Are you wondering how to create an LLC in Illinois? Maybe you have a great business idea but don’t know how to get started, or perhaps it’s time to take your side hustle to the next level. Either way, creating an LLC may be the best way to make your business official.
Chicago Tax Lawyer Firm is here to help you register your new or existing business as a Limited Liability Corporation (LLC) to help you save on taxes and make sure your business can thrive without risking your personal assets.
How to create an LLC in Illinois
If you’ve read up on the advantages of an LLC, you’re probably asking yourself why you haven’t decided to register your business as an LLC sooner. No extra taxes, limited liability, and great self-employed tax deductions? Sign me up!
The answer to this question is simple: the process to register your business as an LLC can be difficult to navigate if you’re unfamiliar with the intricacies of business law. That’s why our experienced Chicago business lawyers are here to walk you through it!
At a glance
In Illinois, registering your business as an LLC generally has five distinct steps:
- Choose your business name
- Select a business agent in Illinois (most likely yourself or another business owner)
- File articles of organization with the Secretary of State
- Create a business operating agreement
- Remain compliant: Taxes, licenses, and reporting
Step 1 for creating an LLC in Illinois: Get creative and name your business
While choosing a name for your Illinois business may seem simple, this step is often frustrating for business owners attempting to register as an LLC. Under the law of Illinois, an LLC’s name must be recognizably different from the name of any other business entities on file with the Illinois Secretary of State.
To see if your desired business name is available, you can search the Illinois database online.
Step 2 to create your Illinois LLC: Who you gonna call? Select an agent to serve as your LLC’s go-to
Every LLC registered in the state of Illinois must have an agent in the state. This second step is usually the most straightforward. More often than not, the registered agent will be an owner of the business with a physical street address in Illinois. As long as the person resides in Illinois and is willing to accept legal papers on the LLC’s behalf, they can serve as the agent of your LLC.
Step 3 to create an LLC in Illinois: Submit your Articles of Organization
Here, we get into the nitty gritty. Filing your Articles of Organization is one of the trickier legal steps in the process of creating an LLC in Illinois.
The Articles of Organization for your LLC include information like:
- The purposes of your business
- Types of transactions that your company is involved with on a regular basis
- Names and business addresses of all managers, and any member of the organization that has the authority to make major decisions possibly leading to legal liability
- Reach out to one of our attorneys to determine if a certain employee needs to be included in your Articles of Organization!
Essentially, the Articles of Organization tell the State of Illinois the type of business you’re registering and your information for any legal implications that may arise.
Filing Articles of Organization may seem like a simple process, but it can easily trip up anyone who is not well-versed in business law. Our attorneys at Gordon Law Group are highly skilled at Illinois business formation and can help you quickly complete your Articles of Organization, as well as guiding you through the entire process of how to create an LLC in Illinois.
Step 4 in Illinois LLC formation: Who does what? Draft an LLC operating agreement
While an operating agreement is not required under Illinois law, it’s a smart move to have one on file in case of any future business disputes. In fact, we consider it essential! We’ve seen countless business disputes that end up being both expensive and frustrating for all parties involved, which could have been prevented by a strong business operating agreement.
Pro tip for multi-owner LLCs
Thinking of going into business with a partner? A custom operating agreement is highly recommended to avoid future disputes!
An LLC operating agreement is a legal document outlining the ownership and operating procedures of your business. A typical LLC operating agreement includes the following:
- Organization: This part of the operating agreement defines the members of the LLC and how the ownership of the organization is divided. This section is also important as a record of when the business was officially formed and where the Principal Place of Business for the LLC is. If you have any questions about the best practices for setting up your business’s organization, Gordon Law Group is here to help!
- Management: Your operating agreement should define how the LLC will be managed. Sometimes LLCs have an appointed manager; other times, an owner manages the day-to-day operations of the firm. Either way, it is the best practice for this information to be included in an operating agreement signed by all owners and decision makers of the company.
- Contributions: All businesses need capital. Your operating agreement should include the amount of money each member has invested in the business. It’s also a good idea to define how the business will go about raising more funds in the future.
- Distributions: The point of creating a business is to make money. A strong operating agreement will detail how the profits from your business will be distributed among the owners of the company. (Defining this from the start can prevent an expensive dispute down the line.)
- Dissolution: All good things eventually come to an end. Sometimes owners of a business move on to another project or collectively decide that they no longer wish to conduct business together. Outlining the hypothetical process of dissolving your business is a crucial aspect of any business’s operating agreement.
Although you can find plenty of templates for an LLC operating agreement online, we highly recommend consulting one of our Chicago business lawyers to create a legal document tailored to your needs.
For example, your business may need to consider additional angles such as who will own future intellectual property rights (including photographs and even blog content) or complying with online privacy laws.
Step 5 for your Illinois LLC: Dot the T’s and continue to cross the I’s
When you’re able to run your business without having to worry about having your personal assets on the line, you will be able to think more clearly and operate the business the way you want to operate it. With this great power of being the master of your LLC’s destiny, comes great responsibility.
There are a few final regulations that owners of an LLC must adhere to in order to enjoy the benefits of Limited Liability Companies:
- Employee Identification Number: If your LLC has employees besides the owners, it must obtain an Employer Identification Number from the Internal Revenue Service. Nobody likes dealing with the IRS, but luckily for you, our firm can handle all your business’s tax needs as well as your business formation. If you have any questions about obtaining an EIN, reach out to one of our attorneys.
- Business License: If your business is engaged in a certain type of industry (e.g. food and beverage, cryptocurrency, cannabis, etc.) you may have to obtain business licenses from Illinois, your county, and sometimes even your municipality. This can be done by working with your county or municipality’s clerk. Need help? Our attorneys can guide you through this process.
- Department of Revenue Registration: If your business will be collecting sales tax, you will need to register with the Illinois Department of Revenue and remit sales taxes to the state on a regular basis. (Keep in mind that if your business will be shipping items outside of Illinois, you may have tax obligations in other states, as well.) Our attorneys can help you determine your sales tax obligations.
- File Annual Reports: The Illinois Secretary of State requires all LLCs doing business in Illinois to file an annual report with the office. Your report is due each year on the 1st of the month in which your LLC was formed. (For example, if you form your LLC on October 15, you will need to file your annual report on October 1 each year.) Your LLC annual report can be filed online or by mail.
Ready to get started?
View our affordable and customizable business formation packages! LLC formation begins at $1,500—and did you know those costs are tax deductible?
Consult with an Illinois LLC lawyer
Ready to create an LLC in Illinois? Gordon Law Group helps LLCs launch quickly and smartly. We’re a one-stop-shop that handles contracts, FTC compliance, tax matters, and employment disputes.
Have legal questions about creating your Illinois LLC? We’ve got answers! Get in touch today for a confidential consultation.
