One of the best decisions entrepreneurs, startups, and small business owners can make is forming a limited liability company (LLC). Not only do you get ownership and management flexibility corporations simply can’t provide, but they also come with tax benefits and essential personal liability protection.
However, starting an LLC isn’t always straightforward, and the fees and paperwork can make business owners second guess forming one.
That’s where we come in.
In this post, we’ll explore the main LLC fees Illinois businesses should know about and what documents you need to file, and when. We’ll discuss:
Let’s get started:
Business Name Reservation Fees
Illinois set a new record in 2021, creating nearly 200,000 new businesses and bringing the state’s total to around 1.2 million small businesses.
Here’s the bad news: any one of them may already be using your desired business name. Before filing your LLC paperwork, search for your business on the Illinois Secretary of State’s website to see if it’s available. If it is, you can reserve it for $25. Reserving your business name gives you exclusive rights to use it for 90 days, which should be enough time to get the rest of your paperwork in order.
Reserving your LLC name is optional but strongly recommended. If another organization beats you to the punch, you’ll have to think of a new name and start the process all over again.
Since it’s an LLC, you must include “Limited Liability Company,” “LLC,” “L.L.C.,” “LC,” or “L.C.” somewhere in your organization’s name.
In addition, you can’t use words like “corporation,” “incorporated,” or any of their abbreviation thereof. You’re not forming a corporation; you’re forming an LLC. For the same reason, you cannot include anything that implies you’re a government entity, like “FBI” or “FDA.” You also can’t use words that misrepresent your business, like “bank” or “insurance.” If you are a bank or insurance company, contact the Office of the Secretary of State to learn how best to file.Finally, you should check your LLC name’s availability in the Trademark Electronic Search System (TESS) database. The TESS database can show you if another organization already has a trademark when marketing business names closely related to yours. For example, you can’t market yourself as “Apple” because “Apple” already is. Doing so puts you at risk of trademark infringement.
Registering A “Doing Business As” Name
Often, business owners and entrepreneurs will use their legal business name on official documents, like their articles of organization and on taxes, but select a different name to be better known by. This is known as your “Doing Business As” (DBA) name. DBA names are great for building your brand and everyday conversation.If you choose to file a DBA name for your LLC, you can file for a five-year DBA name for $150. However, the fee structure is arguably a little more complicated than it should be. According to Ilsos.gov, “the right to use an assumed name is effective from the date the Secretary of State’s office files the application until the first day of the company’s anniversary month in the next calendar year evenly divisible by five. In other words, here’s how much it’ll cost you to register a DBA name, depending on when you do so:
Each year or part of a year ending in 0 or 5
Each year or part of a year ending in 1 or 6
Each year or part of a year ending in 2 or 7
Each year or part of a year ending in 3 or 8
Each year or part of a year ending in 4 or 9
The fee structure for renewing your DBA works the same way.
Illinois LLC Fees For Registered Agents
One of your final orders of business before filing your LLC paperwork with the Secretary of State is to determine who your registered agent should be.
A registered agent is a person or business entity that receives the legal and financial documents on behalf of your LLC. They must have a physical address in the state of Illinois, and not just a P.O. Box.
Many business owners opt to hire a commercial registered agent service because either:
If you want to work with a commercial registered agent service, sites like Illinois Registered Agent will work on your behalf. You should expect to pay $49 or more per year.
You can do so for free if you choose to be your own registered agent.
LLC Filing Fees Illinois
Next up, you’re ready to submit your articles of organization.Your articles of organization outlines all the important information about your LLC that the government and vendors need to know. While it sounds official (and it is), this document is far from intimidating once you actually look at it. It’s only two pages long and requires you to know:
Your articles of organization cost $150 to file. Once approved, you’re officially an LLC!
LLC Fees In Illinois For Operating Agreements
Your operating agreement defines your LLC’s rules and regulations and, in a way, acts as your organization’s constitution.
