Why form an Illinois LLC?
Illinois LLCs balance home-state credibility with flexible governance and the option to layer in series or low-profit structures. This hub mirrors the depth of our Washington and Nevada guides—only now tuned to 805 ILCS 180, Cook County realities, and the 2025 CTA shift.
When Illinois is the default
- Founders live or operate in Illinois and want bank-ready filings recognized by local lenders and landlords.
- Real estate investors holding multiple Chicago or downstate properties who can leverage the series LLC statute.
- Professional practices governed by Illinois licensing boards (law firms, medical groups, architecture firms).
- Mission-driven ventures exploring L3Cs to attract program-related investments from foundations.
When another state may be smarter
- Venture-backed C-corps that need Delaware case law and venture-familiar shareholder agreements.
- Multi-state holding companies with no Illinois nexus that would only incur foreign-registration costs.
- Wyoming anonymity or asset-protection plays (Judge-proofing) where IL transparency is a drawback.
- Businesses planning public markets or large stock-option plans that belong in DE with WA/IL foreign qualification.
Myth: “Illinois LLCs are always worse than Delaware or Wyoming.”
Tax differences exist, but if you have employees, inventory, or property in Illinois, you file IDOR returns and pay replacement taxes regardless of home state. Adding a foreign Delaware LLC often doubles compliance rather than saving tax.
Reality: “Illinois offers tools others do not.”
Series LLCs, L3Cs, and PLLCs are built into 805 ILCS 180. You can segregate real estate, run mission-focused entities, or comply with DFPR rules under one statutory umbrella. Staying local streamlines financing, permits, and IDOR audits.
Entity types and the 805 ILCS 180 map
Article-by-article awareness keeps you from being blindsided by naming, RA, series, or dissolution surprises. Here’s the high-level map.
805 ILCS 180 quick map
- Article 1 – Definitions, lawful purposes, naming standards, registered agents/offices.
- Article 5 – Organization mechanics: Articles of Organization, amendments, restatements.
- Articles 10 & 15 – Member roles, management structures, duties, and voting.
- Articles 20 & 25 – Contributions, finance, distributions, and liability for improper payouts.
- Article 30 – Assignments and rights of assignees.
- Article 35 – Dissolution, winding up, member dissociation.
- Article 37 – Conversions, mergers, and Illinois’ series LLC framework.
- Article 45 – Admission of foreign LLCs and consequences of unauthorized business.
- Article 50 – Fees, penalties, reinstatements, and administrative powers.
| Entity flavor | Primary use cases | Naming convention | Extra statute notes |
|---|---|---|---|
| Standard Illinois LLC | Most operating companies and single-entity holdings. | Must include “LLC,” “L.L.C.,” or “Limited Liability Company.” | Form LLC-5.5; optional future effective date ≤ 60 days. |
| Series LLC | Real estate portfolios, asset-segregated ventures. | Master uses “LLC” but Articles must authorize series. | Requires series-capable Articles + Form LLC-37.40 per designated series. |
| Professional LLC (PLLC) | Law, medical, dental, financial, architecture, etc. | Must include “Professional Limited Liability Company,” “PLLC,” or “P.L.L.C.” | Comply with Professional Limited Liability Company Act and DFPR/board rules on ownership. |
| Low-profit LLC (L3C) | Hybrid charitable ventures targeting PRI capital. | Name may include “L3C.” | Organized primarily for charitable/educational purposes; limited expectation of profit. |
Decision matrix
- Local restaurant or retail: Standard LLC + solid operating agreement.
- Chicago landlord with 6-flats: Series LLC to place each building in its own series (with strict separateness) or multiple LLCs if lenders require.
- Illinois SaaS founders: Standard LLC for pass-through simplicity, series optional if multiple app lines.
- Mission-driven nonprofit-lite: Consider L3C plus companion nonprofit if donor deductibility is needed.
How to form an Illinois LLC
Use this workflow to move from idea to bank-ready entity without skipping statutory beats.
Pre-formation checklist
- Confirm member count, ownership percentages, and target tax classification (default pass-through vs S/C election).
- Decide whether the LLC must support series, PLLC requirements, or L3C status.
- Choose a registered agent strategy (self, attorney, or commercial RA) with a reliable Illinois street address.
- Map capitalization tables, contribution expectations, and whether you need buy-sell provisions from day one.
Step 1 – Choose a compliant name
Names must be distinguishable on the Secretary of State index and include LLC/PLLC/L3C designators as appropriate. Avoid names identical to administratively dissolved entities unless the gap exceeds the statutory waiting period.
Search trademarks and domain names before printing signage. Illinois rejects names implying another entity type (corporation, bank, insurance) without additional approvals.
Step 2 – Appoint registered agent & office
Every LLC must maintain an Illinois registered agent with a matching registered office. The agent must be an Illinois resident or an entity authorized in Illinois; PO Boxes alone are insufficient.
