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How to Start an LLC in Illinois (May 2024 Update)

Meow Technologies, Inc.

Meow Technologies, Inc.

A limited liability company (LLC) is one of the most popular business structures for small business owners and entrepreneurs. An LLC provides personal asset protection for business owners while also offering pass-through taxation that avoids double taxation on business profits. Forming an LLC in Illinois can be an excellent way to legally establish your business while optimizing taxes.

This article will explore the step-by-step process for starting an LLC in Illinois, including naming your business, designating a registered agent, filing formation paperwork, creating an operating agreement, obtaining licensing, and staying compliant after formation. Even if you have no prior experience forming a business entity, this guide aims to make starting an Illinois LLC simple.

Steps to Form an Illinois LLC

1. Choose a Name

Picking the perfect name for your Illinois LLC is an important first step when starting your business. You'll want to check that your desired company name is available and complies with Illinois naming rules before filing any formation paperwork.

Here are some tips for checking and reserving an Illinois LLC name:

  • Use the Illinois Secretary of State business database to search for availability. Your LLC name must be distinguishable from any existing business names in Illinois.
  • Check if the domain name is available before settling on a name. Even if you don’t plan on having a website yet, buying the domain locks in branding for the future.
  • You can reserve a name for 90 days by submitting the Name Reservation form. This prevents anyone else from claiming the name in the meantime.

Illinois has rules around acceptable LLC names, including:

  • Must contain “LLC”, "L.L.C.” or “Limited Liability Company”
  • Cannot use restricted words like “bank” or “university” without approvals
  • Can't be misleadingly similar to existing names

2. Appoint a Registered Agent

Illinois requires all LLCs to designate a registered agent, which is a person or company that receives important legal and tax documents on behalf of your business. Using a dedicated registered agent service can relieve business owners of this administrative burden.

Some of the top reasons for using a registered agent service include:

  • Maintains privacy by keeping your personal address off formation documents
  • Provides reminder services for deadlines like annual reports
  • Local agents meet Illinois requirement for in-state physical address

You could designate yourself as the registered agent, but this will publicly list your name, address, and contact information on all formation paperwork filed with the state.

3. File Articles of Organization

To formally create your LLC, you must file Articles of Organization paperwork and pay a $150 state filing fee. This paperwork can be completed online through the Illinois Secretary of State website or mailed in.

The Articles of Organization will require you to provide details like:

  • Your Illinois LLC’s official name
  • Registered agent’s name and address
  • Principal place of business address
  • LLC purpose
  • Ownership structure information
  • Organizer's signature finalizing the formation

You will receive confirmation from the state upon approval of your Articles of Organization. Processing times take approximately 10 business days.

4. Create an Operating Agreement

An operating agreement establishes rules and provisions for how your Illinois LLC will be structured and managed internally. It’s an important step to take when forming an LLC, even though Illinois does not legally require it.

Key details to outline include:

  • Member responsibilities
  • Profit/loss distributions
  • Adding/removing members
  • Amending existing terms
  • Dissolution procedures

For multi-member LLCs, the operating agreement plays a vital role in preventing disputes over internal business matters. Single-member LLCs also benefit from the legitimacy an operating agreement provides.

5. Obtain an EIN

An employer identification number (EIN) serves as a tax ID number for your business to be used for federal tax purposes. Apply online through the IRS website anytime after formally registering your Illinois LLC.

Reasons you need an EIN:

Having an EIN creates an additional layer of separation between your personal and business finances, which is useful for liability protection.

Additional Requirements After Forming an Illinois LLC

Meeting state and federal compliance regulations is crucial for LLCs after completing initial formation. This helps legitimize your business and keeps your LLC in good legal standing. Here are some key post-formation steps:

Open a Business Bank Account

To help maintain personal liability protection, open a dedicated business bank account for your Illinois LLC using your EIN. Avoid commingling personal and business transactions whenever possible.

For more information, take a look at our article on the key benefits of business checking accounts.

Understand Tax Obligations

How your Illinois LLC gets taxed depends on your entity classification:

  • Multi-member LLCs = Partnerships
  • Single-member LLCs = Sole proprietorships

Additionally, you may elect S-Corp or C-Corp tax treatment through the IRS. Talk to an accountant about the optimal election for your business model.

