Registering a business in Illinois means two separate registrations, and most guides blur them together. First you form your entity with the Illinois Secretary of State (SOS). Then you register for taxes with the Illinois Department of Revenue (IDOR). Sole proprietors and single-owner service firms often skip one or both without realizing it.
Here is the one-line answer. File Articles of Organization or Articles of Incorporation with the SOS, get a free Employer Identification Number (EIN) from the Internal Revenue Service (IRS), register your tax accounts through MyTax Illinois using Form REG-1, then pull any industry or local licenses. This guide walks each step with current fees and sources.
What Are the Steps to Register a Business in Illinois?
Registering a business in Illinois takes seven steps: choose an entity, clear and reserve a name, file formation documents with the SOS, get an EIN from the IRS, register taxes with IDOR, secure licenses and local permits, then track your annual report. The table below is your full Illinois business registration checklist with the fee, portal, and source for each step.
| Step | Action | Fee | Portal | Source |
|---|---|---|---|---|
| 1 | Choose an entity type | $0 | n/a | See entity table below |
| 2 | Search and reserve a name (Form LLC-1.15) | $25 for 90 days | ilsos.gov | ilsos.gov |
| 3 | File Articles with the SOS (LLC-5.5 or BCA 2.10) | $150 (LLC) / $150 + $25 min franchise tax (corp) | apps.ilsos.gov/corporatellc | ilsos.gov |
| 4 | Get an EIN | $0 | IRS.gov | irs.gov |
| 5 | Register taxes (Form REG-1) | $0 | mytax.illinois.gov | tax.illinois.gov |
| 6 | Licenses, permits, local zoning | Varies | IDFPR / municipality | idfpr.illinois.gov |
| 7 | File annual report | $75 (LLC) | ilsos.gov | ilsos.gov |
What Types of Business Entities Can You Form in Illinois?
Illinois recognizes LLCs, corporations, sole proprietorships, and partnerships. The limited liability company (LLC) is the default choice for most small businesses. It combines liability protection with pass-through taxation and low formality. One correction up front: an S-Corp is not an Illinois entity type. It is a federal tax election layered on an LLC or corporation, covered in its own section below.
| Entity | Liability protection | Taxation | Ownership limits | Formality | Best for |
|---|---|---|---|---|---|
| LLC | Yes | Pass-through (default) | None | Low | Most small and mid-sized businesses |
| C-Corporation | Yes | Corporate, then dividends taxed again | None | High (board, bylaws) | Venture and IPO-track companies |
| S-Corp (election) | Yes | Pass-through | ≤100 shareholders, one class of stock, US persons | Medium-high | Small, profitable, salary-split firms |
| Sole proprietorship | No | Pass-through | One owner | None | Solo, low-risk ventures |
| Partnership | General: no / Limited: partial | Pass-through | Two or more | Low-medium | Multi-owner businesses |
Source: entity attributes summarized from the Illinois Limited Liability Company Act and Business Corporation Act of 1983 (ilga.gov).
Which entity type is best for an Illinois startup?
It depends on your funding plans. Bootstrapped local businesses usually want an Illinois LLC for its low cost and simple taxation. Venture-track startups that plan to issue equity almost always form a Delaware C-Corp instead, because institutional investors expect Delaware incorporation, then register in Illinois as a foreign corporation if they operate here. “Best entity” is really a funding question.
How Do You Check and Reserve a Business Name in Illinois?
Search the Illinois SOS Business Name Search tool to confirm your name is distinguishable from existing entities. You can then reserve it for 90 days by filing Form LLC-1.15 for a $25 fee (Form BCA 4.10 for corporations), per the Illinois Secretary of State. The same search tool doubles as the business registration lookup for verifying an entity’s status, registered agent, and good standing.
Illinois enforces exact name designators by statute:
| Entity | Required designator | Source |
|---|---|---|
| LLC | “Limited Liability Company,” “L.L.C.,” or “LLC” (or “L3C” for a low-profit LLC) | 805 ILCS 180/1-10 |
| Corporation | “Corporation,” “Company,” “Incorporated,” “Limited,” or “Corp.,” “Co.,” “Inc.,” “Ltd.” | 805 ILCS 5/4.05 (ilga.gov) |
Check domain availability and search the USPTO trademark database in parallel, so your name is clear online and legally.
How Do You File Articles of Organization or Incorporation in Illinois?
