Illinois Business Tax

The state of Illinois is a business friendly state and like all other states, also requires new and existing entities to file taxes. You may be required to file Illinois business tax at the state level and local level. Depending on the type of entity you form, federal taxes may be required to be filed. The type of taxes that you may need to file may also depend on certain other factors like business activity and number of employees. Each type of state or local tax has different rates. Hence, it is important to use an Illinois business tax calculator to determine the exact tax amount. If you are moving your company through foreign qualification then you will be required to file state business taxes in the state of formation (home state) as well as Illinois.

What taxes do businesses pay in Illinois?

Illinois is a business friendly state and home to several Fortune 500 companies. Some of the largest multinational companies based in this state include Boeing, Walgreens Boots Alliance, Caterpillar, United Parcel Service (UPS), Baxter International, Hyatt Hotels, Aon, Northern Trust, and CNA Financial among others. There are several key industries in this state right from pharmaceutical and drugs to cosmetic & toiletry, life sciences, Casualty and Direct Insurance, transportation, distribution, and logistics, and commercial banking among others. The industry also plays a key role in determining the type of small business tax in Illinois that may be applicable.

Illinois business income tax

There are two types of income tax prevalent in the state of Illinois. One is a personal or individual income tax, and the other is a small business tax, also known as the state business income tax. The tax rate is a flat 7 percent of your federal taxable income, along with adjustments. The tax returns are due on the 15th day of the fourth month after the end of an entity. This is one of the important Illinois corporation taxes.

Illinois pass-through entity tax

An important Illinois business tax is the Pass-through Entity (PTE) tax. This is considered an entity-level income tax. The PTE tax rate is 4.95 percent (.0495) of the taxpayer’s net income during a taxable year. S corporations and partnerships can elect this tax. This tax will be paid on all Illinois net income post allocation or apportionment.

Illinois personal property replacement tax

Personal property replacement taxes (PPRT) are an essential source of revenue for the state. It is collected by the Illinois state and paid to the local governments. The PPRT tax is governed by the 2024 Illinois Compiled Statutes, Chapter 30 – Finance, 30 ILCS 115/ – State Revenue Sharing Act – (30 ILCS 115/12) (from Ch. 85, par. 616). It is an essential form of Illinois Corporation taxes where the rate can vary from 1.5 to 2.5 percent depending on the entity type.

Illinois sales and use tax

One of the important forms of Illinois corporate income tax is the sales and use tax. The sales and use tax is imposed on different business activities connected to selling products and services. The most important component of the sales tax act is known as the Retailers’ Occupation Tax Act. This act imposes sales tax upon individuals or businesses that are engaged in selling tangible personal property through retail to vendors or purchasers for use or consumption.

Illinois withholding tax

The employer withholding tax is an important form of Illinois business tax. The application of this tax is governed by the 2024 Illinois Compiled Statutes, Chapter 35 – Revenue, 35 ILCS 5/ – Illinois Income Tax Act., Article 7 – Withholding Tax. According to this law, every employer who maintains an office or is transacting their business within this state is required under the provisions of the Internal Revenue Code to withhold a tax on any form of compensation paid in this state to an individual according to Section 304(a)(2)(B)). If you are paying wages and salaries, you must first register with MyTax Illinois. The tax rate for withholding is 4.95 percent, effective July 1, 2017. You can use an Illinois business tax calculator to determine your withholding tax rates.

Illinois individual income tax

There are certain types of entities that have to file one or more small business tax in Illinois. In some forms of entities, the owners of such businesses have to file individual income tax returns. This tax applies to individuals, estates, and trusts. A flat income tax rate of 4.95 percent of the net income. If it is applicable, then you will need to file Form IL-1040. You can file it electronically using MyTax Illinois. You can file this return using your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).

Are you thinking of starting a new business in Illinois?

How Illinois Businesses are Taxed?

Suppose you have decided to form and operate a new company in Illinois, and then you must maintain compliance with all important state requirements. One such requirement is filing Illinois business tax returns. The state has different types of taxes; one entity may be required to file multiple taxes. The type of taxes that will apply to your business will depend on the entity structure, business activity, and even location. You may need to file multiple Illinois LLC taxes if you form a limited liability company. Let us examine the various entities and their tax obligations in this state.

