Illinois LLC

Illinois LLC

Form a Illinois LLC

At LawInc we are Illinois LLC (Limited Liability Company) formation experts who can help you form a Illinois LLC, the right way. We file the Illinois LLC Articles of Organization with the Illinois Secretary of State and prepare your customized operating agreement. We can also obtain the Illinois LLC’s Tax ID Number (TIN)/Employer Identification Number (EIN), in as quickly as 24 hours. Let LawInc guide you through the process of forming your Illinois LLC. Our clear, concise and easy to use website, helps keep things simple.

Illinois LLC Name

The first step in forming a Illinois Limited Liability Company (LLC) is selecting the business name. Illinois LLC names:

  • Must contain the terms “limited liability company”, “L.L.C.”, or “LLC”.
  • The name of a Illinois LLC must be distinguishable on the records of the Illinois Sec. of State.

An available Illinois LLC name may be reserved for 90 days. permits you to choose up to three names and will conduct a name search for your Illinois LLC, prior to filing.

Illinois LLC Formation

Illinois LLC Filing Procedure: When forming a Illinois LLC, the Illinois Articles of Organization must be filed with the Illinois Secretary of State. The Illinois Articles of Organization must state:

  • The Illinois LLC name.
  • Name and address of each Illinois LLC organizer.
  • Street address of principle place of business.

Illinois LLC Organizers: An Illinois limited liability company can be formed by one (1) or more organizers.

Illinois LLC Members: Illinois LLCs require 1 or more members. There is no residence or age requirement.

Illinois LLC Duration: The period of duration of a limited liability company shall be perpetual unless the Illinois Articles of Organization place a limitation on the company’s existence or until dissolution or termination.

Illinois LLC Purpose: The purposes of the limited liability company may be stated to be, or to include, the transaction of any or all lawful businesses for which limited liability companies may be organized under this Act. A limited liability company may not be formed for the purpose of providing insurance or practicing medicine or dentistry unless it first meets specific licensing requirements.

Illinois Registered Agent: An Illinois LLC must maintain a registered agent and office to receive service of process in Illinois. The Illinois registered agent should be available, at an Illinois physical address, during normal business hours to accept important legal and tax documents on behalf of the Illinois LLC. The registered agent can either be (1) a domestic entity or a foreign entity that is registered to do business in Illinois or (2) an individual resident of the state. A Illinois LLC may not act as its own agent.

Illinois LLC Operating Agreement: After filing, it is highly advised that an operating agreement is drafted which dictates the LLC internal affairs and management. There is no set criteria, but an Illinois LLC operating agreement should reference how the Illinois LLC is managed, allocation of profits and losses and member capital contributions. The Illinois LLC operating agreement does not need to be filed.

Illinois LLC Post-Filing Requirements

Illinois Annual Report: Once formed, an Illinois LLC is required to file an Annual Report with the Illinois Secretary of State in order to maintain its existence. The report is due each year prior to the first day of the company’s “anniversary month,” which is the month in which the company was organized. The Annual Report may be filed online. Failure to file in a timely manner results in a $300 penalty. Failure to file within 180 days of the due date will result in administrative dissolution of the Illinois LLC.

Illinois LLC Taxes

Illinois State Income Tax: The LLC tax rate for Illinois is variable, depending on Illinois taxable net income.

Federal Income Tax: An advantage of the LLC is its tax flexibility. LLC members are allowed to select how the entity will be taxed. An LLC may be classified for federal income tax purposes as either a:

  • Sole proprietorship
  • Partnership, or
  • Corporation.

Single member LLCs are treated the same as sole proprietorships. Profits are reported on Schedule C as part of your individual 1040 tax return. Self-employment taxes on Illinois LLC net income must be paid just as you would with any self-employment business.

Most Illinois multi-member LLCs elect to be treated as partnerships by the IRS and file IRS Form 1065. On this form, Illinois LLC profits are reported and allocated to each of the owners according to the Illinois LLC’s operating agreement. Each owner is given a Schedule K-1, which shows each owner’s share of LLC income or loss. The owner then reports and pays taxes on this income on the owner’s annual 1040 income tax return. It is important to note that as with sole proprietorships, all Illinois LLC profits are taxed to the owners, even if they are not actually distributed by the LLC. This situation can arise when the LLC needs to use its profits to pay ongoing expenses.

If pass-through taxation is not desired, an LLC may elect to be taxed as a corporation by completing IRS Form 8832. If this election is made, the LLC is taxed as a C corporation by the federal government. Because the corporate income tax rates for the first $75,000 of corporate taxable income are lower than the individual income tax rates that apply to the taxable income of non-corporate taxpayers, it is possible a net income tax savings can result from this tax election. Additionally, an LLC can be taxed like an S corporation by filing IRS Form 2553.

Federal Tax Identification Number/Employer Identification Number (EIN): The Federal Tax Identification Number, also known as the Employer Identification Number (EIN) is a number that is assigned to a business by the Internal Revenue Service. An EIN is like a Social Security Number for a business. It is a requisite for certain business functions such as opening bank accounts or hiring employees. An EIN is typically required if the Illinois LLC has more than one owner, or any employees.

Illinois LLC Dissolution/Termination/Cancellation

In order to dissolve/terminate/cancel an Illinois LLC, the members or managers must file LLC-35-15, Articles of Dissolution with the Illinois Secretary of State.

Acts Triggering Illinois LLC Dissolution: A Illinois LLC can be dissolved upon the happening of one of the following:

  • At a time specified in the Articles of Organization or operating agreement;
  • Upon occurrence of events specified in the Articles of Organization or operating agreement;
  • Consent by the specific number or percentage of members indicated in the operating agreement; or
  • At any time there are no members;
  • Judicial decree to dissolve by a Court.