How to Form a Illinois LLC in 10 Steps
An LLC or Limited Liability Company can be formed in Illinois in 10 simple steps. LLCs are common business structures. Profits that your LLC earns will pass through to members, and with an LLC, one or more individuals or members can own a portion of your company. Having an LLC reduces your exposure to liability from any and all company activities
Forming your Illinois Limited Liability Company is fairly straightforward. Still, there are several key steps you will need to follow:
1. Choose Your Company Name.
Your LLC name cannot be one that any other business in Illinois has a right to use. At the very least, make sure the State of Illinois does not have the name you choose on file for another business or organization.
If you’re interested, SunDoc can run your name search or reserve your LLC name for you.
2. Understand the LLC Organizer Requirement.
You have to name an LLC organizer on the Articles of Organization form. An organizer is the person or company that drafts your LLC. By preparing on-line with us, SunDoc Filings will be your organizer. If you choose to prepare and upload your filing with SunDoc, you can name your own organizer.
3. Designate a Registered Agent.
Your LLC needs a designated registered agent. This can be either a firm or a person. A registered agent is required for the Articles of Organization form (see step #6). For additional information on why your LLC needs to have a registered agent, go here: Registered Agent Service.
4. Decide Your Ownership and Management Structure.
On your Articles of Organization form, you’ll be asked whether you’d like your LLC to be managed by multiple managers, all members, or one manager. You need to decide whether you want to be manager managed or member managed.
5. Create an Operating Agreement.
According to Illinois law, you are not required to have an Operating Agreement. Conditions specified by the law state that an implied Operating Agreement will be formed. On the other hand, you should still take a look at the default conditions to make sure that they meet your needs and are in your best interest.
Operating Agreements must be created if your LLC is going to be manager managed. Current Illinois law states that a manager-managed LLC is valid only when it is declared both in the Operating Agreement and the Articles.
Your Operating Agreement is like the engine that runs your new company. It drives everything, managing working capital, creating your company’s governance, and paying out profits. Serious matters, such as voting, money, fiduciary constraints, and liability are all at play.
You may also wish to consult an attorney for advice.
6. File the Articles of Organization.
You’ll need to file a simple one-page form called the Articles of Organization as well. This provides essential company details. When the Secretary of State of Illinois accepts your Articles of Organization, your company is officially created.
You’ll need several things before you can file your Articles of Organization. You will first need the name of your LLC. You will next need the address of your new company. You will need to know what management method you’ve chosen, who your registered agent is, and who your LLC organizer is. Illinois state law does not require that you publish anything in a newspaper of record.
SunDoc can file your Articles of Organization for you if you like.
7. Obtain an EIN and Open a Business Bank Account.
Congratulations on your newly registered LLC in Illinois!
Whether or not your new LLC has employees, if your LLC has more than a single member, you will need to obtain an EIN (Employer Identification Number) from the IRS. You can feel free to file with the IRS on your own, or SunDoc can file for you.
Keep in mind you’ll also need an EIN in order to open business accounts at most banks. You will want to have a business account, even if you’ve been using your personal account up until now. It’s also a wise decision to begin keeping all receipts for payments made for your business. You might even consider locating an accountant to assist you with business matters.
8. Pay Illinois State Taxes.
Every year your Illinois LLC might need to pay state taxes in Illinois. Do you sell goods in Illinois? If so, you will also need to collect sales tax. Learn more about state tax information on the Illinois Secretary of State’s website.
9. Determine Necessary Licenses and Permits.
Nearly all Illinois companies need to have one or more business licenses or permits for operation at the county and city level. Read over Illinois's Secretary of State website to find the specific requirements for your business. It’s crucial to check this even if you think your LLC will be exempt. You’d be shocked to discover what is required, and if you operate without the proper licenses or permits, it can result in expensive fines for your LLC.
10. File an Annual Report.
All LLCs doing business in Illinois must file an Annual Report every year. You need to file an Annual Report to keep your LLC in compliance and in good standing with the state. The form is simple. Its use is to keep the state of Illinois up to date on important information about your business.
Important Notice: It is beyond the scope of this article to talk about employee-related matters or your potential needs for insurance. Instead, speak with an accountant or attorney regarding any questions about financial or legal matters. Please note that nothing in this article can be construed as legal, tax or accounting advice.
For additional learning, please visit our LLC FAQs.
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