Are you thinking about starting an LLC in Illinois? In this article, we’ll discuss the top advantages of an LLC and how it will benefit your business in the short and long term. After that, I will walk you through the entire registration process if you decide it is the right business structure for you.
However as a quick note, if you are nervous about the filing process and would rather professionals handle it to make sure everything is filed properly, look into a service like IncFile (for $49) or LegalZoom (for $149). Both services use online questionnaires that take you less than 15 minutes to fill out and they take care of the rest.
If you’d like to handle the incorporation process yourself, keep reading for our step-by-step guide. Otherwise look into one of the incorporation services mentioned above. Do what you feel most comfortable with.
Here are the 5 reasons why forming an Illinois LLC is highly beneficial. The following are the lists and thorough explanation of each one based on state and federal standards.
From the entity name itself, forming an Illinois LLC will provide you with limited liability. When you incorporate your business, you create a separate and independent entity. Your business will have its own rights and transactions.
Therefore, any mistakes or problems it encounters in the future will be its sole responsibility and you will not be held accountable for anything. This gives you protection against personal, financial and legal liabilities.
As much as you are protected when you start an LLC, your business will also greatly benefit from this. Because it is considered an independent entity, the state will respect its right to due process and will be given fair treatment to explain its side.
LLC’s are flexible in so many ways. From their management structure, terms of ownership, company rules and many other aspects, a Limited Liability Company can easily be customized. You can manipulate almost every aspect of an LLC because there are less government laws to follow.
Most entrepreneurs are attracted to this characteristic: a highly bendable entity that is not required to follow state imposed laws like corporations. Because LLC’s are not subject to stiff laws, you can easily change ownership or change the course of running your Illinois small business.
A Limited Liability Company follows less state regulations and laws than other entities, for instance corporations. There are just three basic things that your Illinois small business must follow; first, it should not cause hard, fraud and danger to its consumers and other competing businesses. This gives you enough leeway to run your business as you like.
Like I mentioned, LLC’s have flexible management structures that can be designed according to the choice of owners and co-founders. You can appoint managers to run your Illinois small business or do the task among yourselves.
You basically have the freedom to operate your business as you please, just keep in mind not to resort in illegal business activities. Unlike corporations, LLC’s are not required to create a definite organizational structure. You can make your management structure based on what you want.
Generally speaking, consumers would want to transact and depend on businesses that are incorporated because there’s an assurance that their rights as buyers will be protected by the state.
Having an LLC after your business name will definitely boost your credibility and establish your corporate identity. Knowing this, people will trust you more because they know that you’re a reliable and responsible company.
IncFile is $100 more affordable than other LLC filing services & twice as fast
Incorporating your business as an LLC in Illinois can be a little complicated, and to make things easier for you, we’ve organized an easy-to-follow 5 step process on how to incorporate your business.
Create a unique name for your Illinois LLC that best represents your branding and business goals. There are no restrictions or rules when it comes to naming your small business so you can basically come up with something as long as it does not cause confusion to the public.
Make sure that you check for duplicates using the business name database provided by the Illinois Secretary of State’s Office. If found available, you can make a reservation for 90 days by filing for Reservation of Name application. When filing your business name, make sure to include the abbreviations L.L.C. or LLC after your chosen name.
When hiring an Illinois Registered Agent, make sure to take note of the following requirements: the professional should be a qualified person residing in the state of Illinois, he/she should have a physical address and must be available during business hours from Mondays through Fridays.
Registered agent services can cost up to $160 every year, however, if you incorporate your LLC with IncFile – you’ll be able to take advantage of a free registered agent service for one full year while being able to save a lot.
Filing your Articles of Incorporation is the most important step to form your Illinois LLC. You need to file this before the Illinois Secretary of State’s Office. Download the form and fill it out with correct information such as your LLC name and address, co-owner names and addresses and other important data.
Once submitted, you need to wait for 7 to 10 days for your Certificate of Organization to be returned to you. You also have to prepare $100 for the filing fee.
The Internal Revenue Service requires businesses within the state of Illinois to obtain an Employer Identification Number for easy monitoring of business activities and taxes.
The EIN is a 9-series number similar to an SSN for individuals. Having an EIN will enable you to open a business bank account, file for income tax and hire employees for you Illinois LLC. You can get the EIN for free at the IRS website.
An Operating Agreement is not a mandatory requirement when starting an Illinois small business, however, making one will help you a lot. This document outlines the financial and operational structure of your business.
By having this, your co-founders or co-owners will be aware of these two important aspects of your business. If you want to make an Operating Agreement but you don’t have any experience, you can make use of Rocket Lawyer’s structured Operating Agreement; just restructure it to make it your own.
Most entrepreneurs no longer write a business plan when they build a business these days. However, if you want to stay well-organized while building your Illinois LLC, it would be really helpful if you write a solid business plan.
A business plan will help you determine if your business idea is viable or not in the first place. It will also enable you to study the financial feasibility of your business idea and create strategies to market and sell your products/services.
Having said all these, if you want to start writing one now but you don’t have any experience, below are some quick links that you can use to get started.
This is a mandatory requirement in the state of Illinois and in other states as well. Paying your state taxes is an obligation that you need to fulfill as a business entity.
As a small business owner, you need to understand Illinois tax regulations and your responsibilities as well. There are certain tax benefits and deductions that you’ll be able to take advantage of so you need to be aware of them.
The state government of Illinois can penalize you with sanctions and file a case against you if you fail to pay your dues. It may even lead to the revocation of your license to operate as an Illinois LLC.
Every year, throughout the existence of your Illinois small business, you’ll have to make an annual report. This is a mandatory requirement that you need to comply with to be able to continue doing business within the state.
An annual report basically contains all your business activities and progress during the preceding year. It will also shed light on the company’s financial performance and status.
Forming an LLC in Illinois is challenging, however, you have to think about the greater good that it can provide to you and your business. While staying small is a valid reason not to incorporate, it’s best that you decide on the future of your Illinois small business. Good thing the state of Illinois provides numerous state resources for entrepreneurs like you, making your tasks easier.
If you decide to incorporate, you have to learn how to start an LLC in Illinois as early as now. It’s not an easy process so you need to familiarize yourself in case you want to do the formation yourself. If you want to avoid all the hassle, you can also ask for assistance from a professional or use an online incorporation service.
Please keep in mind that this guide is not meant for legal purposes and is not legal advice. If you want specific answers for forming an LLC in Illinois, consult with a professional.