How to Form an LLC in Illinois

The filing fee to form an LLC in Illinois is $150, paid to the Illinois Secretary of State. You can file your Articles of Organization online or by mail. Illinois is moderately priced compared to other states for LLC formation.

Standard processing for an Illinois LLC takes approximately 5 to 10 business days. Online filings tend to be processed more quickly. Illinois also offers expedited processing for an additional fee, which can reduce the turnaround to one or two business days.

Illinois LLCs must file an annual report with the Secretary of State. The filing fee is $75 per year. The annual report is due before the first day of the anniversary month of your LLC's formation. Failure to file results in a penalty and can eventually lead to involuntary dissolution.

Illinois requires every LLC to designate a registered agent with a physical address in the state. The agent can be an individual residing in Illinois or a corporation authorized to transact business in the state. The registered agent must maintain a street address (not a P.O. box) and be available during business hours to accept legal documents.

Illinois does not legally require LLCs to have a written operating agreement, though the Illinois Limited Liability Company Act acknowledges their importance. An operating agreement is strongly recommended to define the roles and responsibilities of members, establish profit-sharing arrangements, and set rules for adding or removing members.

Your Illinois LLC needs an EIN if it has more than one member, hires employees, or elects corporate tax treatment. Illinois businesses with employees must also register with the Illinois Department of Revenue and the Illinois Department of Employment Security. You can get an EIN for free through the IRS website.

Illinois has a flat 4.95% individual income tax rate, and the combined corporate rate is approximately 9.5% (including a corporate income tax and a personal property replacement tax surcharge). A sole proprietorship has no formation costs but provides no liability protection. An LLC with pass-through taxation is taxed at the 4.95% individual rate. An S-Corp election can reduce self-employment taxes on higher earnings. Be aware that Illinois also imposes a personal property replacement tax of 1.5% on S-Corp and partnership income.

Illinois imposes a personal property replacement tax (PPRT) on partnerships, S-Corps, and certain other entities. For partnerships and LLCs taxed as partnerships, the PPRT rate is 1.5% of net income. For S-Corps, the rate is also 1.5%. This tax is in addition to the individual income tax that members pay on pass-through income. The PPRT is an important consideration when comparing entity structures in Illinois.

Yes, you can use your home address as the principal office address for your Illinois LLC. You can also serve as your own registered agent using your home address, as long as it is a physical street address in Illinois. However, keep in mind that your registered agent address becomes public record. Many business owners prefer to use a professional registered agent service for privacy reasons.