An exciting and daunting prospect is starting a new business. You will make a lot of decisions along the way, so this is just the beginning. There are likely to be state, local, and federal registration requirements depending on where you live. The purpose of this guide is to help you understand how to register your business in Illinois.
How to Register business in Illinois-Briefly explain
1. Name Your Illinois Business
There is one critical step you must complete before you can register your new business – you must determine its name. Choosing a company name may seem straightforward on the surface, but it is actually one of the most challenging and demanding steps of starting a company.
Choosing a memorable name for your business is essential, but it represents much more than that. In addition to stating what you sell and/or what you offer, it should send a clear message about what you do. In addition to introducing the public to your brand, the name of your business may also convey a message about what your company stands for or what it stands for.
How to think of a good name
Most entrepreneurs are tempted to rush through the naming process, but you should allow yourself plenty of time to come up with the right name. Brainstorm a few possibilities using free online tools, narrowing down your options as you go. After several brainstorming sessions, use free online tools to come up with several possibilities.
Our business name generator is a fantastic tool for brainstorming names based on your industry. It checks domain name availability while helping you come up with the most suitable name. We have a naming guide if you need assistance defining your brand and offering suggestions on how to conduct brainstorming sessions.
Read Also: How much does it cost to register a business in Illinois
Find a name in Illinois
Use the Secretary of State’s corporation/LLC search tool to verify whether a name is available once you have an idea. Ensure that your business name does not sound too similar to any of your state’s existing businesses. The purpose of this is to prevent confusion and potential legal entanglements in the future.
It’s time to legitimize your business after you have chosen a name that accurately represents your brand. Your state’s legal requirements and the structure of your business will determine the next steps. The next section discusses the different types of business structures.
The Doing Business As (DBA) guide in Illinois will assist you if you decide to use an assumed name, or “doing business as,” on a state, county, and/or city level. Your assumed name can be registered with the state for several reasons. Vendors, banks, and lenders may require it to prove your company’s legitimacy, protect you against other Illinois businesses, and prove your company’s legitimacy.
2. Choose a Business Structure for Your Illinois Business
You should now begin the process of legalizing your business once you have chosen a name for it. Choosing the right business structure is essential before you begin the registration process. Tax benefits, disadvantages, and advantages are all unique to each.
Sole proprietorship
There is no doubt that a sole proprietorship is the most straightforward business structure. Entrepreneurs without business partners are able to use this informal entity. State filing is not required, and it does not offer personal asset protection.
When operating under an assumed name, a sole proprietorship must submit a DBA in Illinois if you want to use the name of the owner. Registering a DBA in Illinois requires filing with the county where your business is located. There is a difference between counties when it comes to filing fees and renewals.
Partnership
Similarly to sole proprietorships, general partnerships are informal business entities set up by entrepreneurs who agree to share profits with one or more other individuals. If you and your partners want to operate under your own names, or if you would like to apply for a DBA name, you can do so. Your (and your partners’) profits and losses would be claimed on your personal tax returns, and no protection is offered for your assets.
The state of Illinois requires limited partnerships and limited liability partnerships to file official paperwork and pay a filing fee.
LLC
It may be best for you to incorporate as a limited liability company (LLC) if you do not intend on going public in the near future. As a result, it provides you with greater flexibility as well as the protection of your personal assets should you be sued.
A registered agent must be appointed by every LLC in Illinois to accept legal documents on its behalf. You must have an Illinois resident or a corporation registered to conduct business in Illinois as your registered agent. There is an annual fee of $29 to $300 for the service of a registered agent for new LLCs.
The Articles of Organization, which provide key details about your corporation, must also be filed with the state. You are also required to follow certain naming requirements.
Corporation
Corporations are businesses that have shareholders or plan to have them. Thus, you might want to consider this option if you intend to go public in the future.
In the same way that LLCs need a registered agent to deal with legal disputes, compliance documents, and government correspondence on their behalf, corporations also need a registered agent. Registered agents for LLCs can also be businesses, professionals, or individuals. A registered agent is not the only requirement; you must also file Articles of Incorporation.
3. Determine if You Need to Register Your Business in Illinois
Depending on your state, you will need to determine the business registration requirements once you have established your formal business structure and registered your new business name. You must follow the state’s guidelines exactly, as each has its own set.
The State of Illinois does not typically require formal registration for informal business structures such as sole proprietorships and general partnerships. Depending on where you live, you may have to register your sole proprietorship or general partnership with your local government.
A few businesses (e.g., sole proprietorships and single-member LLCs without employees) may not be required to register and file for an Employer Identification Number (EIN), also known as a Tax ID Number. There are several legal and tax benefits to registering, even if it is not a requirement for your business.
Although registering an LLC isn’t mandatory, forming one offers a number of financial and legal advantages. Whether you’re a sole proprietorship or a partnership, you’re going to be liable for your business debts as a private individual. A lawsuit can entitle you to seize your personal assets. Personal assets are legally protected and liability is limited by LLCs.
Furthermore, LLCs enjoy a wide range of other advantages, including:
The ability to distribute profits, make decisions, and manage the business with flexibility
“pass-through personal income tax”, which allows LLC income and expenses to pass through to individual income tax returns without any restrictions on the number of owners or types of owners.
Keeping records, attending meetings, and maintaining paperwork are limited
Many reputable LLC filing services can help you launch your business if you lack the time and/or knowledge to form it yourself. We have reviewed and ranked the five best LLC filing services because we understand how difficult it can be to sort through the dozens of available options. Our review compares each service side-by-side and ensures you choose a service that saves you time and money.
4. Register for Taxes for Your Business in Illinois
Identifying businesses for tax purposes is made possible by EINs. An employee handbook must be kept by every business with employees. You’ll get a step-by-step guide to determining your business structure’s EIN requirements in our EIN guide.
State and local taxes may also need to be registered with your EIN.
Businesses in Illinois must comply with different tax requirements depending on their type and location.
Sales tax is collected by businesses that sell tangible items or taxable services.
You may also have to pay property tax, corporate income tax, and fuel excise tax as part of your new Illinois business. On the website of the Department of Revenue Services, you can find a complete list of tax registration requirements.
5. Obtain Permits and Licenses for Your Illinois Business
All businesses are not required to obtain a general license in Illinois. Nevertheless, many industries have licenses or permits specific to their industry in order to stay compliant. The Department of Public Health requires permits for hospice services, for instance. License and permit requirements can be found on the State of Illinois website.
Further, some companies must obtain federal licenses and/or permits under the authority of a state agency. The FDA, for example, creates guidelines and rules for liquor manufacturers. Visiting the Small Business Administration (SBA) website will provide you with information on federal permit requirements and fees.
With the help of our business license search, you can determine which licenses and permits you are required to obtain from the federal, state, and county governments. A list of everything you need to know about starting a business in Illinois will appear when selecting Illinois from the dropdown menu.
Is the process still unsettling for you?
Additionally, we have compiled a list of our top five business license services to assist you in getting your company set up and complying with the law.