Form a Corporation in Illinois.

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Choosing a Corporation Name

The name you choose for your new Illinois corporation must be distinguishable from all other registered and reserved Illinois business entities. Like other states, Illinois state law mandates the use of some words and phrases, but restricts the use of others when it comes to business names.

For instance, your new corporation’s name must include one of the following words or their abbreviation at its end, or equivalent terms in another language: “Corporation,” “Incorporated,” “Company,” or “Limited.” It also must contain the word “trust”, “pawners,” or “cooperative” if the corporation is conducting these types of business.

The name must be made up of letters or symbols which the secretary of state’s office can reproduce, and it must be the name under which the corporation will conduct business, unless it has selected an assumed name (“doing business as”) in compliance with Illinois law. Assumed corporate names must be periodically renewed with the secretary of state’s office.

Additionally, your new Illinois corporation’s name must not contain terms that state or imply that the corporation is authorized to conduct business in insurance, assurance, indemnity, savings deposits, banking, or as a corporate fiduciary, unless it has been so authorized by the proper state agency.

Available corporate names can be reserved with the state for up to 90 days for $25

Articles of Incorporation

Before actually conducting business, Illinois state law requires that a new corporation’s articles of incorporation be filed with the state Secretary of State. The articles must be signed by at least one incorporator, who can be either a natural person at least 18 years old or a corporation. The incorporator delivers the articles of incorporation to the Secretary of State’s office, and also establishes the number of initial directors in either the articles or at the organizational meeting. The articles must include:

  • The incorporators’ names and addresses
  • The corporate purpose-but, since Illinois allows a corporation to be formed for any legal business activity, this can be a general business purpose
  • The number of shares of each class of stock the corporation is authorized to issue
  • The number of shares proposed to be issued, as well as the consideration or payment to be received for such shares

Unlike some other states, Illinois does not require the names of the corporation’s initial directors to be listed in the articles of incorporation.

Unless stated otherwise, the state assumes that 100 percent of the corporation’s paid-in capital (the amounts paid by shareholders for their initial shares) is located within Illinois; this is frequently the situation for most small, newly-formed corporations. This means that your corporation’s state franchise tax will be calculated on the basis of the corporation’s entire paid-in capital. A tax professional can tell you if you should allocate property and business outside Illinois, and thereby reduce your Illinois franchise tax.

Additional provisions may also be included in the articles, such as:

  • Additional qualifications for directors
  • Specific provisions to regulate the corporation’s internal affairs
  • Voting majority requirements
  • An estimate of the value of all property to be owned by the corporation in the following year, both in and out of Illinois

There is a minimum $175 fee-a $150 filing fee and a minimum $25 franchise tax. The franchise tax part of the fee is computed at a rate of $1.50 per $1,000 of the corporation’s paid-in capital, with a $25 minimum. “Paid-in capital” is the total amount of payment the corporation expects to receive from the initial shareholders when stock is issued to them, minus any commissions or expenses incurred in connection with the issuance of shares. The corporation can have paid-in capital of up to $16,667 and pay the minimum $25 franchise tax.

Registered Agent and Office

Illinois corporations must maintain a registered agent within the state-a person or office designated to receive official state administrative and legal correspondence. The agent must have the same business office address as the registered office and be either an individual residing in the state or a corporation with the authority to conduct business in Illinois.

A copy of the filed articles of incorporation must be recorded with the clerk of the county where the resident agent resides.


Bylaws describe the corporation’s basic operating principles from both the managerial and legal perspectives. Corporations must maintain their bylaws at their main executive office, but are not required to file them with the state.

The incorporators or board of directors should adopt the corporation’s bylaws at its initial meeting-making sure that they do not conflict with the articles of incorporation-and keep them updated. The corporation’s board of directors can adopt, amend, or repeal bylaws, unless the articles of incorporation reserve this right to the shareholders.

Corporate bylaws should include at least the following:

  • How, when, and where shareholders and directors meetings are held
  • What authority directors have, how many there are, and how long they serve
  • How consensus on major decisions is reached with and without meetings
  • Duties and responsibilities of officers and how long they serve
  • How stock is issued
  • Requirements for providing annual financial information to shareholders


Officers of the company must be listed in the bylaws or elected by the board. The secretary has authority to certify the bylaws, resolutions and other corporate documents. An officer may simultaneously hold more than one corporate office unless otherwise prohibited by the corporation’s bylaws.

