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How Much Does an LLC Cost In Illinois? Fees & Taxes in IL

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Last updated February 17, 2023

Written by Dmytro Kondratiev

Editor, lawyer

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If you've decided to embark on a business in Illinois, you're probably digging into the information on what it takes to open an LLC in this state. In addition to digesting this information, you also need to get ready for the financial burden.

It's worth noting that there have been some recent fee changes in the state (in 2017-2018). Let's take a look at what LLC owners will need to pay before and after company formation in 2022.

How Much Does an LLC Cost in Illinois?

To get an answer regarding LLC Illinois cost, you need to break down the price of the formation process, setting up an LLC, and keeping it up to date.

Therefore, let's loop our attention to the questions:

How much to form an LLC in Illinois?
How much will it cost to prepare the documents for filing?
What tax rates can you expect?
What additional steps require a financial investment?

LLC Fees in Illinois: Online Filing Fee: $150

Before the state law on fees for LLCs was changed, the registration price was $500, which was one of the highest rates in the United States. That was the reason why many entrepreneurs opted to set up firms in neighboring regions.

Today, the requirements have been greatly simplified. It has made a significant difference and entrepreneurs have become more willing to open firms. LLC registration now costs $150.

Form of filing: online or by mail;
Processing time: up to 10 days online (there is expedited processing for $100), no time limits by regular mail are specified (no expedited processing);
Address for Articles of Organization filing via mail: Department of Business Services 501 S 2nd Street, Room 351 Springfield, IL 62756.

Note! Before filing the Articles of Organization with the Secretary, pay the state fee by credit card. Read how to fill out the document here. If the paperwork is sent by mail, a check is enclosed in the envelope.

Annual LLC Fee Illinois: Annual Report: $75

The annual report fee requirements in Illinois have changed over the past few years. Previously, the amount owners had to pay was $250. Now, it has been reduced to $75. This price is current for all forms of filing.

Form of filing: online or by mail;
Mailing address: 501 S 2nd Street, Room 351 Springfield, IL 62756.

The state has a system of penalties for late filing of the report. Thus, the fine for 60 days overdue is $100, and for 180 days delay, the state has the right to dissolve the LLC.

Note! Reminder letters are sent to the registered agent 45 days prior to the due date of the annual report.

Illinois LLC Cost: Registered Agent (Agent of Process, Resident Agent) Fee

In the founding documents, the organizer specifies the data (name and address) of the registered agent. In Illinois, this requirement is described in detail in law 805 ILCS 180/1-35.

The state allows a family member or friend to be appointed as an RA. It is also possible for the owner to act as an agent. In this case, the service would not incur any financial cost.

Commercial entities that provide resident agent services have different pricing for their work. The average annual cost of RA assistance for an LLC in Illinois ranges from $49 to $500. A selection of the best commercial agents for 2022 is here.

Cost to Form a Foreign LLC in Illinois

The cost of registering a foreign LLC in Illinois is not much different from the requirements for local businesses. LLC in Illinois cost for them will also be $150, and the application will take up to 45 days to process.

Form of filing: by mail or in person;
Expedited processing: you can request registration the same day if you apply in person, and this will cost you $100.

Note! Once the paperwork is approved, the State of Illinois sends one stamped copy to the organizer. Therefore, you need to provide the Secretary with 2 copies of the paperwork.

What is needed to register a foreign LLC?

Appoint an RA ($49-$500);
Obtain a Certificate of Good Standing (approximately $50);
Application for admission to Transact Business.

Illinois LLC Fees: Cost to Form a Series LLC

In Illinois, you can form a primary LLC and several subsidiaries. And if that's your option, you need to register a Series LLC. This option became available in 2005.

To form a Series LLC, the owner needs to file documents by mail and pay the state LLC Illinois fee of $400.

Form of filing: by mail or online;
Expedited procedure: you can request same-day registration when filing in person for $100. Standard processing takes up to 30 days.

Business Entity Income Tax

In Illinois, all LLCs pay income tax, and it is deducted from the amount paid to themselves by the owners. The same rule applies to salaried employees. The state rate is 4.95%.

Business License Renewal Fee

At the state level, businesses are not required to obtain a business license, but this rule may be set by the city or municipality where the firm will operate.

The standard renewal fee for an LLC in Illinois is $250 each year until June 30;
Renewal methods: online or at the Secretary of State's office.

Note! In order to operate legally in the state, some specialists will need to obtain a professional license, which can cost between $2,000 and $3,000.

Franchise Tax

Franchise tax obligations for LLCs depend on the form of business. Therefore, you should first seek guidance from your accountant or the Department of Revenue to determine if you need to pay it.

