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Hey there! Excited about setting up a Limited Liability Company in Illinois? You’ve landed in just the right spot. Before diving in, though, it’s crucial to understand the financial aspects. From the get-go, you’ll encounter fees for filing, plus ongoing costs to keep your LLC in tip-top shape.
This guide will clarify the expenses involved in forming an LLC right here in Illinois. And hey, if you need a bit more guidance, LLC services like Tailor Brands are ace at navigating the paperwork maze ensuring you tick all the right boxes.
Arm yourself with the right info and support, and you’ll be more than ready to tackle the costs and intricate details that come with launching your own LLC in the Prairie State.
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What Is the Cost of Forming an LLC in Illinois?
In Illinois, the main expense for setting up an LLC is the $150 online filing fee. This is necessary for submitting your LLC’s Articles of Organization to the Illinois Secretary of State.
Illinois Foreign LLC Formation Costs
If you’re the proud owner of an LLC registered outside Illinois and you’re eyeing expansion into the Prairie State, you’ll have to register your LLC as a foreign entity here.
For this business registration, a fee of $150 applies. You must complete and submit an Application for Admission to Transact Business (Form LLC-45.5) to officially get your foreign LLC up and running in Illinois.
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Annual Cost for LLCs in Illinois
After setting up your LLC in Illinois, it’s crucial to grasp the yearly expenses necessary to keep it compliant and operational. These LLC costs fluctuate based on your particular business demands, yet there are a few standard charges to factor into your LLC’s yearly budget in Illinois.
A key expense is the Annual Report, which Illinois LLCs must submit to the Secretary of State’s office with a filing fee of $75. This report updates important details about your LLC, such as addresses, managers, and members. Missing the reporting deadline could result in late fees or even the dissolution of your LLC.
Additionally, Illinois requires a Registered Agent to handle important official and legal documents for the LLC. Hiring a registered agent service can cost between about $100 to $300 per year. While some LLC owners may choose to serve as their own registered agent to save money, this requires being available during business hours to accept legal documents.
How Much Does It Cost to Start an LLC in Illinois With the Best LLC Service?
In Illinois, setting up an LLC kicks off with a $150 starting fee, potentially increasing with additional services. It typically takes 2 to 3 weeks to process, but if you’re crunched for time, dropping an extra $50 shaves the wait down to 4 to 6 days or $100 to just 1 to 2 days.
Looking at Tailor Brands’ options, their Lite LLC plan covers the basics of LLC formation with standard processing for only the state filing fee.
For a bit more oomph, the Essential LLC plan costs $199 plus state fees. It speeds up the process and includes annual compliance assistance, and an operating agreement. To keep these services going, you’ll need to pony up $199 each year.
The top-shelf choice is the Elite LLC plan, priced at $249 plus state fees. It packs everything from the Essential plan along with more biz tools enjoying a free business domain for a year, website and online store builders, eight free logos, a digital business card, business card tools, and a social media post maker. To keep these goodies, an annual fee of $249 is needed.
Additional Costs When Starting an LLC in Illinois
Illinois LLC Name Costs
Registering a business name for your Limited Liability Company (LLC) in Illinois comes at no cost. Choosing a name for your LLC will not add any financial strain, as the name approval is part of the Articles of Organization filing process, with no extra fees involved.
You might find some online sources claiming that you need to reserve an LLC name, but this often is different for most states. In general, there’s no requirement to reserve a name when forming an LLC.
Make sure that the name you pick for your LLC meets Illinois’ naming requirements and isn’t already taken by another business.
Illinois Registered Agent Costs
When setting up an LLC in Illinois, you must choose a Registered Agent. This might cost you nothing or up to $125 every year. This agent handles all your legal papers and state communications. They need a legitimate Illinois street address and must be around during office hours. You could serve as your own agent or pick someone you trust at no additional cost.
You also could go for a Registered Agent service. These services cost between $100 and $300 per year and offer perks like extra business features and privacy protection.
It’s smart to hire one of these services if you don’t have an Illinois address or prefer to keep your address private. Some companies let you use their address on public records for these reasons.