Failure to maintain an agent leads to SOS notices, loss of good standing, and eventual administrative dissolution. Commercial agents provide continuity when founders move.
Step 3 – File Articles of Organization (LLC-5.5)
Articles list the LLC name, principal place of business, registered agent/office, purpose (often “any lawful business”), duration, and the names/address of initial managers or members with management authority. You can choose immediate effectiveness or a date within 60 days.
Fees: $150 (10-business-day) or $250 (24-hour) for standard LLCs; $400/$500 for series-capable Articles. Pay via MyTax portal or credit card with processing fees. SOS is a filing agency—it will not review your governance logic.
Step 4 – Obtain EIN & register with IDOR
Apply for an EIN with the IRS (online for domestic members). Next, register with the Illinois Department of Revenue using MyTax Illinois or Form REG-1 for sales/use tax, withholding, and unemployment where applicable.
Register before making sales, collecting tax, or running payroll. IDOR issues account numbers tied to your EIN; keep them handy for city licensing and bank compliance.
Step 5 – Operating agreement & initial resolutions
Illinois does not mandate a written operating agreement, but lenders, investors, and courts expect one. Draft roles, capital contributions, voting thresholds, transfer restrictions, and buy-sell triggers.
Adopt initial resolutions covering: acceptance of the OA, appointment of managers/officers, banking authority, EIN/IDOR filings, and authorizing any series or PLLC filings.
Documents you should assemble
- Stamped Articles of Organization + expedited receipt if applicable.
- Registered agent consent/contract.
- Operating agreement (standard or series-specific).
- Initial resolutions/minutes & banking certificates.
- EIN confirmation letter + MyTax Illinois registration proof.
- Series Certificates of Designation (if used) and PLLC license approvals.
Series LLCs, PLLCs, and L3Cs
Illinois’ special LLC flavors unlock flexibility—but only when you respect formalities.
Series LLC essentials
Article 37 lets you form a “series LLC” where a master company holds multiple designated series, each with separate assets, liabilities, and members. Liability segregation works only if each series maintains separate records, bank accounts, contracts, and signage.
Filings: (1) File series-capable Articles with the higher fee. (2) For each series, submit Form LLC-37.40 (Certificate of Designation) and pay the additional fee. (3) Update the operating agreement with series-specific rights and asset lists.
| Series wins when… | Separate LLCs are safer when… |
|---|---|
| One owner controls multiple rental units and can maintain meticulous books. | Lenders insist on single-purpose entities or you plan different investor groups per asset. |
| You need to add/drop properties frequently without multiple SOS filings. | You operate in states that do not recognize series liability shields (forcing separate registrations anyway). |
| You want a consolidated brand but internal asset silos. | You worry courts may pierce the veil if series formalities slip. |
Professional LLCs (PLLCs)
PLLCs must comply with the Professional Limited Liability Company Act and the Department of Financial and Professional Regulation (DFPR) or other boards (e.g., Supreme Court of Illinois for lawyers). Ownership and management often must be licensed individuals, and naming must use “Professional Limited Liability Company” or “PLLC.”
Before filing, confirm board-specific requirements: law firms need ARDC registration; physicians coordinate with IDFPR; accountants coordinate with the Board of Examiners, etc. Expect extra filings when owners join/leave.
Low-profit LLCs (L3Cs)
L3Cs exist to pursue charitable or educational purposes while permitting limited profit. They are designed to attract program-related investments (PRIs) from foundations under IRS rules. In practice, funders still scrutinize governance and may insist on companion nonprofits for donations.
Tax, IDOR, and local sales tax overlay
Forming the LLC is step one; maintaining good standing with the Illinois Department of Revenue and local tax authorities is ongoing.
Tax classification snapshot
Single-member LLCs default to disregarded entities; multi-member LLCs default to partnerships. You can elect S corporation status for payroll-tax planning or C corporation status for QSBS and reinvestment strategies.
Illinois levies a 4.95% flat individual income tax and a 7% corporate income tax. Partnerships/S corps/LLCs taxed as pass-throughs owe a 1.5% personal property replacement tax; C corps pay 2.5% replacement tax.
Illinois’ pass-through entity (PTE) tax allows partnerships and S corps to pay a 4.95% entity-level tax with a credit to owners. Elections must be made annually by the extended return due date.
Sales & local tax realities
State sales/use tax is 6.25% on most tangible personal property. Local governments add 0–4.75%, pushing combined rates up to 10.25% in Chicago. Service businesses may owe service occupation/use tax depending on tangible deliverables.
Nexus is triggered by physical presence, employees, inventory, or economic thresholds. Register with IDOR and relevant home-rule jurisdictions before collecting tax.
Compliance basics
- Obtain EIN and MyTax Illinois credentials; keep login shared securely among managers.
- Register for sales/use, withholding, unemployment insurance, and local business licenses as needed.
