Registering a business in Illinois is one of the first steps to operating a legal and compliant business in the state. Whether you’re starting a new company or expanding an existing one into Illinois, you’ll need to navigate the business registration process with the Illinois Secretary of State (SOS) and other relevant departments. From selecting a business structure to applying for tax registrations and licenses, Illinois provides various resources to help you formalize your business and comply with state regulations. This article covers everything from choosing the right business entity, filing the required documents, and paying the appropriate fees, to understanding the tax obligations and license requirements. With a streamlined online system and clear guidelines, Illinois makes it straightforward to get your business up and running.
Step 1: Choose Your Business Structure
The first step in the Illinois business registration process is selecting the right legal structure for your business. The structure you choose will affect your personal liability, taxation, and compliance requirements. Illinois recognizes several business structures:
- Sole Proprietorship:
This is the simplest structure, where the business is owned by one person who is personally liable for business debts and obligations. Sole proprietors do not need to register with the Illinois Secretary of State, but they may need to register for local permits and tax IDs. - General Partnership:
A partnership involves two or more people who share the profits, losses, and liabilities of the business. General partnerships must register their business name with the county clerk’s office but do not need to file with the Illinois SOS unless they use a different business name. - Limited Liability Company (LLC):
An LLC provides liability protection like a corporation but with fewer formalities. In Illinois, LLCs are popular because they protect personal assets while offering flexible tax options. You must file Articles of Organization (Form LLC-5.5) with the Illinois Secretary of State. - Corporation:
Corporations are separate legal entities from their owners (shareholders), providing full liability protection but with more regulatory requirements. There are two types: C-Corporations (standard corporations) and S-Corporations (with special tax designations). Corporations in Illinois must file Articles of Incorporation with the SOS. - Limited Partnership (LP) or Limited Liability Partnership (LLP):
These partnerships offer some liability protection to the partners, but they require formal registration with the Illinois SOS. - Nonprofit Corporation:
For organizations with charitable, educational, or religious purposes, a Nonprofit Corporation may be the right choice. Nonprofits need to file specific Articles of Incorporation for Nonprofits with the Illinois SOS and may apply for tax-exempt status.
Step 2: Choose a Business Name
Once you’ve selected a structure, the next step is choosing a unique business name. In Illinois, your business name must be distinguishable from other registered businesses. You can check name availability through the Illinois Secretary of State’s Business Services website:
- Business Name Search: Use the online Corporate/LLC Database Search to see if your desired business name is available.
- Name Reservation: If your preferred name is available, you can reserve it for up to 90 days by filing a Name Reservation Application with the Illinois SOS.
Step 3: Register Your Business with the Illinois Secretary of State
To legally operate in Illinois, most business entities (LLCs, corporations, and partnerships) must register with the Secretary of State. The specific filing requirements depend on your business structure:
- Sole Proprietorship and General Partnerships:
- You do not need to register with the Illinois SOS. However, if you’re using a business name that is different from your legal name, you must register that name with the county clerk’s office as a DBA (Doing Business As) name.
- LLCs:
- File Articles of Organization (Form LLC-5.5) with the Illinois Secretary of State. You can do this online or by mail.
- Filing Fee: $150 for online filings, $250 for paper filings.
- Corporations:
- File Articles of Incorporation (Form BCA-2.10) for domestic corporations. Foreign corporations (those formed in another state) must file Application for Authority to Transact Business (Form BCA-13.15).
- Filing Fee: $150 for domestic corporations.
- Limited Partnerships:
- File Certificate of Limited Partnership (Form LP-210) or Statement of Qualification for LLPs (Form LLP-100) with the SOS.
- Filing Fee: $150.
For all filings, you can submit documents through the Illinois SOS Business Services website, by mail, or in person.
Step 4: Obtain an Employer Identification Number (EIN)
Once your business is registered with the state, you will need to obtain an Employer Identification Number (EIN) from the IRS. An EIN acts like a Social Security number for your business and is required for:
- Hiring employees.
- Opening business bank accounts.
- Filing business taxes.
You can apply for an EIN for free on the IRS website and receive your number immediately.
Step 5: Register for Illinois State Taxes
Most businesses operating in Illinois must register with the Illinois Department of Revenue to pay taxes, such as:
- Sales Tax: Businesses selling goods and certain services must collect and remit sales tax.
- Withholding Tax: If you have employees, you must withhold Illinois income tax from their wages and remit it to the state.
- Other Taxes: Depending on your industry, you may also need to register for additional taxes, such as excise taxes or use taxes.
To register for Illinois state taxes, use the MyTax Illinois portal to apply for a tax account and receive your Illinois Business Tax (IBT) number.
Step 6: Apply for Business Licenses and Permits
Depending on the nature of your business, you may need local, state, or federal licenses and permits to operate legally. The specific licenses you’ll need vary based on your industry and location:
- General Business License: Check with your city or county government to see if you need a local business license.
- Professional Licenses: If you work in a regulated field (e.g., healthcare, real estate, legal services), you may need to obtain a professional license from the Illinois Department of Financial and Professional Regulation (IDFPR).
- Special Industry Permits: Certain businesses, such as restaurants, contractors, or transportation companies, may require special permits or health department inspections.
Use the Illinois Business Information Portal to find out which permits apply to your business.
Step 7: File Annual Reports
Most registered businesses in Illinois, including LLCs and corporations, must file Annual Reports with the Illinois Secretary of State to remain in good standing.
- Due Date: The annual report is due before the first day of the anniversary month in which your business was formed.
- Filing Fee: $75 for LLCs, $100 for corporations.
Failure to file your annual report on time can result in late fees or the dissolution of your business.