Illinois LLC
LLCs in Illinois offer entrepreneurs a flexible business structure that allows the formation of various types of businesses.
$150
Formation fees
$25
Name reservation fees
$75
Annual report fees
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StartGlobal: Legal + Taxes + Bookkeeping for solopreneurs
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What is an LLC?
Limited Liability Company
LLC is a business entity in the U.S that provides limited liability to its members. It has characteristics from both corporation and sole proprietorship. LLCs are permitted under State statutes of each US state.
Limited liability
Personal assets are protected for people with limited liability when they are sued.
Corporation
A business entity that can issue shares and give limited liability to shareholders.
Members
Owners of an LLC are referred to as members. They own membership interest in the LLC.
Sole proprietorship
Where an individual engages in business activity without formal organization.
Types of LLC
Depends on the number of members and whether it has elected to change its IRS classification.
Single-member LLC
Has only a single member. IRS considers it as a sole proprietorship for tax purposes.
LLC as C-corp
Owners of an LLC are referred to as members. They own membership interest in the LLC.
Multi-member LLC
Has two members. IRS considers it as a partnership for tax purposes.
LLC as S-corp
A special election for a maximum of 100 US shareholders.
Actions
The following are some common actions in an Illinois LLC:
How to add an Illinois LLC member?
Follow these 6 steps:
1. Check your operating agreement
If you have an operating agreement, check the procedure for adding a new member. Follow the voting and transfer procedures accordingly.
2. Default Illinois provisions
If you do not have an operating agreement, you will have to follow the Illinois’ default rules as mentioned in Illinois Compiled Statutes (§ 805 ILCS 180/10-1)
According to the default provisions, all the existing members of the LLC must vote and consent to add a new member.
3. File Articles of Amendment
To include the name of the new member, you must submit your articles of amendment by mailing Form LLC-5.25 it to the SOS. You cannot do this online.
Filing fees
$50
Address
Secretary of State
Department of Business Services
Limited Liability Division 501 S. Second St., Rm. 351 Springfield, IL 62756
4. Get EIN if necessary
Some single-member LLCs don’t require an Employer Identification Number (EIN) from the IRS. If you were one of these, now you will require one after you add a new member. If you already had one, you don’t have to do anything now.
5. Update Responsible party with IRS
If you want the new member to be the responsible party with the IRS, then you have to file Form 8822-B with the IRS within 60 days of the change. However, if you’re not changing the responsible party, you don’t have to file this.
Notify within
60 days
6. Update your operating agreement
Amend your operating agreement to include the names and details of the new member.
Entity name
Every LLC should have a unique name in Illinois. Illinois maintains a list of names of entities in the state. Go through it to check if your chosen name is available.
Search for names
Go to the official website of the Illinois corporation & llc search tool to see if the name you want is available.
Searching fee
Free
Reservation
You can reserve a name for your LLC for a specific duration by paying reservation fees to the Illinois business services. You will have to file your LLC formation documents within this period to keep the name. Alternatively, you can directly go ahead with the LLC formation without any reservation. That's fine too.
Reservation fee
$40
Reservation period
90 days
LLC naming guidelines
The name you choose for your LLC must the official naming guidelines.
805 ILCS §180/1-10
Visit
Here are some of the guidelines in simple language:
- 1
Shall contain the terms "limited liability company", "L.L.C.", or "LLC".
- 2
Don’t include terms that indicate that you are doing an activity that you are not authorised to do.
- 3
Your name should be ‘distinguishable’ in the Secretary of State records. Adding a punctuation or ‘the’ does not make it distinguishable.
- 4
Don’t use words that makes it seems like you are a governmental entity or has an affiliation.
Operating agreement
Operating agreement is an internal business document that outlines the general rules and policies of the LLC.
Importance
It is not a legally mandatory document. However, it is recommended to have one since many courts, banks and financial institutions use it for verification. It is also nice to clearly outline the duties and relations between multiple members of an LLC—so you avoid any confusion in the future.
Format
There is no ‘required’ format for an operating agreement. You can include anything reasonable in it. In general, it has the following sections:
Basic Business information
Contains name, address, names and details of members, purpose
Member relationship
Contains membership interest, decision making process, powers, duties.
