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How to Start a Business in Illinois

If you’re looking to start a new business in the state of Illinois, look no further!

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With low income tax, the “Land of Lincoln” has launched some tax incentives and angel investment programs to offer the new business owner. Illinois is a diverse state, and home to one of the nation’s three largest cities — Chicago. Outside of the big city is country living and an ever-expanding suburban area that surrounds Chicago.

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How to Start a Business

Starting a business can be both exhilarating and challenging. It requires your full attention and energy. It all begins with an idea, an observation that there is a problem and the belief that you have a new solution – or a better one. Allow us to walk you through the steps in this free guide: How to Start A Business.

General resources for starting a business in Illinois

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Fun facts about starting a business in Illinois

Famous business founded in Illinois: John Deere

John Deere was founded in Moline, Illinois, and manufactures agricultural, construction, and forestry machinery, diesel engines, drivetrains used in heavy equipment, and lawn care equipment. In 2014, it was listed as 80th in the Fortune 500 America’s ranking and was ranked 307th in the Fortune Global 500 ranking in 2013.

Famous entrepreneur born in Illinois: Jheri Redding

Jheri Redding (1907-1998) was a hairdresser, chemist, hair care products entrepreneur and businessman born in Rantoul, Illinois. Redding is best known for having created the Jheri curl. Redding is credited with being the inventor of modern-day hair conditioner. He was the first to make “pH balanced” shampoos and to put vitamins in hair care products. He developed the perm product Jheri curl, as well as numerous other beauty products.

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Which type of legal structure is best for my business in Illinois?

We strongly recommend you incorporate, but you must consider the tax, legal, and liability implications carefully before deciding on the best structure.

Here are 5 helpful steps to determine what is the best legal structure for your business:

Click one of the buttons below to learn more about the different types of business legal structures and how to start them in the state of Illinois.
LLC (Limited Liability Company)
An LLC is a specific form of a private limited company. It is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.

Steps to starting an LLC in Illinois:

  • Step 1 — Choose a name for your LLC.
  • Step 2 — File Articles of Organization.
  • Step 3 — Appoint a Registered Agent.
  • Step 4 — Prepare an Operating Agreement.
  • Step 5 — Comply with any publication requirements.
  • Step 6 — Comply with other tax and regulatory requirements.
  • Step 7 — File Annual Reports.
  • Step 8 — Register foreign LLCs doing business in Illinois.

For help forming your LLC in Illinois we recommend CorpNet (they have fees for their service).
Alternatively, visit the Illinois Secretary of State website.

Other Illinois resources for LLCs:

Secretary of State Business Name Database: Search for the availability of your LLC name here.
File your Name Reservation form here.
File your “Articles of Organization” here.
File your “Annual Report” here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your LLC here. If your LLC has more than one member, you must get an EIN, even if you have no employees.

My Tax Illinois: If you will be selling goods or will have employees, you’ll need to register here.

Sole Proprietorship
A sole proprietorship is an unincorporated business with one owner who pays personal income tax on profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual self contractors or business owners.

Steps to starting Sole Proprietorship in Illinois:

  • Step 1 — Name your business.
  • Step 2 — File an Assumed Business Name with the county clerk.
  • Step 3 — Obtain licenses, permits, and zoning clearance.
  • Step 4 — Obtain an Employer Identification Number (EIN).

For help forming your sole proprietorship in Illinois we recommend CorpNet (they have fees for their service).
Alternatively, you can visit the Illinois Secretary of State website.

Other Illinois resources for Sole Proprietorship:

Secretary of State Business Name Database: Search for the availability of your business name here. A sole proprietor can use their own given name, or an assumed business name.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

County Clerk Addresses: To file your assumed business name, you will have to fill out the assumed business name certificate available from the county clerk’s office where your business is located.

Illinois Business Portal: A comprehensive database of every license and permit that may be required by your sole proprietorship.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your business here. If you wish to have employees, you will need an EIN.

My Tax Illinois: If you will be selling goods or will have employees, you’ll need to register here.

Partnership
A partnership is created whenever two or more people do business together for profit and share ownership, even if there is no written agreement to form the partnership. Each partner contributes to all aspects of the business, and each partner shares in the profits and losses of the business.

