Think about your LLC a year from now: raking in profits and taking Illinois by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Illinois.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Illinois startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Illinois
- Optional: LLC Name Reservation Fee
- $25 to file a hard copy
- Required: Articles of Organization Fee
- $150 for hard copy filings and $250 for online and expedited forms
Overall Illinois LLC Formation Costs
LLC Name Reservation Fee
If you’re thinking about reserving a business name but you’re also ready to start your LLC, stop right there. A name reservation isn’t required for LLC formation in Illinois, so sometimes it’s more efficient to just file your Articles of Organization, which will register your name on the spot. But if your business isn’t ready yet and you want to protect that perfect name, a reservation is quite helpful. It’s $25 for a nonrenewable 90-day hold.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Illinois LLC. The Illinois Secretary of State won’t officially recognize your business until you’ve successfully filed the Articles of Organization. The filing fee is $150 for hard copy filings. If you’re in a hurry and need to expedite the process, that’s an additional $100. Online submissions are $250 because they’re automatically given expedited processing. In case you’re fretting the cost, know that this is a one-time filing, so as long as it’s accepted, you won’t have to pay it again.
You may not need a business license in Illinois. Or, you may need several. It all depends on the type and location of your business. For example, someone looking to open a brewery would need to apply for a Liquor Manufacturing License. Each city also has its own licensure requirements, so you’ll need to check with your local government to see if you might need additional licenses. Costs vary depending on the license.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Registered Agent Service
Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Illinois business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. There are a lot of lawyers to choose from so, to make sure you’re finding the right fit, take advantage of resources like Avvo. Avvo is an online database of lawyers from every state, so you can sort them by location, rates, specialties and more. It will help you in determining the right Illinois business attorney for your LLC.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Illinois. If this describes your LLC, you will file an “Application for Admission to Transact Business” instead of the Articles of Organization
All foreign business entities are required to foreign qualify in Illinois, or they could incur some pretty severe penalties. Like the Articles of Organization, the Application for Admission isn’t cheap – it carries a $150 price tag. But also like the Articles of Organization, you only have to pay it once.
LLC Annual Fees
To help keep its business records up to date the state of Illinois requires all of its businesses to submit Annual Reports. These are due by the first day of your LLC’s “anniversary month,” the month in which it was formed. There is a filing fee of $75 with an expedited service option for an additional $50, and you can count on making those payments every year. Annual Reports are available to file online or with a hard copy.
By default, LLCs are classified as “pass-through” entities, which means that the LLC itself doesn’t file a tax return – it’s members simply file their own personal taxes. Plus, Illinois doesn’t impose a “franchise” or “privilege” tax on LLCs. However, it does require LLCs to pay a “Personal Property Tax,” 1.5% of your net income. On top of that, there are some other specific circumstances that may yield additional taxes for your LLC.
- If your LLC is a resale business, it needs a Retailer’s Occupation Tax Number.
- If your LLC is a wholesale business, it needs a Resale Certificate Number.
- If your LLC hires employees, it will need to pay an unemployment insurance tax and a payroll tax. It also must obtain an Unemployment Compensation Number.
- If your LLC is set up to be taxed like a corporation, it will pay the 5.25% corporate income tax and a higher Personal Property Tax, 2.5% of its net income.
Visit the Illinois Department of Revenue website for more information on business taxes.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
Let’s say you forget to file your Annual Report by the due date. This will cause you to lose your good standing with the state, and your business will be labeled “delinquent.” The same goes for registered agent changes, paying necessary taxes, and other business filings. For Annual Reports specifically, there is also a $100 late fee if the report isn’t filed within 60 days of the due date, and if the business still hasn’t filed after another 120 days, it will be administratively dissolved.
Aside from the threat of dissolution, being labeled “delinquent” isn’t a good time. The Secretary of State’s office will not process any new filings by a delinquent business. Further, delinquent businesses cannot obtain a Certificate of Good Standing, which you’ll need if you want to foreign qualify in other states, apply for business loans, renew your professional licenses, and more.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Illinois.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like Annual Reports – so your business doesn’t fall out of good standing.