How to Start an LLC in Illinois (2024 Guide)

Whether you choose to take on the task yourself, or you want some extra help, this all-inclusive guide will give you an overview of how to form an Illinois LLC, state-specific details and all you need to know for keeping your business up and running for years to come.

Starting an LLC in Illinois will include the following steps: 

• #1: Choose a Name for Your Illinois LLC
• #2: Choose Your Registered Agent
• #3: File Your Articles of Organization
• #4: Draft an LLC Operating Agreement
• #5: Obtain Your Employer Identification Number (EIN)

Learning more about Illinois LLC creation is a great way to help establish credibility for your small business and open doors for its future success. Ready to get started? Follow this 5-step guide.

Finding the perfect business name is one of the most exciting (and fun) parts of starting an LLC in Illinois. The state requires your company name be original and easily distinguishable from those of other corporate entities registered in the state (including corporations, partnerships and other LLCs). You can see whether an Illinois LLC name you’ve already picked out is available by performing an LLC lookup on the IL name database.

How do you make sure your choice isn’t already used?

• Check availability
• Perform a basic internet search to see if anyone is already informally operating using your name; even if it’s technically available, this situation could cause confusion
• Check the federal patent and trademark database to make sure another company doesn’t have the name trademarked

Illinois has many naming requirements and restrictions for acceptable LLC names. First, your LLC’s name must include:

• The words “limited liability company” or any abbreviation thereof (e.g., “L.L.C.” or “LLC”)
• Only letters of the English alphabet, Arabic or Roman numerals and symbols that can be reproduced by the Department of Business Services

Second, your Illinois LLC’s name may not include:

• The words Ltd., Limited Partnership (or L.P.), Incorporated (or Inc.), Corporation (or Corp.)
• Words that might confuse your business with a government agency, such as “treasury” or “FBI”
• A word or words that create a “connotation that is offensive to good taste and decency”
• For a complete list of rules, check the Illinois naming guidelines. These clearly lay out any naming restrictions that your corporation must follow.

Choosing a suitable name is an essential step in Illinois LLC creation. Once you’ve settled on a few potential winners, you can submit a corporate name availability inquiry form to the secretary of state. It will perform an internal LLC search and respond by email to confirm whether your potential company name is available. You can inquire about up to three names per form.

Inside Scoop: If your desired name is available but you’re not quite ready to start your LLC in Illinois, you can reserve your potential name for 90 days by submitting this form. The only way to submit is by mail. Just send the original form and one copy along with a check for $25 payable to the Illinois Secretary of State (the filing can be expedited for an additional $25).

Next, you’ll need to designate an agent as the official contact for potential legal matters involving your LLC. Illinois law requires that the agent be either an individual who lives in Illinois or a corporation authorized to do business in the state. A P.O. Box in Illinois will not suffice. They must also have a physical street address in Illinois which they must be available on-site during normal business hours to receive important documents on your behalf. Your registered agent is responsible for forwarding documents to you. Documents that will be sent to the agent include:

• Legal service of process (if your LLC is sued)
• Tax documents
• Court summons

You can also consider using a professional registered agent service. This is a business entity that will accept tax and legal documents for your LLC. Illinois companies that choose a professional registered agent service can get peace of mind knowing a company that specializes in the task is in charge. This is a particularly strategic move if you conduct business from another state or travel frequently.

Even if you have a single-member LLC, using a registered agent service rather than listing yourself can help you focus more on everyday business activities and less on whether you accidentally threw away an important piece of mail!

Filling out the Form LLC-5.5, which is the articles of organization, is perhaps the most important step of creating an LLC. You must file articles of organization with the Illinois Secretary of State to keep documentation of your company and record the essential information about your new business entity. Once it’s accepted, your company is authorized to begin doing business.

For an LLC, Illinois articles of organization must include:

• The name of your Illinois Limited Liability Company
• Your LLC’s business address (i.e., the address of the LLC’s principal place of business)
• The date when you want the articles to take effect (if not immediately)
• The name and address of your registered agent
• The purpose of your LLC (Illinois allows a general statement of purpose)
• A statement on your LLC’s duration (if not perpetual)
• The names and addresses of the initial members (if your LLC is member-managed) and any managers (if your LLC is manager-managed)
• The organizer’s name, address and signature

Inside Scoop: If you work out of your home, you can use a virtual address for your LLC’s principal place of business. This will help keep your home address anonymous.

In addition, any LLC that intends to provide professional services licensed by the Illinois Department of Financial and Professional Regulation (IDFPR) must register as a professional limited liability company (PLLC) and list a specific purpose clause for the type of professional service being provided. Their names must include “PLLC” or “Professional Limited Liability Company.”