Taxes for an LLC

If you plan to form a limited liability company in Illinois, then it will be considered a pass-through entity for taxation purposes. Such an entity will not be required to file any federal or Illinois corporate income tax. This being said, the income earned by an LLC will always pass through to the owners and other members. As a result, you or the members will be required to file personal income tax at a flat rate of 4.95 percent. However, suppose a limited liability company is considered a disregarded entity for federal income tax purposes. The income, deductions, and other relevant items must be reported on the owner’s federal income tax return.

Taxes for a C Corporation

If you are thinking of incorporating in Illinois then your company will be subjected to different types of taxes. One of the foremost amongst them is the Illinois corporate income tax. The current tax rate is a flat 9.5 percent. Apart from this, corporations are also charged a franchise tax. This is quite a complex tax and will require you to use an Illinois business tax calculator. Apart from this, a corporation may be subjected to Replacement Tax, which is also known as the Personal Property Replacement Tax (PPRT). Corporations will have to pay a replacement tax of 2.5 percent on their net income in this state. You can file this tax using Form IL-1120.

Taxes for S Corporation

An S Corporation is not exactly an entity structure but is a type of tax election. You will actually need to register some form of entity prior to opting for this election. The most common form of companies that elect S Corporation tax status are C Corporations and Limited Liability Companies (LLC’s). Once your company gets the S Corporation status, the Illinois corporate income tax liabilities will also change. The most important feature is that of pass-through taxation and due to this, an S corp will not file any federal income taxes at the company level. Instead, the profit and loss will be “passed through” to company shareholders and they will need to file individual tax returns.

Taxes for a Sole Proprietorship

A sole proprietorship is one of the easiest forms of business that you can operate in the state of Illinois. Since it is owned and operated by a single owner hence the most important small business tax in Illinois for a sole proprietorship is individual income tax return (Form IL-1040). You will have to file this return at a flat rate of 4.95 percent irrespective of your earnings. Apart from this, depending on the business activity, sole proprietors may also be required to file sales and use tax returns.

Taxes for Partnerships

The income generated from a partnership firm is normally distributed to the individual partners. These partners pay tax on this distributed amount through their federal as well as state tax returns. One of the Illinois Corporation taxes that partnerships are required to file is the personal property replacement tax. The applicable tax rate for this type of entity is 1.5 percent of its net income. Partnerships can also elect to file Pass-through entity (PTE) tax at a rate of 4.95 percent. If the business activity of a partnership involves retail sales then sales and use tax will also be applicable.

Ready to Incorporate Your Illinois Company?

You can register several types of entity structures in Illinois right from a Partnership to an LLC or C Corporation. You can even elect S Corporation tax status to enjoy certain tax privileges. The process for new company formation and the applicable taxes will vary according to the chosen structure. IncParadise, one of the state’s top incorporation service providers, can provide information about Illinois’s small business tax. We can help you register your LLC or corporation in this state.

Doing Business As or DBA in Illinois

Illinois is home to over 1 million small businesses including LLC, sole proprietorships, and partnerships among others. You can form any type of company structure in this state but one of the primary requirements is that of a business name. The importance of a company name or a DBA lies in the fact that no business can be registered or can operate without this. You may opt to use your name (owner’s legal name) like Sarah Ferguson LLC or use a “Doing Business As” (DBA) name like Ferguson & Friends. If you proceed with filing a DBA in Illinois then it is important to ensure compliance with the requirements as governed by Illinois Compiled Statutes, Chapter 805 – Business Organizations, 805 ILCS 405/ – Assumed Business Name Act. If you are wondering how to look up a DBA in Illinois then there is a specific process that you need to follow.

What is DBA in Illinois?

A business name is considered to be the identity of a company. Your customers, vendors, or partners will be able to recognize your company with the help of a name. Example – When we say IBM, immediately customers globally can relate to the name as one belonging to a technology giant. There are basically three types of business names that any company can choose and they are:

• The name of the business owner – James Beck LLC
• Traditional company names like Vermillion Inc.
• A DBA or an assumed name like Dennis Bakery

When do you need a DBA in Illinois?

