Guide on How to Form an LLC in Illinois: 6 Steps to Follow

When you decide to create an Illinois LLC there will be certain rules you will need to make sure to follow to ensure your business is set up correctly and following all guidelines in place by the state. There will be a checklist of things you need to complete to have your business in good standing and enjoy the many advantages LLCs offer to business owners such as liability protection. LLCs are one of the most popular businesses to form due to the ease of formation, flexibility of ownership, and protections they grant to the owners of the business.

In Illinois, forming an LLC will require you to follow a checklist of things to correctly complete this process. This checklist will include:

1. Choosing a business name - Your business name is required to be unique and distinguishable from other active businesses in the state of Illinois, include a designator such as "LLC" or "Limited Liability Company", and not be currently in use by any businesses in the state.

2. Appoint a registered agent - All Illinois LLCs will need to appoint a registered agent to their business to be responsible for receiving any service of process. This person will need to be at least 18 years old, have an active address in Illinois, and be available during regular business hours (Monday-Friday 9am-5pm).

3. Submit your Articles of Organization - The Articles of Organization form will officially register your LLC in Illinois, and outline your business information, registered agent information, and ownership information.

4. Draft an operating agreement - Operating agreements are not required for Illinois LLCs, however they are highly recommended for businesses to outline the processes for how they operate and are managed

5. Obtain an EIN - The IRS will issue you an EIN for your business, and this number will be used for filing taxes, hiring employees, and opening a business bank account

6. Maintain ongoing good standing - Once your business is formed, you will be required to file annual reports each year and register for any industry specific licenses required to ensure you stay in good standing

This guide will cover the process of how to form an LLC in Illinois business owners will need to follow, including all guidelines and that set by the state. You can choose to submit these documents yourself or you can have a service like Firstep complete this process for you. Firstep can complete and submit all these requirements for you, so you are able to focus on your business operations instead. If you would like to do this on your own, this guide will give you the tips and information needed to correctly set your business up from the start.

Step 1: Choosing a Business Name

The first step of forming a business will be to choose a business name for your new LLC in Illinois. Your business name will need to be unique and distinguishable enough from other active businesses in the state. This is a very important aspect of the business formation process as your business name will be the first thing potential customers will see when interacting with your LLC. Also, it makes things easier when your business name relates to your business operations which can make it more likely for customers to remember your name and become repeat customers.

Your LLC's name will be required to have certain designators such as "LLC" or "Limited Liability Company",and to form an LLC and choose a name that is available you will need to ensure there are no conflicts with your chosen name. Illinois holds names for 3 years once a business falls out of good standing, so you need to be sure there will be no issues with your chosen name. On the form for submitting your Articles of Organization, you will enter your name and there will be a page to check this name compared to other active businesses in the state. You will need to review these names and check a box to affirm there are no conflicting names.

Step 2: Appoint a Registered Agent

After you have chosen your business name, your next step before forming your new LLC will be to appoint a registered agent to your business. A registered agent will be responsible for receiving any service of process that is sent to your business. These types of documents will be any notice of a lawsuit against your business, as well as any important documents sent to your business by the Secretary of State. You can appoint anyone as your registered agent, but they will need to meet certain requirements set by the state to legally be appointed as your registered agent. These requirements will include:

• Be at least 18 years old

• Have a current and active address in the state of Illinois

• Be available during regular business hours (Monday-Friday 9am-5pm)

Your registered agent can be anyone who meets these requirements. You can act as your own registered agent, appoint a trusted friend or family member, or you can hire a service like Firstep to be your agent. It's important to be aware that if you choose to be your own registered agent the address you listed will be on your formation documents, which are public information. If you value privacy and would rather not list your address, you can appoint someone you know or hire a registered agent service to avoid listing your personal address. This also is helpful if you are a business owner who is mobile or has multiple locations, as you will not be able to meet the requirement of being at your listed address from 9am-5pm each day.

Step 3: Submit Your Articles of Organization

Now that you have chosen your business name and your registered agent, you are now ready to submit your Articles of Organization to officially form your LLC in Illinois. To do this, you will need to go to the Illinois business page, navigate to the business services tab, and select start a business. You will need to scroll down and select organize a Limited Liability Company, and you will be directed to the Articles of Organization form.

This form will start by asking you if you want to start a standard LLC or an LLC with the ability to establish series. Most LLCs will be standard, but be sure to decide what kind you would like before starting this process. After this, you will now enter your business name with designators. As mentioned before you will be shown a list of names that are similar, and review them to ensure there are no conflicts with your chosen name. Once you have agreed there are no conflicts, you will move on to entering your principal office address information. Next, will be your registered agent information. This address for your registered agent will need to be an active address in Illinois.

After you have verified the registered agent and address information is correct, you will be asked to enter your manager information. This will include the first name, last name, and address of each member. Then, you need to enter the organizer information who is authorized to form the LLC. Finally, you will be taken to the overall review page where you can check all information you have entered on this form is correct.

The processing time for an Articles of Organization in Illinois will typically be around 10 days to be reviewed. You are able to submit this form on your own, or have Firstep complete this for you. In total, the cost for submitting the form on your own will be $153 including the online processing fees. Once your submission has been approved, you will receive an email notification to the email provided on the payment information page that contains your certified documents.

