Form an LLC in Illinois.

Step One: Pick a Name For your LLC

The first step to forming your LLC is choosing a name for your business. The name must not be the same as another LLC, corporation or other business entity already registered in the state. A simple way to make sure your name is available is to do a name search on the Illinois state website.

Here are some other tips for naming your LLC:

• Your business name must include LLC, or the words Limited Liability Company.
• You cannot use words that imply your business is authorized to be a fiduciary business, unless it is. These restricted words include “bank,” “trust” and “trustee.”
• You cannot use words that would mistake your business for a federal agency, such as “treasury.”
• Check to see if there is a domain available that matches your potential name.

Step Two: Create Your Articles of Organizationn

Now that you have thought of a good name for your LLC, the next step is creating and filing your articles of organization. The state fee to file in Illinois is $500. Incfile makes filing your articles of organization super easy.

The Articles of Organization include:

• Your LLC Name.
• Address of principal place of business. (Not a P.O. box.)
• Date you want it to be filed.
• Name and address of registered agent.
• Purpose(s) for which your LLC is organized.
• Names of manager(s) and members.

Registered Agents in Illinois

It is required that every LLC filed in the state of Illinois have a registered agent. The agent must be in-state. The purpose of an agent is to receive and send paperwork on behalf of your company.

• An agent can assist you if any legal issues occur.
• An agent keeps important documents in case of a theft or natural disaster.
• An agent will give you privacy because you won’t have to provide your home address.

Incfile provides Registered Agent services for Illinois LLCs FREE for your 1st year in business.

Step Three: Create Your Operating Agreement

Once you have completed your articles of organization, you will need to create an operating agreement. While an operating agreement is not mandated by the state of Illinois, it is a crucial legal document that explains ownership and day-to-day operating procedures for your company. It essentially serves an internal contract for members and owners.

An operating agreement should include:

• A list of LLC members.
• How much each member has invested.
• How the profits will be divided among members.
• How much “voting power” each member holds.
• How new members will be added or removed.
• Information about meeting and voting rules.
• Any restrictions on amending the operating agreement.

Operating agreements are an important way to have all the details of your LLC written out to avoid potential legal issues. You do not need to file this agreement with the state.

Who is a Member in Illinois?

LLC owners are usually referred to as members. An LLC must have at least one member, but there is no maximum. To become a member, an individual must make some kind of contribution to the business, either by paying cash, transferring property, or by assuming an obligation to do so. Members have voting and control over the company. The procedure for becoming a member and resigning should be outlined in the operating agreement.

Ongoing Requirements for an LLC in Illinois

In order to stay in good standing with the state, Illinois requires all LLCs to provide an annual report within 60 days of the first day of the anniversary month of your LLC. The cost is $300 to file online. Incfile will send you reminder emails before the due date.

Illinois Tax Information

In many states an LLC can be a “pass-through entity,” meaning the LLCs do not pay the federal income tax, only the members do. In Illinois that is not the case. The state imposes a separate tax on LLCs, called a personal property replacement tax. For most LLCs, it is 1.5% of the net income.

If your LLC has employees, or if you are selling goods and collecting sales tax, you will need to register with the Illinois Department of Revenue.

Dissolution of an LLC in Illinois

If in the future your LLC can no longer operate, you will need to officially dissolve it. Your operating agreement should include a dissolution plan and its procedures to close the business. Illinois’s LLC Act includes these tasks for dissolving your LLC:

• Settling any disputes.
• Settling and closing the LLC’s business.
• Disposing of and transferring the LLC’s property.
• Distributing any remaining assets to the members.
• Paying any outstanding debts and taxes.
• Returning any contributions.

Article of Dissolution

Illinois’s LLC Act requires filing articles of dissolution with the Secretary of State. The article includes:

• The LLC’s Name.
• A statement that all debts and obligations have been paid.
• A statement that all property and assets have been distributed.
• A statement that there are no pending lawsuits against the LLC.

The fee to file the article of dissolution is $100. You must file two identical copies.