COMPLETE GUIDE TO FORMING AN LLC IN ILLINOIS (2025)
Everything you need to know about forming an LLC in Illinois, from choosing a name to ongoing compliance requirements.
Forming a Limited Liability Company (LLC) in Illinois provides business owners with liability protection while maintaining operational flexibility. The Illinois Secretary of State oversees the LLC formation process, requiring specific steps and documentation to establish your business legally.
📋 TABLE OF CONTENTS
What Is an Illinois LLC?
An Illinois Limited Liability Company combines the liability protection of a corporation with the tax flexibility of a partnership. According to the Illinois Limited Liability Company Act (805 ILCS 180), an LLC separates your personal assets from business debts and obligations. This structure protects your personal property if your business faces lawsuits or financial difficulties.
KEY BENEFITS:
- ✓ Personal asset protection from business liabilities
- ✓ Pass-through taxation (avoiding double taxation)
- ✓ Flexible management structure
- ✓ Enhanced credibility with customers and vendors
- ✓ Simpler compliance requirements than corporations
Step 1: Choose a Distinguishable Business Name
Your Illinois LLC name must meet specific requirements set by the Illinois Secretary of State's Business Services Department.
NAMING REQUIREMENTS
Your LLC name must be distinguishable from existing business names registered in Illinois. The Illinois Limited Liability Company Act requires your name to differ from any domestic or foreign LLC name, corporate name, or reserved name currently on file with the Secretary of State.
REQUIRED DESIGNATORS:
- • "Limited Liability Company"
- • "LLC"
- • "L.L.C."
NAME AVAILABILITY
Search existing business names through the Illinois Secretary of State's business name database before filing your Articles of Organization.
OPTIONAL NAME RESERVATION:
Reserve your name for 90 days by filing an Application to Reserve a Name with a $25 fee.
Step 2: Appoint a Registered Agent
Every Illinois LLC must designate a registered agent to receive legal documents and official correspondence. The Illinois Secretary of State requires this agent to maintain a physical Illinois address and be available during regular business hours.
REQUIREMENTS
- • Illinois resident aged 18 or older
- • OR business entity authorized in Illinois
- • Physical Illinois address required
- • Available during business hours
YOUR OPTIONS
- 1. Designate yourself (no cost)
- 2. Appoint business partner/employee
- 3. Hire professional service ($50-$300/year)
Step 3: File Articles of Organization
The Articles of Organization create your Illinois LLC legally. You submit this document to the Illinois Secretary of State Department of Business Services.
REQUIRED INFORMATION
- • LLC name (with required designator)
- • Registered agent name and address
- • Principal place of business
- • Management structure
- • Manager/member names and addresses
- • Organizer signature
FILING METHODS
ONLINE FILING (RECOMMENDED)
File through the Illinois Secretary of State's online system for immediate processing and instant confirmation.
MAIL FILING
Send Form LLC-5.5 to:
Illinois Secretary of State
Department of Business Services
Limited Liability Division
Springfield, IL 62756
PROCESSING TIMES
Step 4: Obtain an Employer Identification Number (EIN)
Most Illinois LLCs need a federal Employer Identification Number from the Internal Revenue Service. The EIN functions as your business's Social Security number for tax purposes.
⚠️ IMPORTANT WARNING
The IRS never charges for EINs. Beware of third-party websites that charge fees for EIN applications. Apply FREE directly through the official IRS website.
WHEN YOU NEED AN EIN
The IRS requires an EIN if your LLC has:
- • Multiple members
- • Employees
- • Files certain tax returns
- • Withholds taxes on non-wage income
HOW TO APPLY
FREE ONLINE APPLICATION
Apply through the IRS online application. Available Monday-Friday, 7 AM - 7 PM ET. Get your EIN immediately upon approval.
Alternative: Complete Form SS-4 and submit by mail or fax.
Step 5: Create an Operating Agreement
An Operating Agreement establishes your LLC's internal rules and ownership structure. While the Illinois Limited Liability Company Act Section 15-5 does not require Operating Agreements, this document protects your business interests and clarifies member relationships.
WHY YOU NEED AN OPERATING AGREEMENT
- • Proves LLC operates as separate legal entity
- • Strengthens liability protection
- • Required by most banks to open accounts
- • Prevents disputes between members
WHAT TO INCLUDE
- • LLC name and registered agent
- • Business purpose
- • Member names and addresses
- • Capital contributions
- • Ownership percentages
- • Management structure
- • Voting procedures
- • Profit/loss allocation
- • Member addition/removal
- • Dissolution terms
MANAGEMENT STRUCTURES
MEMBER-MANAGED
All owners participate in daily operations and decisions.
MANAGER-MANAGED
Specific managers handle operations while others are passive investors.
Step 6: Register for Illinois Business Taxes
Illinois LLCs must register for state taxes depending on their activities. The Illinois Department of Revenue administers state business taxes.
SALES TAX
Retail businesses must register through the Illinois Department of Revenue. Registration is free and available online.
WITHHOLDING TAX
LLCs with employees must register for Illinois withholding tax and withhold state income tax from wages.
INCOME TAX
Most LLCs use pass-through taxation. Partnerships file Form IL-1065 for informational purposes.
Step 7: File Annual Reports
Illinois requires all LLCs to file annual reports to maintain good standing. The Illinois Secretary of State processes these reports.
FILING REQUIREMENTS
- • DUE DATE: First day of anniversary month
- • METHOD: Online filing recommended
- • PROCESSING: Immediate (online) vs 10-15 days (mail)
LATE FILING PENALTIES
- • $100 penalty if filed more than 60 days late
- • Administrative dissolution for failure to file
Illinois LLC Costs Summary
INITIAL COSTS
ANNUAL COSTS
Additional Resources
ILLINOIS SECRETARY OF STATE
Mon-Fri, 8 AM - 4:30 PM
FEDERAL & STATE TAXES
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Disclaimer: This guide provides general information about forming an Illinois LLC. Business formation involves legal and tax considerations specific to your situation. Consult with an attorney or tax professional for advice tailored to your circumstances.