Illinois combines a large consumer market, a strong base of business customers and a straightforward online LLC filing process. Formation costs are moderate and the yearly report is quick. The parts to plan for are the state’s replacement tax and, if you’re in Chicago, the city’s own licensing rules.
What an Illinois LLC costs
Table of Contents
| Item | Cost | When |
|---|---|---|
| Articles of Organization | $150 | At formation |
| Name reservation (optional) | Small fee | Before filing, if you want to hold a name |
| Assumed name registration (if using a DBA) | State fee, renewed periodically | When you register the name |
| Annual report | $75 | Before the first day of your anniversary month, every year |
| Late annual report | Penalty added | If filed late |
Illinois cut its LLC filing and annual report fees in recent years, which made it noticeably cheaper to form and maintain an LLC than it used to be.
Step 1: Choose your LLC name
The name must include "limited liability company", "L.L.C." or "LLC" and be distinguishable from other entities on file with the Secretary of State. It can’t include certain restricted words, such as words implying it’s a bank or insurer, without approval. Search the state’s business entity database first.
Check federal trademarks, domains and social handles, following our business name checklist. To operate under a different name, file an assumed name with the Secretary of State.
Step 2: Appoint a registered agent
Every Illinois LLC needs a registered agent with a physical address in Illinois, available during business hours to accept legal papers. You can serve yourself, name another adult or use a registered agent company.
Step 3: File Articles of Organization
File Articles of Organization with the Illinois Secretary of State’s Department of Business Services, online or by mail, and pay $150. You’ll include:
- The LLC’s name and principal place of business.
- The registered agent’s name and Illinois address.
- The LLC’s purpose (a general purpose is acceptable).
- Whether it’s managed by members or managers, and their names and addresses.
- The organizer’s name and signature.
Online filings are generally processed quickly. Expedited service is available for a fee.
Step 4: Write an operating agreement
Illinois doesn’t require you to file an operating agreement, but every LLC should have one. It sets out ownership, management, voting, profit sharing and what happens when members join or leave. Banks and lenders often ask for it, and it’s vital when there’s more than one owner.
Step 5: Get an EIN and open a bank account
Apply for a free EIN from the IRS online, then open a business bank account with your filed Articles and EIN. Keeping finances separate supports your liability protection. See choosing a business bank account.
Step 6: Register for state taxes through MyTax Illinois
Use MyTax Illinois, the Illinois Department of Revenue’s online system, to register for:
- Sales tax (Retailers’ Occupation Tax), if you sell goods at retail.
- Withholding tax, if you have employees.
If you hire, also register with the Illinois Department of Employment Security for unemployment insurance.
Step 7: Get local and professional licenses
- Chicago businesses often need a city business license from the Department of Business Affairs and Consumer Protection, depending on the activity, along with zoning approval for your location. Some activities, such as food service, need additional city health permits.
- Other cities and counties have their own licensing and zoning rules; check with your local government.
- State professional licenses for many occupations, including some contractors, cosmetologists, real estate and health professionals, are issued by the Illinois Department of Financial and Professional Regulation.
Step 8: File your annual report on time
Every Illinois LLC must file an annual report with the Secretary of State before the first day of its anniversary month, the month it was originally formed. It costs $75. The Secretary of State sends a notice before it’s due, but you’re responsible for filing even if you don’t receive one.
Late reports bring a penalty, and an LLC that doesn’t file can be administratively dissolved. Keep your registered agent and addresses current so notices reach you.
How an Illinois LLC is taxed
By default, LLC profits pass through to the owners, who pay federal income tax, self-employment tax and Illinois’s flat personal income tax on their share.
Illinois also has a personal property replacement income tax, which applies to businesses rather than individuals. For LLCs taxed as partnerships or S corporations, it’s 1.5% of net income, and the LLC files an Illinois partnership or S corporation return. Single-member LLCs taxed as sole proprietorships report income on the owner’s personal return. LLCs taxed as C corporations pay corporate income tax plus a higher replacement tax rate.