LLCs file Articles of Organization (Form LLC-5.5) and corporations file Articles of Incorporation (Form BCA 2.10) with the Illinois Secretary of State. File online at apps.ilsos.gov/corporatellc or by mail. Online is faster and serves the register-a-business-online intent directly. Every LLC and corporation must also name a registered agent with a physical Illinois address.
| Filing | Fee | Source |
|---|---|---|
| LLC Articles of Organization (Form LLC-5.5) | $150 (same online or by mail) | ilsos.gov LLC instructions |
| Corporation Articles of Incorporation (Form BCA 2.10) | $150 + $25 minimum initial franchise tax ($175 minimum total) | ilsos.gov (Form BCA 2.10) |
| Expedited 24-hour service | +$100 on top of the standard fee | ilsos.gov LLC instructions |
What is the Illinois corporation franchise tax?
Illinois corporations pay an initial franchise tax with their Articles of Incorporation and an annual franchise tax with each annual report. It was slated for repeal but was halted in 2021 and reset by the FY2025 budget. Today the first $10,000 of franchise tax liability is exempt for tax years beginning on or after January 1, 2025, so most small and mid-sized corporations now owe $0.
| Franchise tax | Rate on paid-in capital | Minimum | Maximum | Source |
|---|---|---|---|---|
| Initial (with Articles) | 0.15% ($1.50 per $1,000) | $25 | $2,000,000 | 805 ILCS 5/15.35 |
| Annual (with annual report) | 0.10% ($1.00 per $1,000) | $25 | $2,000,000 | 805 ILCS 5/15.35 |
The exemption phased in over four years, per 805 ILCS 5/15.35:
| Tax year | Exempt franchise tax liability | Source |
|---|---|---|
| 2020 | First $30 | 805 ILCS 5/15.35 |
| 2021–2023 | First $1,000 | 805 ILCS 5/15.35 |
| 2024 | First $5,000 | 805 ILCS 5/15.35 |
| 2025 onward | First $10,000 | 805 ILCS 5/15.35 |
How Do You Get an EIN in Illinois?
An Employer Identification Number (EIN) is a federal tax ID issued free by the Internal Revenue Service (IRS). Apply online at IRS.gov for immediate issuance, or by fax or mail. There is no Illinois-specific EIN; “in Illinois” just reflects how people search. Corporations, partnerships, multi-member LLCs, any employer, and anyone opening a business bank account need one.
A single-member LLC with no employees can use the owner’s Social Security number (SSN) federally, but should usually get an EIN anyway to separate business and personal finances. Watch out for third-party sites that charge for the EIN. The IRS gives it away for free.
How Do You Register for Illinois Business Taxes with IDOR?
Separate from SOS formation, you must register with the Illinois Department of Revenue (IDOR) if you conduct business in Illinois or with Illinois customers, including sole proprietors. The electronic route is MyTax Illinois via “Register a New Business (Form REG-1)”. Online REG-1 processing takes about 1 to 2 business days, versus 6 to 8 weeks for a mailed paper form, per IDOR.
One REG-1 covers several tax accounts:
| Tax type | Applies to | Source |
|---|---|---|
| Retailers’ Occupation Tax (ROT, sales tax) | Sellers of tangible goods | tax.illinois.gov |
| Service Occupation Tax (SOT) | Servicepersons transferring tangible property | tax.illinois.gov |
| Use tax | Out-of-state purchases used in Illinois | tax.illinois.gov |
| Withholding income tax | Any employer, including sole proprietors withholding Illinois income tax | tax.illinois.gov |
A pure service business with no employees and no tangible-goods sales may have no REG-1 obligation beyond use tax; confirm against current IDOR guidance. Reach IDOR through these channels:
| IDOR contact | Detail | Source |
|---|---|---|
| Central Registration email | REV.CRD@Illinois.gov | tax.illinois.gov |
| Central Registration phone | 217-785-3707 (weekdays 8:00 a.m.–4:30 p.m.) | tax.illinois.gov |
| General taxpayer line | 800-732-8866 | illinois.gov services page |
How Do You Register a Sole Proprietorship in Illinois?
A sole proprietor does not file formation documents with the Illinois Secretary of State. If you operate under any name other than your full legal name, you file an Assumed Business Name (DBA, “doing business as”) certificate with the county clerk in your county of operation. This is required under the Illinois Assumed Business Name Act (805 ILCS 405), which also requires newspaper publication. Fees vary by county.