Many companies conduct their business under multiple names. If you plan to form an LLC, C Corporation, sole proprietorship, or partnership, then filing a DBA in Illinois is necessary. Of course, there is nothing wrong in using a DBA name or an assumed name as long as you comply with state laws. Several reasons or situations require businesses to file an Illinois DBA online application. Some reasons you may need a DBA are:

• Operate multiple businesses – If you want to operate multiple businesses or more than one business, you must apply for Illinois DBA online. A single company cannot use the same name for any other business. Hence, you can apply for an assumed name instead of registering a new legal entity.

  Example: Your primary business activity is party planning. Now, you want to expand into baked cookies and cakes. You can simply file an Illinois DBA online application to promote this new venture. After a few months, you can use another assumed name to brand this new business activity if you want to branch off into entertainment.

• Maintaining Business Compliance – Certain forms of businesses, like corporations or LLCs, automatically enjoy some degree of legal protection. If you start another business with a different name but don’t file a DBA, that company will not have any legal protection, and your client or project contracts will not hold up in court.
• Complexity and expenses – One of the reasons for filing a DBA in Illinois, especially by a sole proprietorship, is to avoid complex processes and expenses related to it. You don’t have to register a sole proprietorship with the state. The only costs involved are those of licenses and individual income tax.

Filing DBA in Illinois for LLC and Corporation

If you focus on expanding your business horizontally, then applying for a DBA would help. This is also known as an assumed name in the state of Illinois. There is a specific process to apply for and obtain an Illinois assumed name or file a DBA in Illinois, especially for a business corporation or an LLC. The process and fee will also differ from the traditional LLC or corporate name reservation process and fee.

Do Illinois Business Name Search

If you want to apply for an Illinois DBA online for your LLC or corporation, then you will first need to ensure compliance with Illinois’s assumed name laws. This will be governed by the Assumed Business Name Act – 805 ILCS 405/0.01 from Ch. 96, par. 3m. You must also ensure your chosen assumed business name is unique. This means it will not be the same as any other registered business name or LLC or corporation’s assumed name in the database. You would now want to know—how I look up a DBA in Illinois.

• Business Name
• Registered Agent
• President
• Secretary
• Manager
• File Number
• Keyword
• Partial Word

File the Certificate of Assumed Name with the County Clerk

Once you have conducted a DBA search and if your chosen name is available, then the next step is to file the Illinois DBA online application. The filing process, the application, and the fee will differ according to the county in which you operate.

Register your Illinois DBA with ease!

Managing Illinois DBA

After conducting an Illinois DBA name search, you can register the assumed name with the office of the County Clerk. Each county in Illinois has its own rules and regulations pertaining to an assumed name. These laws are also applicable for renewal, changing, or cancelling of the assumed name in the jurisdiction where the DBA application was filed. Let’s look at the various processes applicable for managing an Illinois DBA in the future.

How to renew Illinois DBA?

Filing a DBA in Illinois can be done only with the office of the County Clerk. Normally, the assumed names registered at the County level do not expire. If you have registered an assumed business name at the state level after conducting an Illinois DBA name search then you will have to renew your registration every 5 years.

How to change Illinois DBA?

After filing an Illinois DBA online application, if you want to change the DBA name then you will need to cancel it and apply for a new name. There is no easy process for the same. Even if there is any change in business information, you will be required to re-register.

How to cancel Illinois DBA?

Once you publish a DBA name in Illinois, this will become the business name legally. At any given point in time, if you want to cancel or withdraw the assumed name then there is a simple process for the same. If you are filing for canceling at the state level, then you will need to fill and submit the Application to Adopt, Change, Cancel, or Renew an Assumed Name. There is a fee of $5 for corporations and LLC’s.

Need Any Assistance in Filing Illinois DBA?

The process for filing a DBA in Illinois requires you to provide accurate business information while being compliant with state assumed name laws, federal trademark laws, and local county laws. The process of conducting an Illinois DBA name search can be quite confusing. IncParadise can gladly assist you with this process. We have expertise and knowledge regarding the Illinois state and county regulations about DBA and new businesses.

