How to Get a Business License in Illinois?

If you are planning to form a startup or move your existing business, Illinois will provide you with the right platform, strong infrastructural support and a good business climate. It has a pro-business regulatory environment as well. Setting up a company is one important aspect and the other is obtaining the right Illinois business license. Licenses or permits are considered as official permissions and facilitates operation of a company in this state. We have created this guide to provide you with as much information as possible regarding Illinois business licenses and permits. You will gain an understanding of processes related to obtaining licenses, various issuing authority, and the different types of licenses and permits that exist in the state.

Business License in Illinois

Different states in the USA have different business laws and regulations. These laws govern the operational aspect of every conducting their business in this state. The Illinois Compiled Statutes, Chapter 805 – Business Organizations requires all domestic or foreign entities formed in this state to apply for an Illinois business license. The importance of licenses or permits lies in the fact that this ensures businesses are able to comply with laws and regulations pertaining to maintaining safety standards and best practices. If you don’t obtain an Illinois business license and still operate a company then you may be severely penalized.

Who needs an Illinois business license?

Whenever you plan to start a business, it is important to always conduct Illinois business license search. The significance of this search lies in the fact that you will need the right permission or authorization to transact in a local jurisdiction. Business licenses and permits provide that authorization. The scope of a license however will vary according to several factors like the type of company, location of your business, profession or occupation, state laws, zonal codes, and industry regulations. This search will essentially help you to obtain an Illinois business license that is relevant to your business.

Example: If you want to start a restaurant then you may need multiple licenses like a health permit, a retail food establishment license, alcohol license, and local licenses as necessary. However, if you operate a home based business as a freelance graphic designer then you will need to apply for a ‘regulated business license for home occupation’.

What business license do I need in Illinois?

If you have decided to form a company in Illinois then one of the foremost operational requirements is to obtain an Illinois business license. Different states in the USA have different licensing requirements. Some states, like Nevada and Washington, issue a general business license, but Illinois doesn’t. There is no requirement for a state-level business license, although some cities may require you to apply for a general business license. This will depend purely on the city where your business is located and the operational area within city limits.

Another important area in licensing to focus on is the local licenses. Local municipalities in cities and counties may require you to apply for and obtain multiple business licenses or permits before beginning operations in this state. You must conduct a proper Illinois business license search to identify local municipalities’ appropriate licenses or permits. If you plan to sell or lease taxable goods or similar services in this state, you may also be required to apply for a seller’s permit, also known as a Certificate of Registration. Let’s look at this state’s various categories of licenses in detail.

Type of Business Licenses in Illinois

The business activity plays a key role in obtaining an Illinois business license. Certain cities are regulated, while some are defined under occupation or profession. The second most important factor is the location of your company. It is important to note that the type of Illinois business license and permits required by your company may vary according to location or jurisdiction. Let’s try and understand the different types of licenses that may apply to any entity planning to conduct business in this state.

Statewide seller’s permit

There are different types of business activities that businesses can indulge in the state of Illinois. If the primary activity is related to meeting economic nexus within the state or selling taxable products and services, then you will need to register for a sales tax permit. This type of Illinois business license is also known as a seller’s permit. You will need to complete and submit the Certificate of Business Registration, and there is currently no registration fee for the same. This certificate can be filed online using MyTax Illinois.

You can also file a paper form REG-1—Illinois Business Registration Application with the Illinois Department of Revenue. This type of Illinois business license and permit expire each year and are renewed automatically. However, if you are a reseller (distributor, wholesaler, or manufacturer), the Certificate of Registration or seller’s permit expires once every three years. You will then be required to renew it manually using a paper Renewal Packet.

Local business licenses

One of the important forms of permits or licenses in this state is local licensing. If your business is situated in a specific city, county, village, or jurisdiction then you will need to conduct an Illinois business license search for that specific location. Different cities and counties have different licensing laws and requirements. Licensing may be industry-specific, activity driven, or simply area-specific. You will need to obtain an Illinois business license based on these parameters. The type of license, fee, and renewals will vary from one city or county to another. Let’s look at an example to understand how to obtain local business licenses.

Example: If you start a manufacturing business focused on mechanical and/or chemical processing in the City of Chicago, you must apply for a business license. Licenses will be issued by the Small Business Center (SBC), and the fee will be $275. You must also undergo a Zoning Review and onsite inspections for Finance and Fire. If you were to start a contractor business in the Village of South Chicago Heights, the licensing regulations would be different. You will need to submit a General Business License Application. The Illinois business license fee will range from $100 to $600 per license based on the business activity. The fee for General contractors is $150 per year.

Specific licenses

Specific business activities require specific licenses and permits. Some of the specific licenses include the following –

Specific activity – There are several activities that fall under this category. An important example is Retail Food. If you start a restaurant, it will be considered under this category, and you may be required to obtain an Illinois business license for food establishments. The issuance of this license is overseen by the Illinois Department of Public Health (IDPH) and local jurisdictions. Certified local health departments must submit a uniform food establishment inspection report before issuing this license.
Professional license – There are hundreds of occupations and professions. If you start a company whose primary activity is categorized under a specific profession or occupation, then proper licenses will be required. You may be required to conduct an Illinois business license search to ascertain the exact permit requirements for your company. This license will enable you to provide a specific service legally in this state. The Illinois Department of Financial and Professional Regulation (IDFPR) is the regulatory body overseeing the issuance of professional licenses.
Home-based business – If you are thinking of establishing your startup from your residence or home, you may need an Illinois business license and permits. The licensing regulations and requirements for home-based businesses will vary from one location or jurisdiction to another. In most jurisdictions, you must apply for a home occupation permit. It is important to note that certain occupations, such as repair or dispatch of motor vehicles, cannot be licensed under this permit. You will also need proper zoning approval from the city or jurisdiction where you conduct your business.

Federal Licenses and Permits

There are certain business activities for which licenses or permits are required at the federal level. The list of activities is regulated by the federal government, like selling alcohol or firearms. Some other areas for which you may need a Federal Illinois business license include producing commercial nuclear energy, drilling for natural gas, manufacturing and importing firearms, making or selling alcoholic beverages, and transportation and logistics, among others.

Alternatively, you can opt for IncParadise “Business License Research Report” service. This is a research report, which contains a list of filing instructions, supporting document requirements, and fees for all business licenses and permits applicable in the state of Illinois.

Need any Assistance in Obtaining Your Illinois Business License?

There is a wide variety of business activities and hence the type of license required by your company will also vary. It will also vary according to location. You may need to apply for a single license or multiple licenses. The application, fee, and laws for Illinois business licenses and permits are different for each type of license and each jurisdiction.

We, at IncParadise can guide you towards obtaining the necessary business licenses and permits. We also provide additional services to new and existing Illinois businesses like EIN Tax ID and Foreign Qualification among others.