Ask an Illinois tax professional how these rules apply to you before electing a tax status.
Your Illinois LLC compliance calendar
| Deadline | Filing | Paid to |
|---|---|---|
| Before the first day of your anniversary month, yearly | Annual report ($75) | Secretary of State |
| Monthly, quarterly or yearly | Sales tax returns | Department of Revenue |
| As assigned | Withholding returns, if you have employees | Department of Revenue |
| Quarterly | Unemployment insurance reports, if you have employees | Department of Employment Security |
| Yearly | Partnership or S corporation return with replacement tax, if applicable | Department of Revenue |
| As required | City or county license renewals | Local government |
Illinois rules for common types of business
Contractors. Illinois doesn’t license general contractors statewide, but many cities do; Chicago, for example, requires general contractors to be licensed before pulling permits. Some trades are licensed by the state, including roofing contractors (through the Department of Financial and Professional Regulation) and plumbers (through the Department of Public Health).
Home-based food businesses. Illinois’s cottage food rules let many home cooks sell certain foods directly to consumers after registering with their local health department. See our cottage food business guide.
Childcare. Day care homes and centers are licensed by the Illinois Department of Children and Family Services. Read our home daycare guide first.
Online sellers. Illinois requires remote and marketplace sellers to collect tax once their sales into the state cross the thresholds set by the Department of Revenue. Marketplaces usually collect for their sellers.
Example: state costs in your first two years
| Year 1 | Year 2 | |
|---|---|---|
| Articles of Organization | $150 | — |
| Annual report | — | $75 |
| State total | $150 | $75 |
Add local licenses, any professional license, and optional services such as a registered agent. Our startup cost calculator helps you add these to the rest of your launch budget.
Special Illinois LLC options
Professional LLCs. Licensed professionals, such as doctors, dentists, lawyers and accountants, generally form a professional limited liability company, and members must hold the relevant license.
Series LLCs. Illinois allows series LLCs, in which separate series hold their own assets and liabilities under one LLC. They’re sometimes used for real estate, but they’re more complex and not every state or lender treats them the same way. Get legal advice before choosing one.
Mistakes to avoid
- Missing the annual report deadline, which is tied to your formation month, not a fixed date for everyone.
- Forgetting the replacement tax when budgeting for a multi-member LLC.
- Operating in Chicago without the right city license or zoning approval.
- Trading under an unregistered name. File an assumed name if your brand differs from your legal name.
- Letting your registered agent lapse.
Frequently asked questions
How long does it take to form an Illinois LLC? Online filings are usually processed within a few business days, and expedited service is faster.
When is my first annual report due? Before the first day of your LLC’s anniversary month in the year after it was formed.
Will I get a reminder for the annual report? The Secretary of State usually sends a notice to the registered agent before the due date, but it’s your responsibility to file on time even if the notice doesn’t arrive. Set your own reminder for the month before your anniversary month.
Do Illinois LLCs pay franchise tax? No. Illinois franchise tax applies to corporations. LLCs pay the annual report fee and, where applicable, the replacement tax.
I live in Illinois. Should I form in Delaware or Wyoming instead? Usually not. If you do business in Illinois, an out-of-state LLC must register here as a foreign LLC, so you’d pay fees in two states.
Next steps
Follow the Start a Business A–Z guide, check your startup costs, and read taxes and bookkeeping for 2026.
This guide is general information, not legal or tax advice. Fees and rules change; check the Illinois Secretary of State and Department of Revenue before you file.
Sources
- LLC University, LLC annual fees by state (2026)
- State Business Compliance, state LLC fees and deadlines (January 2026)
- Illinois Secretary of State, Business Services
- Illinois Department of Revenue (MyTax Illinois)
Last reviewed October 18, 2026. Startup costs are estimates; check local prices, licensing and tax rules before you commit money.
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