How to Form an LLC in Illinois (2026)

1. 1Choose a name for your LLC and verify availability by searching the Illinois Secretary of State business entity database. Your name must include "Limited Liability Company," "LLC," or "L.L.C."
2. 2Appoint a registered agent with a physical street address in Illinois.
3. 3File Articles of Organization with the Illinois Secretary of State. The filing fee is $150. Online filing is faster (5-10 business days) vs. mail (2-3 weeks).
4. 4Obtain an EIN (Employer Identification Number) from the IRS at no cost.
5. 5Create an operating agreement. Not legally required in Illinois but strongly recommended.
6. 6Open a business bank account with your Articles of Organization, EIN, and operating agreement.
7. 7Obtain any required business licenses. Check with your city and county for local requirements.
8. 8File your first annual report in the month before your LLC's anniversary date. The fee is $75.

• ✓Obtain an EIN from the IRS (free, apply online at irs.gov)
• ✓Open a dedicated business bank account
• ✓Register for Illinois state taxes with the Department of Revenue
• ✓Get business insurance (general liability at minimum)
• ✓Set up an accounting system to track income and expenses
• ✓Apply for any local business licenses
• ✓File your first annual report ($75) in the month before your anniversary date

Your Illinois LLC name must contain "Limited Liability Company," "LLC," or "L.L.C." Restricted words like "Bank," "Insurance," or "Trust" require additional licensing. The name must be distinguishable from existing business entities in Illinois.

Illinois LLCs are pass-through entities by default. Members pay Illinois individual income tax at a flat rate of 4.95% on their share of profits. Illinois repealed its franchise tax in 2024, eliminating a significant cost for LLCs. The annual report fee is $75. There is a $100 late filing penalty if you miss the deadline.

LLC vs. other structures in Illinois

Illinois has moderate LLC costs: $150 to file and $75/year for the annual report. The repeal of the franchise tax in 2024 reduced ongoing costs significantly. Chicago businesses should also budget for city-specific licenses. For profitable LLCs, an S-Corp election can reduce self-employment taxes.

• •File an annual report in the month before your LLC's anniversary date — $75 fee ($100 late penalty)
• •Maintain a registered agent with a physical address in Illinois at all times
• •Keep your operating agreement current and update it when membership changes
• •File Illinois state income tax returns for all members receiving pass-through income
• •Renew any local business licenses or permits as required

Illinois has higher-than-average LLC costs. Weigh the total cost of formation and annual maintenance against your expected revenue before deciding.

In general, you should form your LLC in the state where you physically live and conduct business. Forming in a "tax-friendly" state like Wyoming, Delaware, or Nevada sounds appealing, but if you operate in Illinois, you will still need to register as a foreign LLC there — paying fees in both states.

An LLC is almost always a better choice than operating as a sole proprietorship because of the personal liability protection it provides. However, if your LLC is highly profitable, you should talk to a CPA about electing S-Corp tax treatment to potentially reduce your self-employment tax burden.

What Illinois LLC Owners Need to Know

• •Illinois repealed its franchise tax in 2024, reducing ongoing costs for LLCs
• •The annual report fee is $75, due in the month before the anniversary of formation
• •Late filing incurs a $100 penalty on top of the $75 fee
• •Illinois processes online filings faster than mail submissions

Frequently Asked Questions

Official Illinois Resources

• Illinois Secretary of State — Business Services
• Illinois LLC Information