How to Register a Business in Illinois

by Jennifer Kiesewetter in
photo of high-rise building

TLDR

  • The state of Illinois is home to 1.2 million small businesses, employing 2.5 million people. Top industries include professional scientific, technical services, construction, health care, and social services.
  • As a startup, when you register a business in Illinois, you'll need to satisfy several requirements to successfully register your organization and be in compliance with state regulations. 
  • Before you register your startup, you need to determine its legal entity structure, such as a limited liability company, a general partnership, or a c-corporation. 
  • In addition to choosing your startup's structure, you’ll also have to choose its name and registered agent. When picking a name for an LLC, corporation, or limited partnership, you’ll need to distinguish it from other business names already registered within Illinois while following the state’s naming conventions.
  • Next, it's time to submit your formation document to the Illinois Secretary of State’s Department of Business Services. For new or converting entities, the State of Illinois provides sample forms for your use or review.
  • Unlike other states, Illinois has a few requirements for where to register a business.
  • Depending upon your chosen entity structure, you also need to understand and be prepared for the expenses associated with registering a business. For example, for registering a corporation in Illinois, you must pay a $150 filing fee. If you register as a limited liability partnership, each partner must pay $100, with a minimum fee of $200.
  • When registering your startup with the Illinois Department of Revenue, you typically will not have an additional filing fee unless you are engaged in certain businesses, such as providing dry cleaning services or selling tobacco products.
  • If you established your startup in another state, and you’d like to register in Illinois as well, you must file an Application for Authority.

Introduction

Illinois is home to 1.2 million small businesses, employing 2.5 million people in the state. Industries leading the way in Illinois’ small business sector include professional scientific and technical services, construction, health care, and social assistance. Further, Illinois comes in fourth in housing Fortune 500 companies, trailing New York, California, and Texas. Some of these giants include Walgreens, State Farm, and Boeing.

If you are considering Illinois as your state of record for your startup, this article will explore how and where to register a startup in Illinois, focusing on what you should do each step of the way.

When Do You Need to Register a Business in Illinois?

When you register a business in Illinois, you'll need to satisfy several requirements successfully and compliantly. Before registering your startup, it’s a good idea to create a business plan, establishing a roadmap for moving forward. 

In drafting your business plan, you’ll want to consider your go-to-market strategy, marketing and sales approaches, location, and ownership -- to name a few topics. To help guide you, you can check in with the U.S. Small Business Administration or the State of Illinois, both of which provide additional guidance for determining the feasibility of starting your business as well as how to create a business plan.

Once you’ve identified some of the basics about your operations, it is then time to register your startup. Below, we've broken these requirements down into a step-by-step process.

Determine Your Business’s Entity Structure

Before you register your startup in Illinois, you must determine your its legal entity structure. For example, in Illinois, you may choose to register as a(n):

  • S-Corporation
  • C-Corporation
  • Limited Liability Company (LLC)
  • General Partnership (GP)
  • Limited Partnership (LP)
  • Limited Liability Partnership (LLP)
  • Sole Proprietorship

Your chosen business entity determines the next steps in registering your startup. To learn more about Illinois' permissible entity types and the different rules applying to each, please visit the websites for either the Illinois Department of Revenue or Secretary of State.

For example, when a business name differs from the names of the owners, the Illinois Assumed Business Name Act requires a sole proprietorship to “register with their local county clerk’s office for registration under the Assumed Name Act.” However, a sole proprietorship is not required to file as a new entity with the Illinois Secretary of State’s Department of Business Services. Keep in mind, though, that you may have other filing requirements depending upon your business type, such as a business license.

If you choose to organize your startup as a limited liability company or a corporation, you must follow specific steps to register it. For example, to register a corporation in Illinois, you’ll need to file Articles of Organization with the Illinois Department of Business Services, which is part of the Secretary of State’s office. The Illinois Secretary of State website has sample documents for you to use. We discuss filing an Illinois LLC in more detail below.

Choose Your Business’s Name

In addition to choosing your startup's structure, you'll also have to choose its name. When picking a name for an LLC, corporation, or limited partnership, you’ll need to distinguish it from any other business names already registered with the state. Use proper designations such as “LLC” or “Limited Liability Company,” as applicable, in your startup’s name. You can check for available names by visiting Illinois’ business entity name search.  

Additionally, if you’re not ready to register your business in Illinois, but you want to preserve the name of your startup, you may reserve its name for up to ninety (90) days by filing a Reservation of Name Application. The fee for reserving an entity name is $25.

Identify Your Registered Agent

Next, you need to identify a registered agent. A registered agent is a person or entity that can accept public service of any court documents on behalf of your startup. If you designate an individual, that person should reside in Illinois. If you select an entity, then that business must be authorized to transact business and be in good standing with the state of Illinois.  

