Start an Illinois LLC

Step 1: Name your Illinois LLC

The first step is to name your Illinois LLC. Your business name provides potential customers and investors with their first impression of your brand. Be sure to choose a name that conveys the image you want to project, and one that you’ll want to stick with long-term.

Naming Requirements for Illinois LLCs

In addition to choosing a name that works well for your brand, you also need to follow Illinois LLC naming rules and requirements.

Under Illinois state law, an LLC name must contain one of the following designators (separate and apart from any other words or abbreviations):

• L.L.C.
• LLC
• Limited Liability Company

Note that, unlike most states, Illinois does not allow LLC business names to include the abbreviations “Ltd.” or “Co.”

The name of your LLC also cannot have a name that makes it sound like a corporation or limited partnership. That means the words “Corporation,” “Co.,” “Corp.,” “Incorporated,” “Inc.,” “Limited Partnership,” or “LP” aren’t allowed in your business name.

Your business name must be distinguishable from any other company name on record with the Illinois Secretary of State. Use our Illinois business entity search page to check online and see if your desired business name is available. (Note: In Illinois, the name of an administratively dissolved LLC is not available for use by another business until three years have passed following the notice of dissolution issuance date.)

Your Illinois LLC name can’t contain any word or phrase that implies that it’s a government agency or organized for the purpose of:

• Banking
• Insurance
• Assurance

Finally, any words that can be considered offensive are restricted from being used in an Illinois LLC name. For more naming guidelines, check with the Secretary of State’s Department of Business Services.

Reserving Your Business Name

Found the perfect business name, but aren’t quite ready to start your LLC? You can reserve your name for up to 90 days instead. That way, no one else can take it before you’re ready to officially form.

To reserve your business name in Illinois, you’ll need to file form LLC-1.15. O

Get a domain name

A huge part of running a successful brand today is being available online. That’s why it’s also a good idea to make sure your desired name is also available as a URL.

For example, if your first business name choice isn’t available as a domain name, but your second choice is, that could sway your decision. Need some inspiration or want to check domain name availability? Use our domain name search tool.

Note: You may also want to check for available social media handles that align with your desired business name and snag them before anyone else does.

Illinois Assumed Business Name

If you want to conduct business under a different moniker than your official company name, you’ll need an Illinois assumed business name. Assumed business names also need to be registered with the Secretary of State.

An assumed business name is often used when an LLC wants to do things like sell/launch new product lines or open a store without having to form a whole new business entity.

Examples of when a DBA would be used include:

• A company with the official name “ABC Toys, LLC” wants to sell puzzles online as “ABC Puzzles.”
• A company with the official name “ABC Toys, LLC” wants to sell on Amazon as simply “ABC Toys.”
• A company with the official name “XYZ Computers, LLC” wants to sell MacBooks on eBay as “XYZ Macs.”

Note: Assumed business names are also known as “doing business as” (DBA) names, fictitious business names, or trade names in other states.

Trademarks

Even if the Secretary of State database shows that your desired LLC name is available, that doesn’t mean you’re clear to use it. Business names can be trademarked at both the state and federal level.

That’s why it’s also a good idea to check with the U.S. Patent and Trademark Office. By using the website’s search engine, you can check to see if your desired name has already been federally trademarked.

For state-level trademarks and service marks, you can check with the Illinois Secretary of State.

Step 2: Appoint a registered agent in Illinois

All LLCs in Illinois are required to have a registered agent. A registered agent is an individual or or business entity who receives important legal notices on behalf of your business.

Your Illinois registered agent must:

• Reside in Illinois or be an entity authorized to conduct business in the state
• Have a physical address in Illinois (a P.O. box will not suffice)

A registered agent’s responsibilities include:

• Being available during regular business hours to receive notices (service of process)
• Accepting legal notices and important government mail

Can I serve as my own registered agent? 

Legally, you can serve as your own LLC’s registered agent, but there are several reasons why this isn’t the best idea. Just two of the pitfalls include:

• Having to be available during regular business hours at all times can be inconvenient.
• Being served with a notice that your LLC is being sued or has had legal action taken against it in front of clients or investors could be embarrassing and even damaging to your brand.

Consider using a registered agent service

Many LLC owners opt to use a professional registered agent service. The benefits of registered agent services like ours include:

• Not having to change your registered agent address when your business relocates
• Avoiding the embarrassment of being served with legal documents or notices in front of other people
• Staying compliant with the Illinois Secretary of State’s registered agent requirement
• Knowing all service of process notices will be received and passed along in a timely manner

A professional service can go a long way toward giving you peace of mind and more freedom to focus on running your business. Use our Illinois registered agent services to keep your LLC organized and compliant with the state’s requirements.

What if the state can’t find my Illinois statutory agent?

If your registered agent office address can’t be reached, you could incur the wrath of the state. Failure to maintain a registered agent could even result in the forced dissolution of your LLC.

Not having a dependable registered agent address on file could also result in you not receiving notice that your business is being sued or has had legal action taken against it.

That’s why acting as your own registered agent or asking a friend or family member to do so can be risky.