Illinois doesn’t require you to submit an operating agreement along with your articles of organization. However, you should create one for your business anyway and get all of your members to sign it.
It doesn’t matter if you’re a multi-member LLC with dozens of members or a single-member LLC with no employees—having an operating agreement can only benefit your business. It is an excellent reference point anytime you make a significant decision or if a member has a financial or legal question about your organization. More importantly, it can protect your business if a legal and financial dispute arises. Without one, critical decisions may be left up to the courts to decide, and their ruling may not be in the best interest of the LLC, its members, or you.
As you can imagine, operating agreements can get pretty lengthy. They don’t have to be. The core elements of your operating agreement should include:
Operating agreements are free to create. However, we recommend hiring an attorney to write one for you or review your current agreement.
LLC Fees Illinois: Business Licenses
Obtaining an Illinois business license allows your LLC to operate your business within your specific industry or location. Depending on your industry, you may have to apply for local, state, and/or federal permits or licenses. Because they’re so diverse, each of these licensing fees will vary, as will their renewal periods.
To obtain many of these permits and licenses, you’ll usually need to provide the following information:
To register your business, request information, or verify a registered business, visit Illinois.gov’s business page.
Business Tax Registration Fees
According to Tax Rates, Illinois has one of the country's most complicated sales tax codes. Their average state sales tax rate is 6.25% and depending on your county or city, you may have to collect an additional 3.5%. Overall, Illinois is home to 1018 special sales tax jurisdictions, so we strongly recommend hiring an accountant to handle your LLC’s taxes.Learn how to register your sales tax permits by visiting mytax.Illinois.gov.
Illinois LLC Annual Fees
Now that you’re up and running, you must remain in good standing with the local, state, and federal governments. Beyond paying taxes and operating lawfully, you have to file your annual report. This report and the $75 filing fee are due each year by the end of the month before your registered anniversary. In other words, if you became an LLC on February 23rd, your annual report is due by January 31st. You will incur a late filing penalty if it’s not filed within 60 days of the due date.
While no one wants to pay more money every year to remain in operation, Illinois’ annual fee is much more affordable than others. For instance, Delaware LLC fees are $300 annually, Tennessee LLC fees are $300 plus an additional $50 for each partner, and California LLC fees are $800 or more!
Total Cost Of State Of Illinois LLC Fees
Here’s the full list of all the main LLC fees in Illinois and how often they’re due:
Business name reservation
DBA name designation
$150, but varies based on the year you file
Registered agent fees
$0, or $49+/yr if with a commercial registered agent service
Articles of organization filing fee
Operating agreement costs
Business license fee
Sales tax registration fees
Do you still have more questions about LLC fees in Arkansas or more questions about LLCs in general?
Yes, and this is a great time to become an LLC. In 2017, Illinois Secretary of State Jesse White announced a new law that reduced the filing fees for LLCs. Here’s what they used to be and what they are now:
Business name reservation
Articles of organization filing fee
Most other documents
These days, many of your potential customers are likely to find your business online. Securing a domain name that matches your legal or DBA name will make it easier for people to find you. Check your domain availability on who.is. This will show you multiple variations of your domain (e.g., .com, .net, .org, etc.) if it’s for sale, and if so, for how much. Typically, the cost of a domain name starts as low as $8.99 or $9.99. More competitive domains can cost thousands.
Typically, you’ll need a Certificate of Good Standing if you want to open a business bank account or work with a lending institution. They cost $25 for a physical copy, of $5 if your LLC is a not-for-profit.
Conclusion: Illinois LLC Fees: What Business Owners Need To Know
Are you ready to form an LLC in Illinois and enjoy the tax benefits, personal liability protection, and everything else they have to offer? Now that you know how the process works and what everything costs, you’re on your way to running a successful business!Are you ready to bolster that success? Check out The Lazy Man’s Guide to Living The Good Life, and learn how to optimize your chances of running a thriving business!