Submit Your Formation Forms

Finally, after you complete the above steps, it's time to submit your formation forms to the Illinois Secretary of State’s Department of Business Services. For new or converting entities, Illinois provides sample forms for your use or review. For example, suppose you choose a limited liability company, a limited partnership, or corporate structure. In that case, you can use the state's official forms, or you may use your own document, as long as it meets all the rules specified by law.

Let's look at a specific example. If you choose to register your startup as an LLC in Illinois, you will file an Articles of Organization (Form LLC 5.5) (in duplicate) with the Department of Business Services. You may file online or through the U.S. Mail. The filing fee is $150. If necessary, you can request an expedited filing, which requires an additional fee of $100. If you file for an expedited filing, your Articles will be filed within twenty-four (24) hours of receipt, not including weekends or holidays. Expedited filing is not available by mail.

Where Do I Register a Business in Illinois?

Unlike other states, Illinois has a few requirements for where to register a business. We’ll walk through these steps below:

  1. If you are a sole proprietorship or a general partnership, you must register your business name under the Assumed Business Name Act with your local county clerk’s office.
  2. Next, register for an Employer Identification Number with the Internal Revenue Service.
  3. Then, file your entity documents, such as your Articles of Organization, with Illinois Department of Business Services, by U.S. Mail or online.
  4. Register your startup with the Illinois Department of Revenue (IDOR), if applicable. If you “plan to hire employees, buy or sell products wholesale or retail, or manufacture goods, you must register with the IDOR.” You may file online by filing an Illinois Business Registration Application (Form REG-1) to complete this step.
  5. Finally, check with your city and county to determine if you must also register for local taxes or any other required permits.

How Much Does It Cost to Register a Business in Illinois?

Depending upon the chosen entity for your startup, you need to understand the annual filing requirements in addition to any state tax owed. For example, for registering a corporation, you must pay a $150 filing fee. If you register as a limited liability partnership, each partner must pay $100, with a minimum fee of $200. You can check the Illinois Department of Business Services for more information on filing fees. Additionally, you are responsible for paying an annual franchise tax (a minimum of $25), along with your annual reporting fee of $75.

When registering your startup with the Illinois Department of Revenue, you typically will not have an additional filing fee unless you are engaged in certain businesses, such as providing dry cleaning services or selling tobacco products.

How to Register a Business in Illinois That Started in Another State

If you started your business in another state, and you’d like to register it in Illinois, your startup is considered a “foreign corporation.” A foreign corporation “is a corporation organized under the laws of a state or country other than Illinois.” Further, according to the Illinois Secretary of State’s office, “[w]hen a foreign corporation transacts business in Illinois, it must qualify to do business by procuring an Authority to Transact Business in Illinois from the Secretary of State’s Department of Business Services.”

Therefore, first, you must file an Application for Authority (Form BCA 13.15), in duplicate, with the Department of Business Services. Along with that application, you should also submit recently certified copies of your Articles of Incorporation (or other applicable formation documents) with any amendments. Finally, you should submit payment for all appropriate license and filing fees, franchise taxes, and any penalties or interest to the state for which you may be liable. 

If you begin operating in Illinois before filing your Application for Authority, the state will fine you $200 plus $5 per month or 10 percent of fees and taxes, whichever is greater. Once the state approves your application, it will issue you an Authority to Transact Business in Illinois certificate. After you receive your certificate, you must pay any applicable Illinois franchise taxes plus file an annual report, with a $75 filing fee each year.

Benefits of Registering a Business in Illinois

Registering your startup in Illinois offers the following benefits:

  • Illinois is home to the third largest metropolitan city in the U.S. -- Chicago -- providing ample business opportunities.
  • Illinois is also a favorable environment for businesses, where new companies can benefit from grants, loans, and tax incentives from the Illinois Department of Commerce and Economic Opportunity (DCEO).
  • The per capita income is 6 percent higher than the national average.
  • Illinois also has easy access to transportation, including air, rail, and shipping.

Limitations of Registering a Business in Illinois

Here are some limitations of registering your startup in Illinois:

  • The State of Illinois has had some financial trouble, facing a high deficit of $3 billion, causing additional concern for small businesses as state services have been cut or reduced.
  • Illinois has higher corporate income tax rates than other states.
  • Based on recent figures, in 2018, the Illinois economy grew slower than the national average.

We can help!

At AbstractOps, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most—your business.

If you're looking for help registering your Illinois startup, we can get your documentation ready, overall shepherding this process to ensure it's done right. Sign up for early access to get started.

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Note: Our content is for general information purposes only. AbstractOps does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.

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