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Illinois Operating Agreement Costs
Getting your hands on an Illinois LLC Operating Agreement won’t cost a dime. It’s a vital document that details how your LLC operates, including ownership stakes, management roles, and how profits get shared. Essential for both single and multiple-member LLCs, it’s a good move to keep this agreement in your business records and give each member their own copy.
Though many sites might ask for $50 to $200 for such agreements, snagging one in Illinois won’t lighten your wallet.
Illinois EIN Cost
An EIN Number, also known as an Employer Identification Number or Federal Employer Identification Number, is essential for several tasks like filing income taxes, opening an LLC bank account, and hiring employees if necessary.
While some websites charge a fee to get an EIN for your LLC, you can obtain it for free directly from the Internal Revenue Service through a straightforward online application. Keep in mind the EIN Application is the only federal requirement. All other LLC management activities are handled at the state level.
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Illinois LLC Taxes
The annual expenses for Illinois LLCs differ because owners need to cover various taxes. These taxes that LLC owners must pay include:
Federal Income Taxes
The IRS provides different tax treatment options for your LLC. For Single-Member LLCs, the IRS considers them Disregarded Entities. This means the LLC itself does not file a federal income tax return; the owner does, paying the taxes due.
The way an LLC is taxed hinges on who owns it: if an individual, it’s treated like a Sole Proprietorship; if a company owns it, it’s taxed as a branch or division.
For Multi-member LLCs, they’re treated as Partnerships. Here, the LLC files a Partnership Return and distributes K-1s to the owners, who then declare their share of the profits on their personal tax returns.
Husband and Wife LLC Taxes
In community property states, husband and wife LLCs have the flexibility to file taxes either as a Single-Member LLC (Qualified Joint Venture) or as a Multi-Member LLC. This option is available due to the rules of community property states. However, Illinois is not a community property state, so the Qualified Joint Venture option is not available there.
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Electing Corporate Taxation
Beyond their default designations, LLCs can opt to be taxed as a Corporation, either an S-Corporation or a C-Corporation.
To elect S-Corp status, submit Form 2553. This choice can benefit profitable businesses by reducing self-employment taxes. To be taxed as a C-Corp, file Form 8832. This option is rarer and typically suits large employers looking to save on healthcare fringe benefits.
Illinois State Income Tax
In Illinois, single-member LLCs do not file a state return; instead, the owner reports LLC profits or losses on their personal state return. Multi-member LLCs may need to file a state-level Partnership return, with each owner then including their share of the LLC’s profits or losses on their own returns. Businesses in specific industries may encounter unique Illinois business taxes, making the guidance of an accountant advisable.
Personal Property Replacement Tax
Illinois LLCs are required to contribute 1.5% of their net income as Personal Property Replacement Tax to the Illinois Department of Revenue.
Illinois Tax ID Number
Businesses in Illinois need to secure a state-level Tax ID number, which can be acquired online through MyTax Illinois or by reaching out to the Illinois Department of Revenue.
Local Income Tax
You or your LLC may be subject to local municipality income taxes. It’s wise to consult an accountant and verify with your local authorities.
Illinois Sales Tax
If you conduct sales to consumers in Illinois, you’re required to collect sales and use tax and obtain a Sales & Use Tax license (also known as a seller’s permit). You can register for this through MyTax Illinois. The terms are often used interchangeably.
Illinois LLC Payroll Taxes
Hiring employees for an Illinois LLC means dealing with several payroll taxes, including federal and state income tax withholding, Social Security and Medicare taxes, as well as federal and state unemployment taxes, and any local deductions. Due to the complexity and risk of penalties, many businesses choose to use a payroll company or hire an accountant to manage these responsibilities.
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Illinois LLC Cost – FAQs
Conclusion
Setting up an LLC in Illinois involves a thorough review of related costs such as filing fees, registered agent fees, and possible expenses for legal or consulting services, despite the state’s favorable business environment and economic prospects. LLC services like Tailor Brands offer different packages to ease the process of LLC formation.
Entrepreneurs need to balance these financial factors with Illinois’ robust legal structure and commercial standing to determine if forming an LLC meets their business objectives and budget.
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