Company formation laws in Illinois
Table of contents
LLC Formation in Illinois
Forming a Limited Liability Company requires an individual or a group of individual to follow certain steps. If you want to set up your own LLC in the state of Illinois, the following steps will show you the way:
- Registering an unique name for the LLC:
- The first task for setting up a new Limited Liability Company involves choosing a unique name for it. The name must contain any of the terms like “limited liability company”, “L.L.C.” or “LLC”. The state laws forbid including other terms as part of the name like “Corporation”, “Corp.”, “Incorporated”, “Inc.”, “Ltd.”, “Limited Partnership”, or “L.P.”. The business name should be unique and distinguishable from other names filed with the Secretary of State. You can also register your business name as a federal or state trademark.
- Filing articles of organization with the Secretary of State:
- The next stage for LLC creation involves filling the Articles of the Organization with the Department of Business Services under the Illinois Secretary of State. $600 is charged for online filing and $500 is the charge for paper filing. The article should include details of the business name and address, the purpose of the organization, the duration, details of the members, manager and organizer etc.
- Negotiating and executing an operating agreement:
- Though an operating agreement is not mandatory in Illinois, an executing agreement is highly recommended. It usually specifies details about how the business will be operating and doesn’t need to be filed with the Articles of the Organization.
- Getting the local licenses:
- The local and city authorities may require the LLC to have business license etc. Again, a registered agent is a must for the service of process in the state.
- Registering for tax and other regulatory obligations:
- The business may have to fulfill other tax and regulatory requirements as well. The Employee Identification Number (EIN) has to be obtained from the Internal Revenue Service (IRS). If you have even a single or multiple employees, you’ll need to register your LLC with the Illinois Department of Employment Security and carry the workers’ compensation insurance. Then there will be the tax registration with the Illinois Department of Revenue.
- Opening separate bank account for business:
- It’s advisable to keep your business finances separate from private finances. For that you’ll have to open up a bank account with your EIN, Articles of Organization and other necessary documents.
- Determining other necessary requirements:
- The state of Illinois requires an LLC to file their Annual report at the end of each business year. The LLC may also need to preserve certain documents at its principal place of business, details of which are enlisted in 805 Ill. Comp. Stat. 180/1-40.
Formation of Non-profit Corporation in Illinois
Non-profit corporations are exempt from the federal and state taxes if they qualify for the 501(c)(3) status. The non-profit corporations are usually set up for scientific, religious, educational, literary or charitable purposes. Initially you need to start off or incorporate your non-profit organization and then apply for the exemption status with the IRS and State of Illinois.
Steps for formation of Illinois non-profit corporation
The State of Illinois draws out certain steps that have to be followed for setting up a non-profit corporation in the state.
- Choosing an exclusive business name:
- The name of your non-profit corporation should not be similar or deceptively similar to other corporate names filed with the Secretary of State (SOS). You can check name availability from the SOS electronic database. To make it clear that it is a non-profit corporation, you can mention “NFP” at the end of the name.
- Appointing directors for the corporation:
- To set up a corporation, you’ll need to enlist at least 3 individuals as directors of the corporation. There are no age restrictions applicable for the directors, and they can be from other states as well.
- Incorporating the non-profit corporation:
- Incorporating the corporation involves specific steps as mentioned below:
- Framing and filing the articles of the organization
- Drawing out the bylaws specifying internal rules and regulations
- Holding organizational meetings
- Creating records book for documentation
- Getting Employee Identification Number (EIN):
- A non-profit corporation needs to inform both the IRS and the State authorities before it initiates the hiring process. Application for the EIN can be done online. You may also need to follow certain guidelines specified by the Illinois Department of Employment Security to be considered eligible for hiring employees.
- Registering with the State of Illinois:
- You’ll also need to register with the Charitable Organization Bureau at the Office of the Attorney General for receiving any form of charitable assistance. The Department of Revenue for Illinois Business Portal will also need you to register for other formalities.
- Applying for the tax-exempt status:
- After you successfully complete all the above-mentioned procedures, and set up or incorporate your non-profit corporation, you can start applying for tax exemptions from the federal, state and local authorities.