How to Start an LLC in Illinois

Illinois offers a straightforward LLC formation process with a $150 filing fee and online filing through the Secretary of State’s website. With a flat state income tax rate of 4.95% and clear compliance requirements, forming an Illinois LLC is a solid choice for entrepreneurs in the Prairie State. Standard processing takes 10-15 business days, with expedited options available for those who need their LLC formed sooner.

Follow these steps to start your Illinois LLC in 2026.

How to Start an LLC in Illinois (6 Steps)

Step 1: Name Your Illinois LLC

Your Illinois LLC name must be distinguishable from any other business entity registered with the Illinois Secretary of State. The name must include a designator such as “Limited Liability Company,” “LLC,” or “L.L.C.” to clearly identify the business structure. You can search for available names using the Illinois Business Entity Search tool on the Secretary of State’s website.

If you want to reserve a name before filing, you can submit a Name Reservation application for $25, which holds the name for 90 days. This gives you time to prepare your formation documents and operating agreement without worrying about someone else taking the name. Before finalizing your name, also check domain name availability, social media handles, and the USPTO trademark database to avoid potential conflicts.

Illinois naming rules:

• Must include “Limited Liability Company,” “LLC,” or “L.L.C.”
• Must be distinguishable from other business entities on file with the Illinois Secretary of State
• Cannot include words that imply the LLC is a bank, insurance company, or government entity without proper authorization
• Cannot use words like “Olympic” or terms restricted by federal or state law

Step 2: Choose a Registered Agent

Illinois requires every LLC to have a registered agent with a physical street address in Illinois. The registered agent receives legal documents — including lawsuits, subpoenas, and official state correspondence — on behalf of your LLC. The registered agent must be available at the designated address during normal business hours to accept delivery.

You can serve as your own registered agent (if you have an Illinois address), but this means your personal address becomes part of the public record and you must be physically available during all business hours. A professional registered agent service provides privacy and ensures you never miss an important document.

Our top recommendation is Northwest Registered Agent ($39/year), which also handles LLC formation for $39 + the $150 state fee. This is the most cost-effective way to get both formation and registered agent service in one package.

Step 3: File Your Articles of Organization

To form your Illinois LLC, file Articles of Organization with the Illinois Secretary of State, Department of Business Services. You can file online through the Secretary of State’s website for faster processing, or by mail using the paper form.

When completing the Articles of Organization, you’ll need to decide whether your LLC will be member-managed or manager-managed. In a member-managed LLC, all owners participate in day-to-day business decisions. In a manager-managed LLC, one or more designated managers run the business while other members take a passive role. Most small LLCs choose member-managed.

Filing details:

• Filing fee: $150
• Online filing: cyberdriveillinois.com (recommended — faster processing)
• Processing time: 10-15 business days (standard), 1-3 business days (expedited for additional fee)

Information required:

• LLC name
• Registered agent name and address
• Principal office address
• Purpose of the LLC (can be general, such as “any lawful purpose”)
• Management structure (member-managed or manager-managed)
• Names and addresses of managers (if manager-managed) or members (if member-managed)
• Organizer name and address
• Effective date (can be a future date)

Step 4: Create an Operating Agreement

Illinois does not legally require an operating agreement, but having one is strongly recommended for every LLC. An operating agreement is an internal document that defines the rules for how your LLC operates, including ownership percentages, profit and loss distribution, voting rights, management structure, and procedures for adding or removing members.

Without an operating agreement, your LLC defaults to the rules in the Illinois Limited Liability Company Act, which may not match your intentions. For example, the default rules may not reflect how you want profits distributed or what happens if a member wants to leave. Most banks and financial institutions also require a copy of your operating agreement before they will open a business bank account.

Step 5: Get an EIN

Apply for an Employer Identification Number (EIN) through the IRS website. It’s free and takes about 15 minutes online. An EIN is a nine-digit number that serves as your LLC’s federal tax identification number. You need an EIN to open a business bank account, hire employees, file federal and state taxes, and apply for business credit. Even single-member LLCs should get an EIN to keep their personal Social Security Number off business documents.

Step 6: File Your Illinois Annual Report

Every Illinois LLC must file an Annual Report with the Secretary of State each year. The filing fee is $75 and it is due before the first day of the LLC’s anniversary month — the month in which your LLC was originally formed. For example, if your LLC was formed in August 2026, your first annual report is due before August 1, 2027.

You can file your annual report online through the Secretary of State’s website, which is the fastest and easiest method. The annual report updates the state on your LLC’s current address, registered agent, and manager/member information. Failure to file the annual report on time can result in late fees and eventually administrative dissolution of your LLC. If your LLC is dissolved, you can reinstate it by filing the overdue report and paying penalties, but it’s better to file on time.

Illinois LLC Costs

Total first-year cost: $264-$524. This includes the $150 filing fee, $75 annual report, and optionally a registered agent service. If you serve as your own registered agent, your mandatory first-year costs are $225 ($150 filing fee + $75 annual report). See our complete guide to LLC costs by state.