Inside Scoop: If you already have an LLC in another state and want to use it to conduct business in Illinois, you can file for a foreign LLC by filling out an application for admission to transact business. The cost is $150. You must include a certificate of good standing that is no more than 60 days old from the state where your LLC was formed.

Unlike some states where you form an LLC, Illinois does not require you to prepare an operating agreement. However, it’s a good idea to consider one when you’ve finished your Illinois LLC creation process. An operating agreement details the essential aspects of how your company will be organized and the way it will conduct business. It outlines how the LLC will be managed and clarifies members’ and managers’ rights and responsibilities.

Drafting an operating agreement is an excellent way to ensure that key stakeholders are all on the same page about important issues. Some important details that most operating agreements include are:

• ownership rights
• profit sharing
• daily operations
• transferring ownership
• dissolution
• voting procedures
• financial accounting information

Law in action: Even if you are only a single-member LLC, Illinois business owners should still consider having an operating agreement in place. For example, if your LLC is accused of co-mingling profits.

Having an operating agreement in place that describes the accounting process and lists the accounting procedures can serve as evidence that your LLC holdings are separate and apart from any personal holdings. That’s why it’s also essential to have an LLC banking account set up (there’s more on that below).

An EIN is basically like a Social Security number for your business. It is a unique nine-digit code that is used by the Internal Revenue Service (IRS) for tax purposes. The application process is free and entirely online. Once you click submit, your number will be generated immediately.

While an EIN is only required if your business is an employer or a multi-member LLC, Illinois single-member LLCs should also consider getting an EIN because they’re often required for certain essential business functions. These functions include:

• working with banks
• hiring employees
• filing federal taxes
• working with vendors

Setting up shop as an LLC in the Land of Lincoln offers many opportunities, but it’s essential to consider financial cost of an llc. Your journey begins with Illinois’ initial filing fee, which currently stands at $150. 

Illinois, like many states, requires LLCs to file an annual report, along with a $75 fee. This recurring expense ensures your LLC remains compliant with state regulations and in good standing. While the Prairie State is one of the best states to start an LLC, it’s vital to be aware of these costs as you embark on your LLC journey.

Creating your LLC is just the first step in having a successful business. There are annual reports to be filed (before the first day of the LLC’s anniversary month), business taxes to be paid and other licensure requirements that must be satisfied to keep your LLC active and ready to conduct business.

Opening a Business Bank Account

The main function, and benefit, of forming an LLC is the separation between business and personal assets for liability protection. However, if there is any co-mingling between a member’s personal assets and the assets of the LLC, you may be canceling out the limited liability feature of an LLC. Illinois businesses that want their personal holdings to be protected if their LLC is sued, should open a bank account and get a business credit card for their LLC as soon as their company is organized.

Getting Business Insurance for an Illinois LLC

Whenever you have something of value, you want to insure it just in case something should happen to it. Your business is no different. You have invested time and money into your forming an LLC in Illinois and if an accident were to happen, you want to be protected by adequate insurance coverage.

Paying State and Federal LLC Taxes

The forms you’ll need to file for federal income tax purposes will vary based on the structure of your company.

Traditional LLCs are pass-through tax entities, which means they do not pay taxes on their income, they only report their income to the IRS.

Single-member LLCs are treated as sole proprietorships and will report the LLC’s income on the member’s personal income tax return (Form 1040).

Multi-member LLCs are treated as general partnerships, which means the LLC will report its income using a Form 1065 and each member will claim their share of the income from the LLC using a Schedule K-1.

LLCs electing S-Corp treatment will need to first file a Form 2553 which will tell the IRS that the LLC wants to be taxed as a small business corporation. Like a traditional LLC, an S-Corp is a pass-through entity so the company’s income will only need to be reported using a Form 1120-S. Then each member/employee will pay taxes on their salary paid out by the LLC.

LLCs electing C-Corp treatment will first need to file a Form 8832 which will tell the IRS the LLC wants to be treated as a corporation for tax purposes. Unlike the other entities, this election will trigger the double taxation structure (once at the corporate level and once at the shareholder level).

At the state level, you’ll need to pay personal property replacement tax, which is 1.5% of the LLC’s net income. Additional taxes will vary based on the business conducted by your LLC. Illinois counties may also enforce additional state taxes deepening on the activities you’re engaged in.

