Thinking of opening a business in the vibrant state of Illinois? If so, forming a Limited Liability Company (LLC) might be the right choice for you. An LLC provides individuals with a fair amount of latitude, a shield against threats, and tax advantages hence widely preferred by entrepreneurs and small businesses.
In this detailed article, you will be guided through the procedure of creating an LLC in Illinois step by step with tips and advice on how to accomplish it well. Regardless of whether you have an already established business or are just beginning, this article provides you with relevant information that will enable you to undertake the proper measures and lay a good base for your venture.
Why Form An LLC In Illinois?
Located in the region of the plains, Illinois accommodates the LLC form of business organization and provides various advantages making it worthwhile for the entrepreneurs:
Limited Liability: Of the various benefits associated with the formation of a limited liability company, the preservation of personal assets against the liabilities of that company stands out as one of the greatest advantages. This means that in case the corporation is faced with legal action or is unable to settle its debts, none of the rented or owned properties by the company such as the house or savings are usually at risk.
Ownership: LLCs provide a high level of ownership and management freedom. An LLC can be formed as a sole proprietorship, partnership, or even a corporation, which allows one to customize the business following their preferences.
Tax benefits: They are also given pass-through taxation which means the owners’ tax returns the for the profits and losses of the business. This can cut tax costs more than using corporations.
Perpetual: As opposed to sole proprietorships or partnerships, LLCs do have a perpetual life which means they will be able to go on even in instances when one of the owners is to die or leave. This brings about stability and continuity to your business.
Step 1: Choose a Name for Your LLC
Your LLC’s name is an essential aspect of your business because it distinguishes you from others in the marketplace. Such a name in Illinois should not be implied by any other business entity that has been registered. Here are some considerations;
- Unavailability: You should use the guidelines for looking up the name you would like to use in the name search to ensure the name that you want has not already been taken. It is prudent to come up with several names where one might fail to be available.
- Compliance: The name of your LLC must conform with the law in the state by incorporating, “Limited Liability Company” or its accepted replacements like, “LLC,” or “L.L.C.” This again helps to explain the nature of the business to the public.
- Trademarks: Look for trademarks at both state thru national levels to mitigate legit threats. This step will help you to obtain and protect your brand’s originality through the U.S. Patent and Trademark Office.
Step 2: Appoint a Registered Agent
A registered agent is someone who is designated to receive service of process on legal documents, such as the complaints or subpoenas filed against your LLC. This is very important when keeping your company in good standing with the state. The registered agent must be able to fulfill these requirements.
- Residency: Be a resident of Illinois or be a business trust allowed to conduct business in Illinois. This is to make sure they are within the jurisdiction to take so legal responsibility.
- Availability: Must also possess a real street address (not a P.O. Box) in the state of Illinois and must be present during normal working hours. This requirement takes care of the issue of receiving important documents on time.
Step 3: File Articles of Organization
The LLC’s Articles of Organization is the one important document that formally places your LLC business structure under the law. This could be submitted either online or via the postal service. Here’s what you need to put in:
- Name of the LLC: Ensure it is the same as the name approved during the name search.
- Principal place of business: It should be the primary place of business for the LLC.
- Purpose of the LLC: This line is usually not required because business can be any general undertaking, however, be more specific in explaining if there are any predominant business activities.
- Registered agent’s name and address: Check for correctness, since this is a statutory obligation.
- Duration of the LLC: In contrast to the rest, most opt for a perpetual duration meaning that the LLC will exist until the members decide to dissolve it.
- Management structure: Indicate whether the LLC is controlled by the members or by the appointed managers to identify who has the power in the company.
- Signature of the organizer: The person who implements the filing must append his signature to the document.
Filing Fee
- Filing notarized Articles of Organization in Illinois is associated with a fee of $150. Expedited processing is available for an additional fee if you require faster approval.
Step 4: Create an Operating Agreement
In Illinois however, even though there is no legal requirement for ‘an operating agreement’, it is desirable to have one. This is an internal document that provides details of the proprietorship and management of the LLC and aims at minimizing potential disagreements among the members. It is important to cover the following items:
- Ownership percentages: Specify the percentage of the ownership of the LLC held by each of the members.
- Voting rights and responsibilities: Outline the decision procedures and the participation of members in the procedures.
- Profit and loss allocation: Explain how profit and loss are distributed among the members.
- Management structure: State again whether the LLC will be member-managed or manager-managed if this detail is left out.
- Procedures for adding or removing members: Develop such procedures to handle changes in their membership.
Step 5: Obtain an EIN
An important number for your tax identification is the Employer Identification Number (EIN), which can also be sourced from the Internal Revenue Service (IRS) for free. This number is fundamental in:
- Opening a business bank account: This aids in the initial venture of separating the personal and business affairs of a person.
- Filing federal and state taxes: This is important in the tax reporting processes and ensuring compliance with tax laws.
- Hiring employees: Enables proper payroll and tax deduction/remittance for employees.
Step 6: Register for Illinois State Taxes
Depending on your business model, you must register for several state taxes so that you remain in good standing and do not incur any fines:
- Sales Tax: If you are marketing and selling physical goods which are taxable in the state then a business registration is compulsory.
- Withholding Tax: If you pay salaries to employees, then you are mandated to withhold the state income taxes.
- Unemployment Insurance Tax: Similarly, if you hire employees, this insurance tax is mandatory since it is used to cater for unemployment benefits.
You can apply for this type of tax on the Illinois Department of Revenue’s site where you can also get other helpful information.
Step 7: Adhere to Further Local Restrictions
Every city or region may have such requisites for business owners. You should contact your local county or city clerk’s office to determine whether there are any other permits or licenses that are necessary for the legal operation of your LLC. This can apply to zoning permits and health department licenses depending on the nature of your business.
Step 8: Submit and File Each Year Any Annual Report
The state of Illinois insists that an annual report must be filed with the Secretary of State if a limited liability corporation is active in its dealings. Such an annual report shall be filed every year by the last day of the month which resonates with the anniversary of the incorporation of the LLC with a payment of a nominal fee fixed at $75. Hence timely filing will ascertain the dues of your LLC at all times are current.
Conclusion
There are many many steps involved when structuring and forming an LLC business in Illinois and all the steps are very important in ensuring that your business runs in an orderly manner and more so in compliance with the law. Knowledge is as important as a rented overturn in this case and this information will assist you to start an LLC in the shortest possible period while concentrating on the expansion of a new entity without any stress. In case of a threshold need, get the specialists for business legal formulation to ensure every and all angles are well-taken attention to.
Are you set to begin? Do you want to start the process of forming an LLC in the state? Go to the Easyfiling website right now, and take the plunge toward becoming a business owner!
Nabin Adhikari