A common myth says sole proprietors register their assumed name with the Secretary of State. That is incorrect. SOS assumed-name filings (Form LLC-1.20 or BCA 4.15) apply only to registered entities like LLCs and corporations. A DBA gives no liability protection and no exclusive name rights. A sole proprietor still registers with IDOR when withholding for employees or selling taxable goods, and can use an SSN federally when no EIN trigger applies.
How Do You Register an S-Corp in Illinois?
There is no Illinois S-Corp registration. You form an LLC or corporation with the Illinois Secretary of State, then file IRS Form 2553 within 2 months and 15 days of the start of the tax year the election takes effect. Illinois automatically recognizes the federal S election, so no separate state election form is filed. Confirm the window against current IRS instructions before relying on it.
S-Corp eligibility limits apply: 100 or fewer shareholders, one class of stock, and US-resident shareholders. Illinois S-Corps file Form IL-1120-ST and pay the 1.5% Personal Property Replacement Tax on Illinois net income (tax.illinois.gov). Because the election happens at the federal level, the mechanics are the same whether your underlying entity is an LLC or a corporation.
What Business Licenses and Permits Do You Need in Illinois?
Illinois has no single statewide general business license. Requirements are industry-specific and local. Professional and occupational licenses come from the Illinois Department of Financial and Professional Regulation (IDFPR) for fields like cosmetology, real estate, and accounting, while healthcare providers are licensed through the Illinois Department of Public Health (IDPH). Sellers of tangible goods also need the sales tax permit filed through IDOR and MyTax Illinois.
Municipal licenses are the third bucket, and Chicago runs its own robust licensing regime with rules that differ from the rest of the state. If you operate from a physical location, confirm zoning and health-code compliance with your municipality before opening. Commenda’s Illinois business license guide and Illinois sales tax permit guide map these requirements by industry.
How Much Does It Cost to Start an LLC in Illinois?
Expect roughly $150 to form an Illinois LLC, plus $75 per year for the annual report. Optional add-ons include a $25 name reservation and $100 expedited processing. Corporations cost more once the franchise tax applies. The table below is the full cost picture with sources.
| Cost item | Amount | Source |
|---|---|---|
| LLC Articles of Organization (Form LLC-5.5) | $150 | ilsos.gov LLC instructions |
| LLC annual report | $75 | ilsos.gov annual report instructions |
| Corporation Articles of Incorporation (Form BCA 2.10) | $150 + $25 minimum initial franchise tax | ilsos.gov |
| Corporation annual report | $75 + annual franchise tax (0.10%, $25 min, often $0 under the $10,000 exemption) | ilsos.gov / 805 ILCS 5/15.35 |
| Name reservation (Form LLC-1.15 / BCA 4.10) | $25 for 90 days | ilsos.gov |
| Expedited SOS filing (24-hour) | +$100 | ilsos.gov |
| County DBA filing | Varies by county | 805 ILCS 405 (ilga.gov) |
| EIN | $0 | irs.gov |
What Are the Ongoing Compliance Requirements After You Register?
Illinois LLCs and corporations must file an annual report with the Secretary of State before the first day of their anniversary month, keep IDOR tax filings current, and renew any licenses. Miss the report and you face a late penalty, then eventual administrative dissolution. The table below sets out each obligation, deadline, fee, and source.
| Obligation | Deadline | Fee | Source |
|---|---|---|---|
| LLC annual report | Before the first day of the anniversary month | $75 | ilsos.gov annual report instructions |
| LLC late report | 60 days past due triggers penalty status | $100 late-filing penalty | ilsos.gov annual report instructions |
| Corporation annual report | Before the first day of the anniversary month (filable up to 45 days early) | $75 + annual franchise tax | ilsos.gov |
| IDOR tax filings | Per assigned schedule | Varies by tax type | tax.illinois.gov |
How Commenda Helps You Register a Business in Illinois
Commenda’s incorporation service handles entity selection, formation filings with the Illinois Secretary of State, tax registration with IDOR, and ongoing annual report and license deadline tracking, so your registration is done once and done right. After formation, Commenda’s entity management platform keeps your annual reports, franchise tax, and license renewals on a single compliance calendar. Check names before you file with the Commenda company name checker and track every deadline with the Commenda compliance calendar.
Book a demo and get your Illinois entity formed and compliant without touching a government portal: schedule a Commenda demo.