Sole Proprietorship in Illinois

The state of Illinois is considered as the national hub for research and innovation. It is home to 34 Fortune 500 companies that have experienced growth in a diverse industry cluster. You can start a sole proprietorship in Illinois and leverage top talent passing out from world-renowned research universities. As an entrepreneur, the expansive business community as well as vibrant startup ecosystem are blessings in disguise. Today, the state is home to 1.3 million small businesses, a large percentage of which are sole proprietorships. When you search sole proprietorship in Illinois for resources, you will be able to access a host of competitive small business incentive programs that aid in business growth and expansion.

What is a sole proprietorship in Illinois?

A sole proprietorship is the most common unincorporated business structure that can be formed within the USA. It requires minimal startup costs and as the name suggests, it’s run by a single individual. This type of company is also known as an individual entrepreneurship or sole-tradership. One of the salient highlights of this type of entity is the use of less state documentation and legal paperwork as compared to a limited-liability company or C Corporation. As a sole proprietor, you will have the flexibility of using your legal full name as a business name or can even choose to use an assumed name or file Illinois trade name. If you start a sole proprietorship in Illinois then you will be able to access state run business incentive and grants programs as well.

Important features of sole proprietorship in Illinois

A sole proprietorship in Illinois is one of the oldest forms of business in the USA and the world. It has a basic and simple structure. It has a different tax structure and you will not be required to file any federal taxes. There are many advantages and a few disadvantages to operating this type of business. This is mostly due to the features of the entity structure. Let’s take a look at some of the top features.

• Control over decision-making is one of the top features of a sole proprietorship. You will be able to manage operations independently and also maintain complete autonomy when it comes to decision-making. This is because it is a single-owner organization.
• When you search sole proprietorship in Illinois tax laws, it will reveal that owners are required to file individual tax returns. You will need to report income and expenses. This helps in avoiding double taxation while enhancing tax efficiency.
• This type of entity is considered the best option for small business owners. This is because the entity structure requires very few setup procedures. You will not be required to face too many regulatory hurdles as well.
• One of the important features is that you are not required to register this type of business, unlike an LLC, corporation, or partnership.
• As a business owner, you will be able to derive maximum incentive from your company. This is because you will not be required to share any of your profits.

Steps to Start Sole Proprietorship in Illinois

If you are wondering how to start a sole proprietorship in Illinois then there are certain state and business-specific requirements that you will need to identify and fulfill. These requirements are mostly related to management, operations, and finance. A sole proprietorship in Illinois can be a home-based business or can be operated from a commercial space like a retail store. As a result, you may need to apply for appropriate licenses or local permits. There are several important areas to focus on as mentioned below.

1. Prepare a business plan

A good business plan can make that all-important difference between success and failure. You may have a brilliant business idea but without proper planning, you will not be able to achieve targeted growth. When talking about a plan, it should be a solution that fits your specific needs. There are several details that are required to be documented in this plan right from the primary objective to future expansion. It should cover operations, product-market fit, competition, finance, and even potential business partnerships. A business plan will also outline other company-related areas like whether the company name should be your legal name or should you file an Illinois trade name. Some of the most common aspects of a sole proprietorship business plan are:

• Executive Summary
• Business concept
• Long and short-term Objectives
• Market analysis
• Operating plan
• Product or Service line
• Organization and Management
• Competition
• Target audience
• Marketing Plan
• Sales Strategy
• Financial Plan and Projection

2. Choose an Illinois business name

If you start a sole proprietorship in Illinois then it is important to identify a strong business name. There are two types of names that this type of entity can choose to operate with. You can use your own legal name (full name) or you can file an Illinois trade name also known as a DBA (doing business as). The name is critical to your business as it will reflect the objectives of your company. The name of your company will be used in marketing and branding collaterals and also for opening a bank account. Hence, it is important to choose the right business name.
Here are some easy tips that you can follow:

• Follow Illinois State’s business name guidelines and rules
• The name you choose should not be similar to that of any competitor
• Try to avoid any names that are hard to pronounce or spell
• You should keep your target audience and business goals into consideration when choosing a name
• You should also search a sole proprietorship in Illinois also known as name availability search
• Check if the chosen name is available for domain name booking for your company website
• You can take help of online business name generators for creating short names

