements.
To do business in Illinois, all LLCs organized outside of the state must register with the Illinois Secretary of State. Foreign LLCs must appoint a registered agent for service of process physically located in Illinois. To register, file Application for Admission to Transact Business, Form LLC-45.5. The filing fee is $150. The form must be filed by mail.
The completed application must be accompanied by a Certificate of Good Standing or Existence from the foreign LLC’s home state, dated no more than 60 days prior to the filing of the certificate.
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 LLC must adopt an assumed name for use in Illinois and submit it with the application. Submit Application to Adopt, Change, Cancel or Renew an Assumed Name (Form LLC-1.20) with the application.