Hiring Employees

If you’re considering hiring employees for your LLC, Illinois has additional requirements you must comply with to remain in good standing with the state, including:

• Buy workers’ compensation insurance immediately after you hire your first worker
• Within 20 days of hiring, report any new workers to the Illinois Department of Employment Security
• Pay unemployment taxes

Marketing Your LLC

Building a customer/client base is so important when you’re trying to get your business off the ground. That’s why it’s a good idea to invest in marketing your LLC. Illinois business owners can start by creating an online presence for their company.

The first step is checking to see if something similar to your LLC’s name is available to use as a domain name. It’s best to choose an address that relates to your business that is short, catchy, easy to remember and user-friendly (especially for mobile users).

For example, the law firm of “Skadden, Arps, Slate, Meagher & Flom LLP” uses the domain “skadden.com.” You could also consider using your company’s initials (“sasmf.com”) or a phrase related to your business (“chicagobusinesslawyers.com”).

You may also decide to use a catchy moniker that is different from your registered LLC name. This is called a “doing business as” (DBA) name, or an “Assumed Name”, and it may be helpful if your registered LLC name is very technical or difficult to remember for the consumer. To make this assumed name official, a form must be filed with the Illinois Secretary of State.

Inside Scoop: Even if you’re not ready to build your business website, reserve your desired domain name now. It’s cheap and easy to do on your own, and it prevents a big headache down the line if you realize that you missed your chance.

If you aren’t quite ready to build a website, you can always start off by creating a free social media account (Instagram or Facebook). This is an increasingly popular way to build up your following and get users interacting with your product or service.

Applying for LLC Business Licenses and Registration

To conduct business in Illinois, your LLC must first register with the Illinois Department of Revenue. You may need to file additional paperwork if you sell certain items, like liquor, tobacco products or gasoline.

The State of Illinois Business Services Department and certain local government branches may also require you to secure a business license, depending on your LLC’s industry. For example, if your LLC is in a professional industry like real estate, dentistry or law, each member must obtain a permit or LLC license from the appropriate state licensing department before beginning business operations.

Many cities and towns have their own additional business licensing rules and LLC requirements, including the city of Chicago. Businesses in certain industries, such as the sale of alcohol and cannabis, must also obtain specific sales licenses and certifications before doing business.

Local Resources

The process of starting an LLC in Illinois can seem like a minefield — there are so many separate things to consider. How do you know what you don’t know? A good solution is to find a business mentor who can help you find your way. The SCORE mentorship organization has chapters throughout Illinois to connect you with a mentor in your area and industry.

You can also become a member of your local chapter of the U.S. Small Business Administration. This can provide a bit more guidance as you figure out everything you need to do to stay compliant with state and federal laws. It can also connect you with many other resources, including funding options, educational opportunities and local small business initiatives.

Before jumping into the formation steps, you should identify which method is best to create your Illinois Limited Liability Company.

DIY

With so much information available through this guide and the Illinois Secretary of State website, budget-conscious entrepreneurs might see the DIY option as the best fit for getting their LLC started. For simple, straightforward LLCs, you may be able to complete the process on your own.

Using an LLC Formation Service

Online LLC services specialize in filing the required documents to form an LLC. Illinois business owners who already have their hands full with a small business may find that the small price tag that comes with hiring an LLC service is well worth it. Most packages offer features like guaranteed acceptance by the state, EIN application, registered agent service and operating agreement drafting.

Many services are customizable and if you like to shop around for the best fit there are several to choose from. ZenBusiness, Incfile, Northwest Registered Agent, Swyft Filings and LegalZoom LLC services are the most popular options with the best ratings.

Hiring an Attorney

While it may not be the best option for every startup, for some, hiring an attorney may be a good path to choose. This is especially the case for businesses with investors or complicated financial structures.

Forming an LLC in Illinois is a fairly straightforward process that can be completed in just a few steps. The state provides ample resources like step-by-step guides and template forms to simplify the paperwork. Additionally, exploring leading LLC formation services can further streamline the process.

To provide consumers with objective and accurate information, our credentialed legal experts created a comprehensive rating system for Limited Liability Company (LLC) services. We researched five online LLC, registered agent and trademark registration services, including ZenBusiness, LegalZoom, Swyft Filings, Northwest Registered Agent and Bizee (formerly Incfile).

We conducted a survey in 2024 of 200 professionals who were currently using LLC services or had used LLC services within the past year. We analyzed the results of this survey to determine the following rating criteria:

• Features (20%)
• Value for Money (25%)
• Customer Service (20%)
• Usability (25%)
• Reputation and Credibility (10%)

Visit the full LLC methodology page for more details on our rating system.

Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.