3. File a trade name

If you want to start a sole proprietorship in Illinois then you can use your own name or go with a DBA name. A DBA or doing business as the name is also known as an assumed name, fictitious name, or a trade name. You can choose this type of company name if you are not comfortable using your full legal name. The process of choosing an assumed name is governed by 2023 Illinois Compiled Statutes, Chapter 805 – Business Organizations, 805 ILCS 405/ – Assumed Business Name Act. It is important to note that you can file an Illinois trade name with the office of the County Clerk in the county where you are planning to transact business. Let’s look at an example to understand this.

Example: Your name is Janet Mason and you want to file a sole proprietorship in Illinois as a cake and catering company. It is based in McLean County, IL. You can use your own name like ‘Janet Mason Cakes & Catering.’ Alternatively, you can choose to use a business name like “Janet’s Cakes & Catering”. Here Janet’s Cakes & Catering will be considered as a fictitious business name or Illinois DBA. You will need to conduct a name availability search for this name. If it is available then only you can file an Illinois trade name. You will need to submit the Assumed Name Certificate Intention with the County Clerk’s Office along with a fee of $24.

Do you want to start a sole proprietorship in Illinois?

4. Get EIN

If you start a sole proprietorship in Illinois, you will be required to file personal income tax. You may also be required to file sales tax and any other state taxes. As an owner of a sole proprietorship, you can file your taxes using a Social Security Number (SSN). However, applying for and obtaining an Employer Identification Number (EIN) can be quite advantageous. There are certain requirements that you need to meet to apply for an EIN and they are:

• If a sole proprietorship company hires employees
• If your company plans to open a business bank account
• If you have a Keogh plan
• You are required to file excise tax returns
• If you change or convert the entity structure from sole proprietorship to a partnership or LLC
• If you file Chapter 7 (liquidation) or Chapter 11 (reorganization) bankruptcy

5. Obtain necessary licenses and permits

One of the most important requirements of any form of business is obtaining proper licenses and permits. A business license is a legal document that is issued by a state or government agency. Its objective is to grant permission to a sole proprietorship in Illinois from an operational perspective. This will help you to sell products or provide services within a specific jurisdiction or industry. Obtaining a license or permit also demonstrates that you are compliant with the local laws and regulations. Licensing in the state are categorized as under –

• Sales Tax license or seller’s permit
• Industry or activity specific licenses
• Professional licenses
• City or County licenses and permits
• Federal or Regulated licenses
• Zoning permits

6. Open a bank account for your Illinois business

One of Illinois’s easiest entity structures to form and operate is a sole proprietorship. The standard procedure is to open a business bank account although most individual owner-driven organizations prefer to operate their personal savings account for business purposes. It is recommended to operate a business banking account as it will help separate your personal gains and expenses from those of the company. Thus, it will help manage the business’s financial aspect. When you keep your funds separately in a checking account, it will help limit your personal liability.

7. Report and pay taxes

You know how to start a sole proprietorship in Illinois but in order to maintain active status and enjoy credibility, it is important to ensure compliance with all annual requirements of the state. This is where filing of taxes each year becomes extremely crucial. A sole proprietorship is a single owner entity and hence there is no distinction between the owner and the business itself from a tax perspective. As the owner, you will need to claim profits or losses on your personal tax return. The individual income tax rate in Illinois is flat at 4.95 percent.

Ready to Start a Sole Proprietorship Business in Illinois

A sole proprietorship in Illinois is one of the best forms of business that you can operate. This type of entity is not required to be registered with the state, unlike several other forms of business. However, you will need to obtain appropriate business licenses and fulfill state annual requirements like filing taxes or renewal of licenses.

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.

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.

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.

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.

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.

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.

