How to Start an LLC in Illinois
How to Start an LLC in Illinois
Forming an Illinois LLC comes down to one core filing: the Articles of Organization with the Illinois Secretary of State, Department of Business Services. The filing fee is $150, standard processing runs about 10 business days, and you can pay extra for same-day-ish turnaround. Everything else, the registered agent, the operating agreement, the EIN, the tax registrations, exists to support that one document and keep your LLC in good standing after it's approved. Here's exactly what to do, in order, with the real Illinois-specific fees and deadlines attached.
What You'll Need to Form an Illinois LLC
Gather these before you start the online filing so you're not stopping mid-application:
- A checked and available LLC name that includes "Limited Liability Company," "LLC," or "L.L.C."
- A registered agent with a physical Illinois street address (no P.O. boxes)
- Your principal business address
- Member or manager names and addresses for the Articles of Organization
- $150 for the standard filing fee (or $250 total if you want 24-hour expedited service)
- An EIN application ready to file with the IRS once your LLC is approved (free, done separately at irs.gov)
- A plan for an operating agreement, even though Illinois doesn't require you to file one
How to Start an LLC in Illinois: Step-by-Step
Step 1: Search and Reserve Your LLC Name
Before you file anything, search the Illinois Secretary of State's Business Entity Search to confirm your desired name is distinguishable from every other entity already on file. Illinois requires the name to include "Limited Liability Company," "LLC," or "L.L.C.," and it cannot contain words reserved for corporations, such as "Corporation," "Corp.," "Incorporated," "Inc.," "Ltd.," "Co.," "Limited Partnership," or "L.P."
One detail that trips people up: if an Illinois LLC gets administratively dissolved, its name stays off-limits to everyone else for three full years after the dissolution notice. If your first-choice name matches a recently closed business, that's likely why it's blocked.
If you're not ready to file the Articles of Organization yet but want to lock in the name, you can reserve it for 90 days for a $25 fee. Details are on the Secretary of State's name reservation form (LLC-1.15).
Step 2: Appoint an Illinois Registered Agent
Every Illinois LLC must maintain a registered agent, an individual who lives in Illinois or a business entity authorized to transact business in Illinois. The registered office has to be a real street or road address (a rural route and box number works; a P.O. box alone does not), and it must match the registered agent's business office address exactly. The Secretary of State mails everything, including your annual report reminder, to this address, so don't treat it as a throwaway field.
You can serve as your own registered agent if you have an Illinois street address and are reliably available during business hours. If you don't want your home address on the public record, or you travel a lot, a commercial registered agent service typically runs $100 to $300 a year. If you ever need to change your agent or registered office later, that's a $25 filing (Form LLC-1.36/1.37).
Step 3: File the Articles of Organization
This is the actual formation step. File Form LLC-5.5, Articles of Organization, with the Illinois Secretary of State. You can file online through the Secretary of State's LLC Articles filing application or by mail.
Fees for online filing:
- $150 for standard processing, about 10 business days
- $250 total ($150 filing fee plus a $100 expedite surcharge) for 24-hour service
- If you're forming a series LLC, expect $400 standard or $500 for 24-hour service instead
On paper filings the expedite surcharge is $100, but you have to request it in person at the Springfield or Chicago office; mail-in expedite requests aren't accepted. Once the Articles are approved, you're a legally formed Illinois LLC and you'll want to save the confirmation for your bank and the IRS.
Step 4: Write an Operating Agreement
Illinois doesn't require you to file an operating agreement with the state, but skipping one is a mistake. This internal document spells out ownership percentages, how profits and losses get split, how decisions get made, and what happens if a member leaves or the LLC dissolves. Banks frequently ask for it when you open a business account, and without one, Illinois's default LLC statute governs your business instead of your own terms. Keep a signed copy with your business records, not with the state.
Step 5: Get an EIN from the IRS
An Employer Identification Number (EIN) is free and comes directly from the IRS, not the state of Illinois. You'll need it to open a business bank account, hire employees, and file federal taxes. Apply online at irs.gov after your Articles of Organization are approved; the online application is typically issued immediately.
Step 6: Register for Illinois Taxes
Most Illinois LLCs need to register with the Illinois Department of Revenue (IDOR) through MyTax Illinois using Form REG-1. Registration is free and generally processes in one to two business days online, or four to six weeks if submitted by mail. This is where you set up sales tax collection if you're selling taxable goods or services (the state sales tax rate is 6.25%, with local additions common), and where you register for employer withholding if you'll have employees.