ZenBusiness can provide your registered agent

To avoid problems with your registered agent address, many business owners opt to use professional registered agent services. When you sign up for our registered agent service, our registered agent partners will always be available to receive important legal, tax, and other notices on behalf of your LLC from the state.

Not only will using our services help you stay in compliance with the Illinois registered agent requirements, but it will also enable you to avoid the embarrassment of being served legal notices in front of others.

Finally, our registered agent services will help you keep organized. When you receive notices, we’ll inform you quickly so you can handle them as you deem appropriate (by viewing, downloading, or printing them whenever you want).

Step 3: File Illinois Articles of Organization

The next step is to file Articles of Organization. Your Illinois Articles of Organization (Form LLC-5.5) are the formation documents that officially register your LLC. To form your LLC, you’ll file these documents with the Illinois Secretary of State Department of Business Services, Limited Liability Division, and pay your filing fee ($150 at the time of this writing). You can file your Articles of Organization via mail, in person, or by completing the online application.

Information Needed for Your Illinois LLC Articles of Organization

Your Articles of Organization should include the following:

• The name of your LLC in Illinois (including the LLC designator)
• Your business address (the address of your LLC’s principal place of business)
• The effective date of your Articles of Organization
  • Note: Generally, an LLC’s existence begins when the Department of Business Services has filed the Articles of Organization. However, a later date (not to exceed 60 days) can be specified instead.
• The name and address of your registered agent
• Your Illinois LLC’s purpose
• Your LLC’s term of existence
  • Note: The duration of an LLC is “perpetual” unless otherwise specified.
• The names and business addresses of the initial managers or any members having the authority of manager
• Optional provisions (such as management structure or other provisions that would be included in an operating agreement)
• Signature(s) of the organizer(s)

Illinois requires all Articles of Organization to be submitted in duplicate, and all responses to be typed or printed in black ink.

Organizers

An LLC can be formed by one or more organizers. An organizer can be an individual who is over the age of 18, or a business entity. Each individual acting as an organizer must sign the Articles of Organization. The names of each organizer must also be typed or printed in the correct section.

If a business entity acts as an organizer, the exact name of the business must be provided, as well as the typed or printed name and the signature of the individual acting on behalf of the entity.

Expediting Your Filing

The Secretary of State generally takes approximately 10 days to process and approve Illinois Articles of Organization. However, you can also expedite your filing to 24-hour service (excluding weekends and holidays) for an additional fee.

Another way to accelerate the process is to choose our faster filing speeds service.

Amending Articles of Organization

You only need to file your Articles of Organization once. But if you need to make changes later (such as changing your registered agent address), you’ll need to file LLC Articles of Amendment.

If you do need to file an amendment, we have an amendment filing service that can handle it for you as well. Our Worry-Free Compliance service also includes two amendment filings per year.

Professional Limited Liability Companies (PLLCs)

According to current state legal requirements, any LLC in Illinois providing professional services licensed by the Illinois Department of Financial and Professional Regulation (IDFPR) must now be registered as a professional limited liability company or PLLC. Common professions that require a professional license include lawyers, doctors, accountants, and architects. Check with your industry’s state licensing board or agency to determine whether you need to form a PLLC.

Note: We at ZenBusiness do not handle PLLC formation at this time.

Series LLCs

Illinois is also one of the few states that allow Series LLCs. A Series LLC is when you register a main LLC, as well as one or more off-shoot LLCs. A common example of when Series LLCs are applicable is when an entrepreneur owns multiple rental properties and wishes to separate the liability of each property.

Note: We do not offer formation of Series LLCs at this time.

Low-Profit LLCs

Another less-common type of business entity allowed in Illinois is the low-profit limited liability company, or L3C. Similar to a nonprofit, this designation is reserved for LLCs that, according to the Secretary of State, “at all times significantly further the accomplishments of one or more charitable or educational purposes…”

You must indicate your intention to qualify as an L3C in your Articles of Organization. You can learn more about the L3C requirements on the Secretary of State’s website.

Store all your documents in a digital dashboard

If you have us file your Articles of Organization, your paperwork will be available in the ZenBusiness dashboard once the Secretary of State approves your LLC. This dashboard enables you to conveniently store and organize all your important documents in one place.

We also offer a customized business kit to help you keep your business records organized and looking professional.

Member-Managed vs. Manager-Managed

A big decision LLC owners must make is whether to be member-managed or manager-managed. Which choice is right for you is dependent on your situation and preferences.

For instance, many LLCs opt to be member-managed, which means the members (or LLC owners) manage the day-to-day activities for your business.

However, if all of your members don’t have the time or inclination to run the company on a day-to-day basis, you can also adopt a manager-managed setup. In a manager-managed LLC, you appoint one or more members or hire an outside manager to manage your LLC.

Note: If you hire an outside manager, it’s important to scrutinize your candidates carefully and make sure they will run your business honestly, efficiently, and effectively. Also, be sure to spell out exactly how much decision-making power they have in your operating agreement.

Why would I delay my Illinois LLC filing date?