Steps to starting Partnership in Illinois:

  • Step 1 — Name your business.
  • Step 2 — File an Assumed Business Name Certificate.
  • Step 3 — Create a partnership agreement.
  • Step 4 — Obtain licenses, permits, and zoning clearance.
  • Step 5 — Get an Employer Identification Number (EIN).

For help forming your partnership in Illinois we recommend CorpNet (there are fees for their service).
Or, visit the Illinois Secretary of State website.

Other Illinois resources for Partnership:

Secretary of State Business Name Database: Search for the availability of your business name here. A partnership can use the surnames of the individual partners, or may use a fictitious business name.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

County Clerk Addresses: To file your assumed business name, you will have to fill out the assumed business name certificate available from the county clerk’s office where your business is located.

Illinois Business Portal: A comprehensive database of every license and permit that may be required by your partnership.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your business here. Partnerships are required to obtain an EIN.

My Tax Illinois: If you will be selling goods or will have employees, you’ll need to register here.

S Corporation
An S corporation (or S Corp), is a special type of corporation created through an IRS tax election. An eligible domestic corporation can avoid double taxation (once to the corporation and a gain to the shareholders) by electing to be treated as an S corporation. In general, S corporations do not pay any federal income taxes. Instead, the corporation's income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns.

Steps to starting S Corporation in Illinois:

  • Step 1 — Name your corporation.
  • Step 2 — File Articles of Incorporation.
  • Step 3 — Find a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with Illinois annual report requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in Illinois.

For help forming your S corporation in Illinois we recommend CorpNet (they have fees for their service).
Alternatively visit the Illinois Secretary of State website.

Other Illinois resources for S Corporation:

Secretary of State Business Name Database: Search for the availability of your corporate name here.
File your “Application for Reservation of name” here.
File your “Articles of Incorporation” here.
File your “Domestic Corporation Annual Report” here.

Illinois Business Portal: A comprehensive database of every license and permit that may be required by your corporation.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your business here.

IRS S corporations: Specific instructions for your tax requirements as an S corp.

My Tax Illinois: Register here to file your corporate taxes.

C Corporation
A C corporation (or C corp), under U.S. federal income tax law, refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately.

Steps to starting C Corporation in Illinois:

  • Step 1 — Name your corporation.
  • Step 2 — Prepare and file Articles of Incorporation.
  • Step 3 — Appoint a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with Illinois annual report requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in Illinois.

For help forming your C corporation in Illinois we recommend CorpNet (they have fees for their service).
Alternatively, you can visit the Illinois Secretary of State website.

Other Illinois resources for C Corporation:

Secretary of State Business Name Database: Search for the availability of your corporate name here.
File your “Application for Reservation of name” here.
File your “Articles of Incorporation” here.
File your “Domestic Corporation Annual Report” here.

Illinois Business Portal: A comprehensive database of every license and permit that may be required by your corporation.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your business here.

IRS S corporations: Specific instructions for your tax requirements as an S corp.

My Tax Illinois: Register here to file your corporate taxes.

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Why choose Illinois for my business?

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    Illinois.gov Tax Incentives
    Comprehensive list of tax incentives available in the state.

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    Illinois Angel Investment Credit Program
    “The purpose of the Angel Investment Program is to attract and encourage the placement of investment dollars into early-stage, innovative companies throughout Illinois. The investment dollars provide these companies with much needed access to working capital to further their growth and success in our state. The Angel Program has allocated $10 million in tax credits annually, from 2011-2016.”

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    Illinois Small Business Jobs Creation Tax Credit Program
    “The Illinois Small Business Jobs Creation Tax Credit program provides small business owners and non-profits with an extra boost to grow their business over the next four years. After creating one or more new, full-time positions that meet the eligibility requirements, small businesses can register online to receive a $2,500 per job tax credit.”

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    New Markets Development Program
    “The Illinois New Markets Development Program provides supplemental funding for investment entities that have been approved for the Federal New Markets Tax Credit (NMTC) program. This program will support small and developing businesses by making capital funds more easily available and will make Illinois more attractive to possible investors.”

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