On the income tax side, how your LLC is taxed determines what you owe:
- By default, a multi-member LLC is taxed as a partnership and owes Illinois's 1.5% personal property replacement tax on net income (no separate Illinois LLC income tax beyond that).
- A single-member LLC is a disregarded entity by default; income flows to your personal return, taxed at Illinois's flat 4.95% personal income tax rate.
- If your LLC elects corporate tax treatment, it owes the 7% corporate income tax plus the 2.5% replacement tax, an effective 9.5% on net income.
Illinois does not impose a franchise tax on LLCs. Confirm your specific registration requirements (local licenses, industry-specific permits) with IDOR at tax.illinois.gov, since requirements vary by business activity and this list isn't exhaustive.
Step 7: File Your Annual Report (Every Year, Ongoing)
Illinois LLCs must file Form LLC-50.1, the Limited Liability Company Annual Report, every year, along with a $75 fee. It's due before the first day of your LLC's anniversary month, meaning the month your Articles of Organization were originally filed. The Secretary of State mails a pre-filled report to your registered agent about 45 days ahead of the deadline, which is one more reason your registered agent address needs to be current and reliable.
Miss the deadline and you're not immediately in trouble, but if you haven't filed within 60 days after the due date, a $100 late penalty kicks in. Keep filing this every year; it's the main thing standing between your LLC and administrative dissolution.
Illinois LLC Costs at a Glance
| Item | Cost | Frequency |
|---|---|---|
| Articles of Organization (standard) | $150 | One-time |
| Articles of Organization (24-hour expedite) | $250 total | One-time, optional |
| Name reservation | $25 | One-time, optional (covers 90 days) |
| Registered agent (if using a service) | $100 to $300 (confirm with your provider) | Annual |
| Annual Report (Form LLC-50.1) | $75 | Every year |
| Late annual report penalty | $100 | If filed more than 60 days late |
| Registered agent/office change | $25 | As needed |
Common Mistakes to Avoid
- Using a P.O. box as your registered office. The Secretary of State will reject it. You need a real street or rural route address.
- Forgetting your annual report is tied to your anniversary month, not the calendar year. Illinois doesn't use a fixed date like December 31 for everyone; it's based on when you originally filed.
- Assuming an LLC name is available just because a similar business closed recently. Dissolved LLC names stay reserved for three years.
- Skipping the operating agreement because it's not legally required. Banks and future business partners will ask for it, and without one, Illinois's default statute controls your internal affairs.
- Mailing an expedite request for the Articles of Organization. Paper expedite service is only available in person at the Springfield or Chicago Secretary of State office.
- Confusing the Secretary of State filing with tax registration. Filing your Articles of Organization forms the LLC; it doesn't register you with the Illinois Department of Revenue. That's a separate step (Form REG-1 through MyTax Illinois).
What to Expect After Filing
Once your Articles of Organization are accepted, standard online filings are generally processed in about 10 business days, though this can vary with the Secretary of State's current filing volume, so treat it as a typical timeframe rather than a guarantee. If you paid for 24-hour service, approval is typically much faster, but confirm current turnaround on the Secretary of State's Business Services page before assuming a specific date. After approval, most LLCs can generally expect to receive their EIN from the IRS the same day they apply online, and IDOR tax registration through MyTax Illinois is typically processed within one to two business days.
Do You Need an Illinois Business License?
Illinois doesn't issue one general statewide business license that covers every LLC. What most businesses actually need is the IDOR tax registration described in Step 6. Beyond that, specific regulated activities, such as liquor sales, child care, cosmetology, or professional services, require licensing through the Illinois Department of Financial and Professional Regulation or another relevant agency. Many Illinois cities and counties also layer on their own local business license or permit requirements, so check with your city or county clerk in addition to the state.
Where to Get Free Help
The Illinois Small Business Development Center (SBDC) Network offers free, one-on-one advising for LLC formation, business planning, and financing questions, and is a solid first stop if you want a second set of eyes on your filing before you submit it.
Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. Illinois filing fees, forms, and requirements can change, and individual circumstances vary. Before filing, confirm current fees and requirements directly with the Illinois Secretary of State and the Illinois Department of Revenue, and consult a licensed attorney or CPA for guidance specific to your business.