Requiment Reports

The corporation must file an annual report with the Illinois Secretary of State within the 60-day period prior to the month of incorporation. This report must include:

  • The corporation’s name
  • Its principal office address
  • The names and addresses of the corporation’s directors and officers
  • The address of its registered office
  • The name of its registered agent at that (in-state) office
  • Information about stock share classes, share volume, and paid-in capital
  • Information about the corporation’s property value and/or location
  • Information about the corporation’s status as a woman- or minority-owned business


The Illinois corporate income tax rate varies based on the amount of the corporation’s income and other factors. The state requires payment of a franchise tax and license fee as mentioned above for the exercise of franchises in the state; this is usually due at the time the corporation files its share issuance reports.

The state of Illinois recognizes “S corporation” status. A “subchapter S” corporation or “S-corporation” is one that chooses to be treated as a pass-through entity for tax purposes, meaning that the tax-related information for the “S-corp” is filed as part of the owner’s individual income tax.

Learn more about incorporating in Illinois

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The Basics To Get You Started Preliminary company name clearance and filing of Articles of Organization.

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EIN / Tax ID Number Providing an EIN is required to open a
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Personalized Operating Agreement Includes most common provisions to protect members from liability

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Commonly Asked Questions For Starting a Illinois Corporation

How is a Corporation Taxed?
Unlike many other business entities in which the profits pass through to the owners' personal tax return (e.g. LLCs, S Corporations, etc.), the C Corporation is a completely separate taxable entity. The C Corporation pays federal taxes on the net profits (after all expenses, including salaries and bonuses) of the business by filing the 1120 form with the IRS. The after tax profits can be paid out to the owners (shareholders) in the form of dividends, or retained for reinvestment of the business. The first $50,000 of net income is only federally taxed at 15% rate, and the next $25,000 is taxed at a 25% rate. Different states have different rules on how they tax corporations.
What is the Management Structure of an Corporation?
An LLC is typically managed by its members/owners (referred to as member-managed). In that respect an LLC is unlike a corporation, which has a much more rigid and defined management structure, including directors and officers. All owners of the LLC are typically referred to as members, and they can have control and voting interest proportional to their ownership interest, or in proportions different from their ownership interest; however the members agree.
Are Non-U.S. Residents Allowed to Own a Corporation or LLC?
There are no citizenship or residence requirements for ownership of a C Corporation or an LLC. The S Corporation however does not allow nonresident aliens to be shareholders (owner), but any US citizen or resident alien may be a shareholder (owner). You would, of course, require an in state street address for the state to forward official legal and tax correspondence including service of process, known as the registered agent address, but neither residency nor citizenship is required for ownership of a C Corporation or an LLC.
Can I form an Corporation with just one member?
There was a time when almost every state required the LLC to have two or more members, but that is no longer the case. This important change came in response to revised IRS regulations that clearly permitted single-member LLCs. As a result, in most states, if you plan to be the sole owner of a business and you wish to limit your personal liability, you can choose between forming a corporation or an LLC.
What is an Operating Agreement?
The operating agreement is akin to a partnership agreement for a General Partnership or Limited Liability Partnership (LLP). It is an internal contract amongst the members/owners of the LLC, and it lays out such things as ownership interest, member responsibilities, accounting method, adding or removing members, terms for concluding the LLC, etc. It is generally not required by a given state for forming an LLC (with the exception of New York), although it is certainly recommended. When dealing with private companies for financing issues (loans, mortgages, etc.) it may be required by that company. A customizable operating agreement is included with the LLC/Corp Kit.
Can another business entity be a member of an Corporation?

In the majority of states, The members of an LLC can be individuals, corporations, or other LLCs. These members of the LLC can be out of state residents or even foreign nationals. Furthermore there is no limit to the amount of members that an LLC can have.

The flexibility of an LLC in contrast to an S Corporation is stark considering the S corporations are limited to 75 shareholders who must either be United States citizens or Lawful Permanent Residents.

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