Membership transfer
Contains details on how to add or remove members and managers.
Accounting and tax
Contains details on how company records and distributions are maintained.
Dissolution
How to dissolve, wind up and terminate, due process to follow and exceptions.
LLC Annual Report
Every LLC has to file this report in Illinois to stay compliant with the state laws.
Filing Annual Report
Illinois LLC is expected to file this report annually
File it online on Illinois Secretary of State website
Visit
Mail a form to Illinois Secretary of State website
PDF
Address
Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62756
Online fee
$75
Mailing fee
$75
Expedited fee
+$50
Failure to pay
Illinois charges a late fee of $75 by mail and $125 online. In addition, LLCs will be dissolved after 180 days for failure to file an annual report.
Note
Report is due annually by the end of the month prior to the registration anniversary month. So if you formed or foreign-qualified on February 16th, then your annual report is due January 31
Registered agent
A registered agent is an agent of your LLC on whom any notice, process or demand may be served. Every LLC in Illinois needs to have a registered agent located in the state.
Requirements
According to Illinois Compiled Statutes 805 ILCS 5/5.05:
- 1
Registered agent can be an individual or an authorised organisation.
- 2
Registered agent must have a street address where they can personally receive service of process.
- 3
Office of Registered agent cannot be just a mailbox service of a telephone answering service.
Failure to maintain registered agent
If you fail to maintain a registered agent, there is a penalty of $100
Articles of Organization
In Illinois, Articles of Organization is the form you file with the Secretary of State to form an LLC. It contains the articles of formation for the LLC.
Filing Articles of Organization
There are a couple of ways to file
Address
Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62746
Online fee
$150
Online processing time
10 days
Mailing fee
$150
Mail processing time
10 days
EIN
An Employer Identification Number, also known as Federal Tax Identification Number, is used to identify a business entity.
Who must have an EIN?
Single member LLC elected to be taxed as C-corp or S-corp
Single member LLC with an employee
All multi-member LLC
Business license
Some businesses need to get business licenses to operate in Illinois. Especially, businesses dealing with physical products often require registration.
Registration with Illinois Dept. of Revenue
You are required to register with the Department of Revenue if you are liable for reporting or paying any type of:
Sales tax
Use tax
Sales for resale
Withholding tax for Illinois employees
How to register?
You can register it online at mytax Illinois website
Processing time
1-2 days
Certificate of resale
Your LLC must register with Illinois for you to use a Certificate of resale. After that, this certificate allows you to buy goods tax-free for the purpose of resale. You must keep track of your tax-exempt purchases on a resale certificate (Form CRT-61). To complete this form, you will need to provide your Illinois Account ID Number
Other licenses
Depending on the type of business you run, you may require various kinds of licenses from the State and the county.
Visit official Illinois gov website to see the type licenses you may require.
Illinois Trademark
Illinois trademark registration helps protect a business’ name, logo, or slogan from being used by another business in the state of Illinois.
Difference between trademark and service mark
Trademark identifies goods or physical products.
Service mark identifies tangible services.
Requirements for Illinois trademark registration
- 1
You should be using the mark in connection to your goods or services in Illinois before registering it.
- 2
Your mark must be different from other trademarks registered with Illinois.
LLC in Illinois
Depending on your business, there are a variety of business structure options to choose from when starting a new business.
Illinois Business search
Illinois LLC add member
Illinois LLC remove member
Page sponsorWhy we like StartGlobal?
My genuine thoughts
Willy Justin
Founder, Statepedia
StartGlobal: Legal + Taxes + Bookkeeping for solopreneurs
Product
For small businesses, managing taxes, accounting and everything legal is just a pain. Nobody wants to do it, but they have to. Instead of working with CPAs, attorneys and others separately, Start brings all of them under a single subscription. It’s just smooth.
Team
I know the team behind StartGlobal very well. It’s a very hardworking group of individuals who are genuinely passionate about small businesses. They are backed by successful founders like Balaji Srinivasan, Biz Stone(Twitter) and others.
Price
Getting a CPA or attorney is a matter of thousands of dollars. It’s just unfair to pay so much when you’re a small business. Start has a single subscription that covers it all. It is a definite money saver.
$599 one-time