Entrepreneurs will sometimes choose to delay the filing date of their LLC. This is most commonly done if it’s already near the end of the calendar year, and the business doesn’t need to start for a few more months. Most business owners who delay their filing date do so in order to avoid having to start paying taxes until the next calendar year.

In Illinois, your LLC effective date defaults to the date the Secretary of State Department of Business Services “files” your Articles of Organization. However, you also have the option of specifying a later date of up to 60 days in the future.

This is something else we can help you with. When you form your Illinois LLC with us, we give you the option of paying an extra fee to have your LLC’s effective date delayed. (Note: This service is only available from October to January.)

Step 4: Create an operating agreement

The next step is to create an Illinois operating agreement. While not required by Illinois state law, an operating agreement lays out how your LLC will be run.

Illinois Operating Agreement Benefits

The benefits of an LLC operating agreement are extensive. They include:

• Helping you to avoid disagreements over assets and responsibilities
• Giving you the ability to customize company rules and procedures (for instance, without an operating agreement, your LLC management structure will default to member-managed)
• Spelling out the details of how your business will be operated and managed
• Creating a succession plan in case members leave the company or pass away
• Making your business look more legitimate in the eyes of the courts

What should I include in my LLC operating agreement?

Your operating agreement should include all pertinent details about how your business will be run, such as:

• The management structure of your Illinois LLC (member-managed or manager-managed)
• A succession plan in case your members leave or pass away
• Ownership allocation (who gets what share of profits)
• The process for admitting new members
• Who has authority to act on behalf of the business
• Plans for dissolution and winding up

Use an operating agreement template

Trying to brainstorm every little thing you need to include in your operating agreement can seem overwhelming, especially if you’re starting from scratch. That’s why we offer an operating agreement template to help get you started.

Do I need an operating agreement even if I’m the only owner?

Owners of single-member LLCs often wonder if they need an operating agreement, since they are the only owner.

The simple answer is that operating agreements are still helpful. For starters, potential investors, future business partners, and others may want to see your operating agreement.

Furthermore, having an operating agreement could help you out if someone takes you to court to claim that you and your LLC are actually the same entity (and thus go after your personal assets). That’s because, without operating agreements, single-member LLCs tend to look more like sole proprietorships in the eyes of the court. But by creating an operating agreement, you show the court that you’ve taken the time to draw up official internal documents for your business. This helps to further separate your business entity from you as an individual.

Step 5: Apply for an EIN

Finally, you need to obtain an Employer Identification Number (EIN). This is also known as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN). Much like a Social Security Number (SSN) does for individuals or sole proprietors, your EIN identifies your business to the Internal Revenue Service (IRS). Small business owners need this number to do things like pay business taxes, open a business bank account, or hire employees.

Open a business bank account

One of the major benefits of forming an LLC is the separation of your personal assets and business assets. In order to get the most out of this benefit, it’s important that you avoid commingling funds. That’s why you’ll want to open a business bank account for managing the finances of your LLC in Illinois.

To further separate your business and personal expenses, you may even want to take out a business credit card for your LLC.

Manage finances and payments for your Illinois LLC

To further help you start off on the right foot, we even offer a discounted bank account for your new business. This account allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others to use the account, we also offer a banking resolution template to simplify the process.

And for even more help managing your finances, check out ZenBusiness Money. It can help you create invoices, track tax-deductible expenses, receive payments, and transfer money all from the same place.

File your annual report

If you run an LLC in Illinois, you’ll also need to file an annual report each year you’re in business. Annual reports are required by the Secretary of State. This filing will include much of the same information that’s in your Articles of Organization, and will let the Secretary of State know that your LLC still exists and whether anything has changed.

Luckily, this is one more thing we can handle for you with our Illinois Annual Report Filing Service.

Can filing as an S corp lower my taxes?

One of the biggest benefits to forming an LLC is the business structure’s flexibility. From management structure to day-to-day operations, LLCs have a lot of leeway in how they are run.

This flexibility is also apparent in how the business structure is taxed. By default, LLCs are usually taxed as either a sole proprietorship (for single-member LLCs) or a general partnership (for multi-member LLCs). However, LLC owners can also opt to be taxed as a C corp or S corp.

Being taxed as a C corp means you’re subject to double taxation. That said, this option can still save certain LLC owners money by qualifying them for a wide range of tax deductions. For example, insurance premiums can be written off as a tax deduction when filing as a C corp.

On the other hand, filing as an S corp (which is short for “Subchapter S Corporation”) offers both pass-through taxation and the potential to save money on self-employment taxes. It does this by allowing you to be an “employee-owner” and split your income into your salary and your share of the company’s profits. Then, you’ll pay self-employment taxes on your salary, but not your profits. (You’ll still have to meet the rest of your tax obligations for your profits, of course.)

That said, The IRS scrutinizes S corps closely and qualifying to file as one is more difficult because of the additional restrictions. You’re also more likely to get audited as an S corp.

While it’s possible that one of these scenarios will work for you, it’s no secret that taxes are complicated. You should consult with a tax professional before making any decisions for your business.