Illinois LLC Taxes

Illinois has a flat personal income tax rate of 4.95%. LLC profits that pass through to members are subject to this rate. Unlike states with progressive income tax brackets, every dollar of Illinois income is taxed at the same 4.95% rate regardless of how much you earn. This makes tax planning relatively straightforward for Illinois LLC owners.

In addition to the personal income tax, Illinois imposes a 1.5% replacement tax on partnerships, which includes multi-member LLCs taxed as partnerships. This tax is paid at the entity level, meaning the LLC itself files and pays the 1.5% tax on its net income. Single-member LLCs (taxed as sole proprietorships) are not subject to this replacement tax. The replacement tax is filed on Form IL-1065 and is due on the 15th day of the 4th month after the end of the LLC’s tax year.

Illinois has a state sales tax rate of 6.25%, with local municipalities adding additional taxes that can bring the combined rate up to 11% in some areas (particularly in Chicago, which has some of the highest combined sales tax rates in the country). If your LLC sells taxable goods, you’ll need to register with the Illinois Department of Revenue for a Retailer’s Occupation Tax (ROT) license.

Members of Illinois LLCs also owe federal income tax and self-employment tax (15.3%) on their share of LLC profits. The self-employment tax covers Social Security and Medicare and applies to all active LLC members, regardless of whether profits are distributed or retained in the business.

Illinois LLC Annual Requirements

Illinois LLCs must file an Annual Report with the Secretary of State each year. The $75 report is due before the first day of the month in which your LLC was formed. For example, if your LLC was formed in June, your annual report is due by June 1 each year. The Secretary of State sends a reminder notice about 60 days before the due date, but it is your responsibility to file on time even if you don’t receive the reminder.

If you miss the deadline, Illinois assesses a late filing penalty. If the annual report remains unfiled for an extended period, the Secretary of State can administratively dissolve your LLC. A dissolved LLC can be reinstated, but the process requires filing all overdue reports, paying accumulated fees and penalties, and filing a reinstatement application.

Beyond the annual report, you should keep your registered agent information current with the Secretary of State, maintain your operating agreement, and ensure your LLC is in compliance with any applicable local business licensing requirements. If you hire employees, register with the Illinois Department of Employment Security for unemployment insurance and set up state income tax withholding through the Illinois Department of Revenue.

Best LLC Formation Services for Illinois

Start an LLC in Another State

Frequently Asked Questions

How much does it cost to start an LLC in Illinois?

The state filing fee for an Illinois LLC is $150. Annual costs include the $75 annual report and a registered agent service ($39-$299/year, if you use a professional service). Most people spend between $264 and $524 in their first year. If you serve as your own registered agent, your mandatory first-year costs are $225.

How long does it take to form an LLC in Illinois?

Standard processing takes 10-15 business days when filing online through the Secretary of State’s website. Expedited processing is available for an additional fee and can reduce turnaround to 1-3 business days. Mail filings take longer and are not recommended if you need fast turnaround.

Do I need a registered agent in Illinois?

Yes, every Illinois LLC must have a registered agent with a physical street address in Illinois. The registered agent is responsible for accepting legal documents and official state correspondence on behalf of your LLC during normal business hours. A P.O. box cannot be used as a registered agent address.

Does Illinois require an operating agreement?

No, Illinois does not legally require an operating agreement. However, having one is strongly recommended. It protects your limited liability status by demonstrating that your LLC is a separate entity, defines member roles and responsibilities, and is typically required by banks to open a business account for your LLC.

How are LLCs taxed in Illinois?

Illinois has a flat 4.95% personal income tax rate. LLC profits passed through to members are taxed at this rate. Multi-member LLCs also pay a 1.5% replacement tax on their net income at the entity level. Single-member LLCs are not subject to the replacement tax. Members also owe federal income tax and self-employment tax (15.3%).

Can I be my own registered agent in Illinois?

Yes, you can serve as your own registered agent in Illinois if you have a physical street address in the state and are available during normal business hours to accept legal documents. Keep in mind that your address will be part of the public record. Many business owners prefer a professional service for privacy and reliability.

Does my Illinois LLC need a business license?

Illinois does not have a general state business license, but many cities and counties require local business licenses or permits. Chicago, for example, requires a Business License for most commercial activities. Some industries also require state-level professional licenses. Check with your local municipality and the Illinois Department of Commerce for specific requirements.

When is the Illinois LLC annual report due?

The annual report is due before the first day of your LLC’s anniversary month each year. For example, if you formed your LLC in October, the annual report is due before October 1 each year. The filing fee is $75. You can file online through the Illinois Secretary of State’s website for fastest processing.

What is the Illinois replacement tax?

The replacement tax is a 1.5% tax on the net income of partnerships, including multi-member LLCs taxed as partnerships. It is paid at the entity level (by the LLC itself, not the individual members). Single-member LLCs taxed as sole proprietorships are not subject to this tax. The replacement tax is filed with the Illinois Department of Revenue on Form IL-1065.

Can a non-resident form an LLC in Illinois?

Yes, you do not need to be an Illinois resident or a U.S. citizen to form an LLC in Illinois. You will need a registered agent with a physical address in Illinois. If you live in another state and form an Illinois LLC, you may also need to register your LLC as a foreign entity in your home state if you conduct business there.