Illinois Business Entity Search

The job of choosing the right name for your company should not be taken lightly as there are several aspects to consider. Sometimes, entrepreneurs choose a name in a hurry and forget to conduct an Illinois business name search. This leads to copyright and other related issues in the future especially from the operational perspective. We can divide the business naming process into three steps and they are:

• Identify the right business name
• Check for Illinois business name availability
• Reserve or register the company name if it is available

• It is important to keep your business name short – 6 to 8 letters and yes, it should be easy to remember
• You need to avoid any complicated names like Hoegaarden or Balenciaga
• Try and ensure the name is catchy and memorable like Arrow or Lee
• It is important to brainstorm business names that reflect on the purpose of your company like “Jacks Burgers”
• You can use online business name generators
• Always as a rule, follow the state naming guidelines
• A business name should be dynamic in nature keeping in mind future expansion
• Try not to choose a name that is similar to that of a competitor
• Your chosen name should not cause any trademark infringement
• The chosen name should be web-friendly and domain name is easily available

What is an Illinois business name search?

There are different types of entities in Illinois from which to choose. You can choose to register LLCs, partnerships, corporations, nonprofits, and even foreign entities. One of the important parts of the registration or incorporation process is the reservation or registration of a business name. This is possible only when your chosen name undergoes an Illinois business name search. This is basically a process of finding out whether the name you choose is available for reservation or not. This process is also known as business entity search or business registration lookup.

Example: You want to establish a new LLC or corporation in Illinois. The primary activity of the business is printing posters and marketing material. It is based in Chicago, IL. You want to name it “Chicago Printworks”. Once you have chosen this name, the next step is conducting an Illinois business name search. When you conduct this search, it will bring up a company with the same name based in Chicago, IL. This entity shows active status. It simply means that you will not be able to use the name chosen by you. You can change the name a little to something like “Chicago Printing Works” and conduct Illinois business name availability again, and then it will show that the name can be reserved.

Naming your Illinois LLC

If you have decided to register a limited liability company in Illinois, the first step will be to choose a company name and reserve it. This will be considered the legal name of your LLC. This name will be used everywhere, from branding collaterals to opening a business bank account. It will also be mentioned in the Articles of Organization and other LLC-related documents. Hence, it becomes crucial to choose a name that is compliant with the Illinois business name rules and guidelines.

General LLC naming rules

One of the most important areas to focus on when naming your limited-liability company is Illinois business name rules and regulations. The naming of an LLC and reservation of such a name is governed by provisions of Article 1, Section 1-15 of the Illinois Limited Liability Company Act. The general rules for an LLC name are:

• The name should have words like Limited Liability Company or abbreviations like LLC or L.L.C.
• It may also contain a combination of words and abbreviations like “limited liability company,” “limited liability company,” or “limited liability co.”
• This name should be distinguishable from any other in the Secretary of State Department of Business Services database. You can check this by searching for the name of an Illinois LLC.
• There are “Word Restrictions” that you need to check before finalizing a name. The state prohibits using specific words like trust, trustee, banking, and fiduciary.
• An LLC name should also remain distinguishable from that of another entity type. Thus, you cannot use terms like Corp., Incorporated, L.P., and Ldt. among others.
• Your chosen name should not contain symbols. You can use Arabic numerals, letters of the English alphabet, and Roman numerals.

Search LLC name availability on Illinois’s Secretary of State Website

Once you have thought of a strong business name for your LLC, ensure it complies with the Illinois business name rules. The next step is to conduct a business entity search. The website of the Secretary of State—Department of Business Services offers an online option for conducting this search. There are several search options available, but the easiest would be to search using a “business name”. You can also conduct a keyword search or partial word search.

Example: You want to start a bakery in Naperville, IL using the name “Golden Hour Bake House”. You can conduct the Illinois business name availability search using the full name or a part of this name, like “bakehouse”. The search options will reveal both specific names and all names with the word bakehouse. The results show that “Golden Hour Bake House” already exists in Springfield, IL. In such a scenario, you can change a part of the name or the complete name. If you change it to “Twilight Bake House,” then it doesn’t bring up any similar name. This means the changed name is available. Now you can simply fill out the Application to Reserve a Name.

Do you want to form an LLC in Illinois?

Naming your Illinois Corporation

A business corporation or a C Corporation is one of the most popular forms of businesses in this state. If you have decided to incorporate then it’s time to choose a name. A corporate name will be the identity of the company and hence you need to be extra careful while choosing this name. It’s important to adhere to Illinois business name rules and related requirements. Once you have chosen a corporate name, the follow up process would be to conduct an Illinois Corporation name search. This process will help you to decide whether your chosen name can be reserved with the state or not. Let’s look at the various aspects to consider when naming your new company.