Step 4: Draft an Operating Agreement for Your Limited Liability Company

With your Illinois LLC officially formed, a suggested next step will be to draft an operating agreement. These are not legally required in Illinois, but they are highly recommended as they grant businesses many advantages. An operating agreement outlines the roles and responsibilities of the business owners, the ownership percentages, processes for how your business will operate, voting rights of members, and more. These documents are useful because they detail in writing these processes and ensure your business is following a standardized process for these operations.

As your business grows, it is helpful to have the operating agreement to determine if your LLC will be member managed or manager managed, the process for how members are added or removed, and the process for how the business will be dissolved if members have chosen to do so. Operating agreements are useful to have a set of clear, written procedures for specific situations that will occur throughout the lifespan of your LLC. These documents also help to settle and avoid disputes between ownership by having steps to take in place when this happens, and also by having these steps in writing helps to avoid disputes as members are aware of the standardized processes in the LLC.

Step 5: Obtain an EIN (Employer Identification Number)

After forming your LLC and drafting an operating agreement, your business will need to obtain an EIN as this will be required for multiple business operations. An EIN, or employer identification number, will essentially be your business's social security number. These numbers are specific to your business, and each business will only be able to get one number. Since your EIN does not need to be renewed, it's important to keep track of your EIN documents and number to avoid the long process of retrieving your EIN down the road.

Your EIN will be issued by the IRS, and you will need to ensure to enter all information exactly as it appears on your Articles of Organization for approval. An EIN number will be used for filing taxes, hiring employees, and opening a business bank account. For most businesses you will need to complete these processes, and an EIN is required to do this.Firstep is able to obtain your EIN for you or you are able to obtain this yourself directly through the IRS. If you do end up forgetting your EIN number or losing the documentation, you can still retrieve this number through the IRS but it will typically have a long processing time. You will need to submit specific forms to the IRS and prove you are the owner of the business you are trying to retrieve the number for, and this will have varying processing times of a few weeks to a few months depending on how busy the IRS is at the time.

Step 6: Maintain Ongoing Good Standing

Now that your LLC has been officially formed with the state of Illinois, the most important thing you will need to continue to do is keep your business in good standing. This will be done through filing annual reports and registering for specific business licenses required by your industry.

Annual Reports

All Illinois LLCs will be required to file annual reports each year to update their business information and maintain their good standing. These reports will allow business owners to review and change any outdated business information such as their principal office address, registered agent information, and ownership information. Keeping this information updated ensures your business will stay in good standing, as well as filing annual reports will renew your business registration each year. The annual reports for Illinois LLCs will be due by the end of the month before your original filing month. For example, if you formed your business on July 10th your annual report due date will be June 30th.

These reports will cost $75 each year if you choose to do them on your own, or you can have a service like Firstep take care of your annual reports each year to ensure you do not miss any report. It's important to stay up to date on your annual report filings, as missing reports can lead to additional fines and fees imposed on your LLC. If you miss consecutive annual reports, your business will be at risk of being administratively dissolved. This will cause you to file for a reinstatement which will have additional fees on top of catching up on your missed annual reports.

Business Licenses

Depending on the industry your business is in you may need to register for certain business licenses to stay compliant with all Illinois state guidelines. These business licenses are typically filed at the local level, so it's important to be aware if your industry will be required to file these once you have formed your LLC. Typically the industries that are needed to register for these will be professional services, including healthcare, construction, law, or insurance. You will need to have these licenses before conducting business to stay compliant, so once you form your new LLC you will need to check to see if you need to complete this step or not.

FAQs on LLCs in Illinois

Where do I go to submit my Articles of Organization and file annual reports for my LLC in Illinois

To submit your Articles of Organization in Illinois you will need to go to the Illinois business page to complete the form. After your business has been approved, you will be required to file annual reports each year, which is done through the same business portal and selecting file annual report instead of form a business.

Is creating an operating agreement legally required by the state of Illinois

No, operating agreements are not legally required for your LLC. However, these documents are extremely helpful in outlining the processes for operations, management, voting, and disputes among ownership of the LLC. You may also be asked to provide your operating agreement when opening a business bank account to show you are a legitimate business and operating legally.

Am I able to be my own registered agent if I don't live in Illinois

If you do not have an active and current address in the state of Illinois you are not able to be a registered agent. If you have run into this problem, then you will have 2 options. First you will have to appoint a trusted friend or family member, only if they have a current address in Illinois. Second, you can hire a registered agent service such as Firstep to be your registered agent as they will be able to meet all requirements for this role.

When will my annual report be due for my LLC in Illinois

If you have an LLC in Illinois your annual report due date will be by the end of the month before your original filing month. This can sound confusing, so for example if you formed your business on July 24th then your annual report due date will be June 30th.

Can I form an LLC in Illinois if I don't live in the state

Yes, you can still form an LLC in Illinois if you don't actually live in the state. However, you will need to have a registered agent that is able to meet all requirements to be able to get your Articles of Organization approved.