- Calendar quarterly estimated taxes, payroll deposits, and keep contemporaneous books (especially for series).
- Reconcile MyTax filings with bank accounts and accounting software monthly to catch nexus or filing errors.
Annual reports and compliance calendar
Missing an annual report triggers late fees, then dissolution. Treat this calendar as mandatory, not optional.
Annual report rules
The Illinois LLC Annual Report (Form LLC-50.1) is due by the end of the month preceding the anniversary month. Example: If you formed on July 15, your report is due by June 30 each year.
- $75 filing fee.
- 60 days late → $100 penalty (total $175).
- 180 days late → administrative dissolution. Reinstatement requires Form LLC-5.5(RT), $200 reinstatement fee, past-due reports, and penalties.
| Event | Due date | Fees | Risk if missed |
|---|---|---|---|
| Annual Report (LLC-50.1) | By month-end preceding anniversary month | $75 + $100 penalty after 60 days | Penalties, loss of good standing, eventual dissolution after 180 days. |
| Reinstatement after dissolution | Any time after dissolution | $200 reinstatement + outstanding fees/penalties | Gap in legal existence, lender covenant breaches, potential contract defaults. |
Does changing registered agent wait for the annual report?
No. File Form LLC-1.36/1.37 (Statement of Change) as soon as the RA changes. You can still update information in the annual report, but the RA change form keeps notices flowing in the meantime.
CTA / BOI & foreign LLCs
FinCEN’s March 2025 rule change paused BOI reporting for domestic entities, but foreign companies remain in scope.
Domestic Illinois LLCs
Under the March 26, 2025 interim final rule, LLCs formed under Illinois law are no longer “reporting companies” for Corporate Transparency Act purposes. No BOI report is required at formation or after changes—for now.
Keep an internal beneficial owner ledger (names, addresses, IDs, ownership percentages) so you can comply quickly if the exemption disappears.
Foreign entities registered in IL
Entities formed under foreign law (e.g., Canadian ULCs, German GmbHs) but registered to transact business in Illinois remain CTA reporting companies if they meet the definition. Reporting deadlines:
- Registered before March 26, 2025 → file by April 25, 2025.
- Registered on/after March 26, 2025 → file within 30 days of registration.
Foreign-owned Delaware or Wyoming LLCs that are themselves domestic entities now fall under the exemption when they register in IL.
| Scenario | CTA status | Notes |
|---|---|---|
| Illinois LLC with Chicago members | Exempt (domestic) | No BOI filing, but keep internal ledgers in case rules revert. |
| Delaware LLC registered in IL | Exempt (still domestic) | Even when foreign-qualified in IL, it is still a U.S. entity and exempt. |
| German GmbH registering to operate in IL | Reporting company | Must file BOI within the applicable deadline and update on changes. |
Attorney services & flat-fee packages
Remote-first, Illinois fluent. I draft, file, and coordinate every document personally—no marketplaces or junior contractors.
How engagements work
- Conflicts check and engagement letter delivered via secure e-sign.
- Strategy call (Zoom/phone) to confirm entity type, tax overlay, and timing.
- Drafts delivered in 2–4 business days for standard LLCs; 5–7 for series, PLLC, or L3C projects.
- Coordination with your CPA and, if needed, registered agent and licensing boards.
Core Illinois LLC Formation
- Articles of Organization drafting + filing (standard LLC).
- Operating agreement tailored to single or multi-member structures.
- Initial resolutions, banking certificates, RA coordination.
- EIN guidance + IDOR registration checklist.
- First-year compliance calendar + annual report reminders.
- Two rounds of revisions within 30 days.
Series LLC / Real Estate Bundle
- Series-capable Articles + up to three Certificates of Designation.
- Series-specific operating agreement schedules & asset checklists.
- Property-by-series ledger templates and lender-ready certificates.
- Guidance on bookkeeping and contracts per series.
- IDOR/sales-tax considerations for property-heavy operations.
- Includes three revision rounds for series language.
Professional / L3C / Cross-Border
- PLLC or L3C formation strategy + Articles + board filings.
- Coordination with DFPR or relevant licensing authority.
- Operating agreement integrating professional/L3C limits.
- Cross-border owner guidance (ITIN/EIN, withholding, CTA).
- Up to two structured consults with your CPA or impact investors.
- Document revisions for 45 days as ownership changes.
DIY Docs Review
- Attorney redline of client-drafted Articles/OA.
- Written memo outlining compliance gaps and next steps.
- 30-minute call to walk through edits.
- One follow-up review within 20 days.
Book an Illinois LLC strategy call
We’ll map entity type, tax exposure, and compliance tasks in 30 minutes. Most standard filings can be submitted within 24 hours of engagement.
Prefer email? Send a 2–3 paragraph summary of your current structure, timeline, and goals to owner@terms.law and I’ll reply with tailored next steps.