General Corporation naming rules

The Illinois business name rules will be different for different types of entities although they may remain same for the same type of domestic and foreign entities. State naming guidelines help in minimizing the risk of your chosen corporate name in getting rejected. The corporate name laws are governed by 2023 Illinois Compiled Statutes, Chapter 805 – Business Organizations, 805 ILCS 5/ – Business Corporation Act of 1983; Article 4 – Name. The general rules for a corporate name are:

• Whether you form a C Corporation or elect an S Corporation status, the name should contain words like “corporation”, “incorporated”, “limited”, or “company”.
• The name can also contain abbreviations like “corp.”, “inc.”, “co.”, or “ltd.”
• The name should be unique and distinguishable from the name of any other company operating in the state as this will aid in Illinois business name availability search.
• You should not use a name that contains any word or phrase implying that your company is authorized to conduct the business of indemnity, assurance, or insurance.
• You should also check the list of restricted words, especially those associated with specific professions or industries. It is important to note that the Secretary of State will be responsible for determining if your name is “distinguishable” from another name.
• If you don’t want to use your legal name or the owner’s name then you can adopt a DBA (doing business as) name also known as an assumed name.

Search Corporation name availability on Illinois’s Secretary of State Website

Once you have finalized a name for your corporation, the next step is to conduct an Illinois Corporation name search. The website of the Illinois Secretary of State – Business Services Department offers you the access necessary to conduct this search. This is an online search option and provides several search methods. The search methods you can use include search using a business name, search using file number, keyword, and partial word.

Example: You want to start an engineering corporation in Evanston, IL. You want to use the name “Collins Engineers, Inc.”. You can search Illinois business name availability by using the entire name or just “Collins Engineers.” The search options will reveal that this name is currently in use. This corporation is situated in Chicago and enjoys an active status. In such a scenario, you can change this name to “Evanston Engineering, Inc.” or “Collins-Engineering, Inc.”. Such a name is available, and you can then reserve it. Alternatively, you can also file a DBA or assumed name.

Are you thinking of registering for a corporation in Illinois?

Do you need any assistance with an Illinois business name search?

A business name is the most important form of identity for a company. It helps create a positive first impression amongst customers and is used in various official documentation. It becomes crucial to choose the right name for your company. An Illinois business name search will help you identify a name that you chose and is available for reservation. IncParadise can provide meaningful assistance in naming your corporation or LLC.

Illinois LLC Annual Filing Requirements

The annual requirements for an Illinois limited liability company are governed by the Illinois Compiled Statutes, Chapter 805 – Business Organizations, 805 ILCS 180 – Limited Liability Company Act. The Illinois LLC annual requirements may be different from those of other forms of entities being formed in this state. If you are planning to form a limited liability company then the important annual requirements are categorized as under.

Illinois LLC Annual Report

When you form a limited liability company (LLC) in Illinois, you realize that there are great benefits like protection of your personal assets and pass-through taxation. Simultaneously, operating an LLC also means that you will have to fulfill several ongoing compliance responsibilities like filing LLC taxes in Illinois and submitting annual reports. These responsibilities are applicable to both domestic and foreign LLCs. One of the most important Illinois LLC annual requirements is that of filing the annual report.

Do you want to file an Illinois Annual Report for your LLC?

Illinois LLC Taxes

As an entrepreneur in Illinois, it becomes essential for you to understand the various taxes that may be applicable to your Limited Liability Company. If you fail to comply with LLC taxes in Illinois requirements then this may lead to heavy penalties and even cause legal issues. According to the Illinois Department of Revenue, the most important of all taxes for an LLC is the personal income tax. This is because a Limited Liability Company is considered a pass-through entity and hence the company will not be required to pay taxes. Instead, you as the owner or member will file individual income tax at a flat 4.95 percent. This rate will remain the same irrespective of your income.

