Start a Business in Illinois

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How To Start A Successful Business in Illinois

Whether you are following the EverEmployed program or going it on your own, many entrepreneurs choose to operate as an S-corp for a number of reasons. While we can’t offer legal advice, here are general instructions and resources on setting up an S-corp in Illinois. If you are still unsure as to what an S-Corp is, please refer to “What is an S-Corp?”

The Elements of a Name

The state of Illinois has several restrictions when it comes to the name of your corporation. They are as follows:

  • The name chosen must be distinguishable from any other on record with the Secretary of State
  • The name must contain one of the following words (or an abbreviated version): Corporation (Corp), Incorporated (Inc.), Company (Co), Limited (Ltd.)
  • The name can NOT include any words or phrases that may indicate the purpose of the company is banking, assurance, insurance, or fiduciary
  • The name can only contain letters in the English alphabet, Roman numerals, and/or those symbols that the Department of Business Services can reproduce
  • Unless an assumed name is adopted, the name chosen and registered is the name that the corporation must use when transacting business

The chosen name can be checked against the Department of Business Services records for availability. This check can be done online, over the phone or in writing. If the desired name is available, you may file a name reservation form to reserve said name for 90 days.

The Legal Stuff

In order to be legally recognized as a corporation, you must file an Article of Incorporation form with the Secretary of State. This form includes lists the name and address of the corporation, the purpose of the corporation, the registered agent (who accepts legal papers on the corporations behalf should they be involved in a lawsuit), and the authorized number of shares.

The form also covers optional provisions such as: First Board of Directors, Allocation factors, and regulating the affairs of the corporation. These optional provisions may also be set up in the corporation bylaws. Details on the Articles of Incorporation, and how to fill it out and file can be found here.

All corporations operating in the state of Illinois must also file an annual report with the Secretary of State. This report can be filed online or through the mail, but MUST be filed by the company’s anniversary date.

Fun with the IRS

All corporations must obtain an Employer Identification Number (EIN) by filling out and filing form SS-4 with the IRS.

All shareholders of an S-Corp must agree in writing to be formed this way by signing Form 2553: Election By a Small Business Corporation.

Next Steps

Once your S-corp is set up, remember to get a business license in the city you are operating.  Most cities pull data from newly-registered businesses in the state so they can track down who in their city should have a license.  While you can wait for your city to come knocking if you are on a tight budget (and many will simply give you a deadline to get a license), some municipalities may not be so friendly about it.
By following the steps as outlined above, you have a good start on setting up your business in Illinois. Please refer to our article, “What Do I Do Next?” for guidance on where to go from here.
If you have helpful information or comments to add about starting a business in Illinois, feel free to comment below.
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