Obtain Licenses and Permits

Look up federal, state, county, and municipal license/permit requirements for your LLC’s activities and locations. Common examples include sales tax permits, food handler permits, and local business licenses.

Stay Compliant Through Annual Reporting

You must submit an Annual Report for your Illinois LLC to remain compliant. This form is due before the anniversary date of your company’s formation each year.

Conclusion

Starting an LLC can be intimidating, but Illinois provides user-friendly processes for registering your business while also offering flexibility in management and taxation. Take advantage of available resources like online filing through the Secretary of State website as you complete each required formation step.

Meow Technologies is a financial technology company, not a bank or FDIC-depository insured institution. Likewise, Meow Technologies is not an investment adviser and none of the information presented herein should be relied upon as financial advice or a recommendation to make any financial decision nor should it be considered to be tax or legal advice. The information is the opinion of Meow Technologies for educational purposes and may not be suitable for all companies. Products, like the one described herein, are offered through Meow Technologies and are not advisory services which are only offered through Meow Advisory, LLC.** The FDIC’s deposit insurance coverage only protects against the failure of an FDIC-insured bank.**

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*Disclaimer: Meow Advisory LLC is a registered investment adviser. Registration as an investment adviser does not imply any level of skill or training.
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**Disclaimer: Meow Technologies is a financial technology company, not a depository, bank or credit union, and your account at Meow is not, itself, an FDIC-insured product.

Meow currently partners with three banking providers. Banking services are provided by Third Coast Bank SSB; Member FDIC, Grasshopper Bank, N.A; Member FDIC, and FirstBank, a Tennessee corporation; Member FDIC.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Grasshopper Bank, N.A, you deposit your funds into a deposit account at Grasshopper Bank, N.A. which sweeps those funds into deposit accounts across a network of Federal Deposit Insurance Corporation (“FDIC”)-insured banks, for up to the current standard maximum deposit insurance amount (“SMDIA”) of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including Grasshopper's ICS Deposit Placement Agreement. Grasshopper Bank, N.A. uses a third-party vendor and agent to help administer this sweep process. Visit https://www.intrafi.com/network-banks/ for a list of the banks and savings associations with which we/Grasshopper, N.A. have a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Grasshopper, N.A. or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of Grasshopper Bank, N.A, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheets for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Third Coast Bank SSB, you deposit your funds into a deposit account at Third Coast Bank SSB. If you also hold funds in a sweep program with Third Coast Bank SSB, Third Coast Bank SSB sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per receiving bank, for each ownership capacity or category, including any other balances you may hold at that receiving bank directly or indirectly through other intermediaries, including broker-dealers. Third Coast Bank SSB uses a third-party vendor and agent to help administer this sweep process. Visit Third Coast Bank SSB for a list of the banks and savings associations with which we/Third Coast Bank SSB have a business relationship for the placement of deposits at receiving banks, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Third Coast Bank or you). The current maximum deposit insurance amount for your funds is up to $50 Million in FDIC insurance through the sweep network of Third Coast Bank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and conditions and refer to the applicable rate sheet for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by FirstBank, a Tennessee corporation, you deposit your funds into a deposit account at FirstBank, which sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including FirstBank's ICS Deposit Placement Agreement. FirstBank uses a third-party vendor and agent to help administer this sweep process. Visit IntraFi for a list of the banks and savings associations with which FirstBank has a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by FirstBank or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of FirstBank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheet for additional information.

***FDIC insurance coverage is only available to protect you against the failure of an FDIC-insured bank that holds your deposits (and does not protect you against the failure of Meow or other third party). Your account with Meow and all services provided to you are subject to the Meow Terms of Service (“Account Agreements”) and other applicable terms and no other representations or warranties, express or implied, are provided to you except as expressly set forth in those written Account Agreements. If you have any questions regarding your account, please contact team@meow.com.

FirstBank Funds Availability Notice

FirstBank’s general policy is to allow you to withdraw funds deposited in your account on the first business day after the day we receive your deposit. Funds from electronic deposits will be available on the day we receive the deposit. In some cases, we may delay your ability to withdraw funds beyond the first business day. Then, the funds will generally be available by the SECOND business day after the day of deposit.