Illinois Employer Taxes

• Self-Employment tax – This is one of the important LLC taxes in Illinois and each member of your LLC needs to file it. Self-employment taxes have to be filed on your share of the profits at a rate of 12.4 percent for Social Security and 2.9 percent for Medicare.
• Unemployment Insurance (UI) Tax – The unemployment insurance tax is considered to be a variable tax as the rates may increase or decrease depending on the overall economic condition of the market or state. If unemployment is low and there is a higher number of businesses paying the tax rates will drop and vice-versa. This is one of the important Illinois LLC annual requirements and currently the UI tax rates vary from 0.525 to 7.1 percent.

Illinois Sales and Use Tax

Apart from an Illinois LLC annual report, one of the important state requirements is that of filing sales and use tax. Most states in the USA have some form of sales and local taxes. In Illinois, if you or your LLC engages in a business activity that involves sale and use of any tangible personal property then you will be required to file this tax. This is one of the most common LLC taxes in Illinois and has to be filed by in-state retailers and out-of-state sellers.

Illinois Corporation Annual Filing Requirements

A C Corporation is one of the most favored forms of business in the state of Illinois. There are several processes that you will need to undergo right from incorporation to applying from necessary business licenses and permits. Apart from all this, you will also need to fulfill Illinois Corporation annual requirements. These requirements are important as they will ensure your company enjoys a good standing in this state. The annual requirements of corporations are governed by the Illinois Compiled Statutes, Chapter 805 – Business Organizations, Business Corporation Act of 1983. Let’s look in detail at all important annual requirements including corporation taxes in Illinois.

Illinois Corporation Annual Report

Once you have incorporated your new business in the state of Illinois, you will need to be compliant with all state requirements. Compliance with all annual state requirements will ensure your company enjoys a good standing in the state. One of the important Illinois Corporation annual requirements is that of filing an annual report. It is an important business filing that is required by most states in the USA. It is typically filed with the secretary of state.

What does it include and how to file it?

Generally speaking, a corporation has to report to the state if there are any changes to their physical or corporate address, change of registered agent, and even ownership and officers. Some states may require additional information about a company like stock, assets, and paid-in capital. When you file an Illinois corporation annual report, all such important information is included in it. It is important to note that both domestic and foreign corporations have to file this report as a part of Illinois Corporation’s annual requirements.

What is the due date for filing?

Once you have incorporated your company, you will need to file an Illinois annual report pursuant to 805 ILCS 5/14.05. This report has to be filed with the Illinois Secretary of State – Business Services Department. You will need to file an Illinois corporation annual report each year by the end of the month prior to the incorporation anniversary month.

Penalties if fail to file

You have to file an Illinois corporation annual report within or prior to the due date to avoid any penalties. There will be a late fee that is normally calculated based on franchise tax that is due on the date you are filing this report. In fact, if this report is not filed within sixty days of your annual report due date then you will receive a notice from the state. The notice states that if you are not able to comply then your entity may be administratively dissolved within a period of 60 days.

Thinking of filing an Annual Report for your Illinois Corporation?

Illinois Corporation Taxes

One of the important Illinois Corporation annual requirements is that of corporation taxes. Illinois is one of the thirty two states to have a flat corporate income tax. In fact, the flat tax rate is also one of the highest in the nation at 9.5 percent. This tax rate includes a 7 percent business income tax rate as well as a Personal Property Replacement Tax of 2.5 percent. The replacement tax is one of the important Corporation taxes in Illinois and will be levied on the net income of your company.

Illinois Sales and Use Tax

One of the important forms of corporation taxes in Illinois is the sales and use tax. As the name suggests, sales tax has to be filed only if a corporation indulges in selling or buying specific products and services. If your corporation is involved in the following then you will need to register with the Illinois Department of Revenue (IDOR).

• If you have a business nexus in Illinois
• If you are selling taxable goods or services to residents in Illinois
• If your buyers are required to file sales tax in this state

Need any Assistance in Filing the Illinois Corporation Annual Report?

The Illinois Corporation’s annual requirements or that of an LLC are quite important forms of compliance. Each new and existing entity needs to fulfill or meet these requirements. If your business fails to maintain compliance then it can lead to heavy penalties and even dissolution.