Note! The franchise tax was repealed in Illinois back in 2020, but the new rule won't go into effect until 2025. The minimum franchise tax is $25.

State Sales & Use Tax

If your business involves selling physical products or certain types of services, it will be subject to sales and use tax at the time of purchase.

Rate: 6.25%.

Federal Self-Employment Tax

All LLC members (including managers) pay Social Security tax. The tax is deducted from the income received.

Rate: 15.3%.

Note! The owners may pay less if the limited liability company is treated as an S corporation.

Federal Income Tax

In Illinois, LLCs are required to pay federal income tax on profits. The rate is calculated based on the profits.

Employee & Employer Taxes

Federal taxes are withheld on employees' wages as well. In addition, some of them may have to file tax returns. It's a good idea to discuss this with your accountant.

Rate: 15.3% (this includes 7.65% employer and 7.65% employee liability).

Insurance

State law stipulates that if a business hires employees, it is required to obtain special insurance for them. There is a similar requirement for officers and members of the LLC.

Other types of insurance may also be needed, such as:

General liability insurance;
Professional liability insurance.

The cost of coverage depends on the city/county where you conduct your business.

Other LLC Filing Costs

Having considered the basic costs of registering and maintaining an LLC, it is necessary to explore other likely costs for both local and foreign firms.

LLC Name Reservation

In the Articles of Organization, the owners specify the LLC name, which should comply with state laws and requirements. The name is checked on the Secretary of State's website.

The name reservation procedure is conducted on the Secretary of State's platform by filing LLC-1.15. It can also be done in person at the office or by mail for $25. The reservation period is 90 days.

Foreign LLC Name Registration

As well as for local firms, foreign LLCs have to meet the requirements of the state regarding the uniqueness of the name and the rules of its registration.

To reserve a Foreign LLC name, a Certificate of Name Reservation needs to be filed with the Secretary of State along with the qualification requirements. Thus, the current official name in the home state can be used in Illinois.

"Doing Business As" (DBA) Name

The DBA is essentially an alias of the firm name that is different from the official one. It can be obtained by all LLCs wishing to position themselves under a name that will better influence branding and reflect the business goals.

The registration process is also done with the Secretary of State. But before submitting the appropriate application, you need to see if a DBA is available in the state by visiting the Secretary's online platform.

Registration costs $150 for 5 years;
The cost to renew a fictitious name is $90;
Form of filing: online, by mail, or in person at the office.

Note! The owners have the opportunity to change or cancel the DBA. So, cancellation service will cost you $5, and changing the name will be $25.

Certificate of Good Standing

A certificate of Good Standing is proof that the limited liability company complies with the state rules and is in good standing.

If the business meets the requirements, the State Secretary will issue the document. You can order it by mail or online. For both options, the price will be $25.

Note! The Certificate of Good Standing has no expiration date, but banks or lenders may insist on re-requesting the document from the Secretary if the date of issue is not current for them.

FAQ

Is owning an LLC in Illinois worth it?

First of all, the state has a flat individual tax rate. Second, the local government has recently revised the prices of state fees.

For example, previously, the amount for filing Articles of Organization was $500, and now, it is $150. The price for filing an annual report was $250, but now, it is $75. Also, in 2020, it was decided to eliminate the franchise tax altogether.

It should be noted that Illinois is not the perfect place to establish a foreign company. But if it is your home state, it is recommended to create an LLC here to avoid double fees and taxes.

Do LLCs in Illinois have no income tax?

Illinois has an income tax. The standard rate is 4.95%, but you can claim surcharges and deductions when you file your return.

Do you have to renew your LLC every year in Illinois?

All limited liability companies are required to file annual reports no later than the first day of the incorporation month.

By filing the report later, the owner will pay a fine of $100.

Note: Cancellation of the LLC will occur if the report is 180 days overdue.

Can I pay myself a salary from my LLC?

LLC owners have one of four options for paying salaries to themselves:

1. As a W-2 employee. This form of salary can be paid if you are an employee of your LLC;
2. Profit Sharing. This form is more convenient to use if you are a single-member LLC;
3. Independent contractor. In this case, your personal bank account will get the full salary without withholding tax, but you will have to pay quarterly tax;
4. Withholding. This method involves no payment of wages. This is appropriate if you are saving for a business.

What is the cheapest way to get an LLC?

The cheapest way to start an LLC in Illinois is to take full responsibility for the formation. In this case, you will only have to pay the government fees set by the state.

In addition, it is also possible not to appoint a third-party registered agent but to take the position yourself or appoint a trusted person to perform these tasks. In that case, the agent will either be free or carry out duties at a reasonable cost for you.