Key Takeaways
- $150 Articles of Organization filing fee (Form Form LLC-5.5), paid to the Illinois Secretary of State
- Illinois flat income tax 4.95% plus PPRT 1.5% on net income for partnership-taxed LLCs — two distinct Illinois taxes on LLC pass-through income
- Annual Report (Online (ilsos.gov)) due within First day of the LLC's anniversary month each year of formation, $75 fee; $100 penalty; dissolution if not paid within 60 days of due date late penalty
- Operating agreement not legally required in Illinois, but strongly recommended to address PPRT tax allocation and member rights
- Must designate a Illinois registered agent with a physical Illinois street address
- No state-level publication requirement
- Same-day filing available through LLC Attorney at no markup on state fees
Illinois is a larger-state formation with same-day online processing and a more complex tax structure than most states. The $150 Articles of Organization fee is filed at ilsos.gov and processes same business day. Illinois LLCs taxed as partnerships owe both the flat 4.95% income tax and the Personal Property Replacement Tax (PPRT) — a 1.5% tax on net income unique to Illinois. The $75 Annual Report is due on the first day of your anniversary month. This guide covers every step and cost for forming an LLC in Illinois, with professional formation from $49.
Who Should Form an LLC in Illinois?
Illinois has the fifth-largest economy in the United States, driven by financial services, manufacturing, agriculture, technology, and healthcare. Chicago is one of the most active business formation markets in the country. An LLC is the right structure for small business owners, contractors, real estate investors, consultants, and entrepreneurs across all of these industries.
Illinois's flat 4.95% income tax applies to LLC pass-through income, but LLCs taxed as partnerships also owe the Personal Property Replacement Tax (PPRT) at 1.5% of net income. Understanding this additional tax — and how it interacts with the operating agreement's profit distribution provisions — is essential for multi-member Illinois LLCs.
Chicago-area LLC formation requires attention to the city's additional business licensing requirements, Chicago's Lease Tax, and the complex local sales tax structure (combined Chicago area rates can reach 10.25%). Illinois outside Chicago has lower local tax burdens, but state-level compliance — particularly the PPRT — applies uniformly.
When Are You Required to Form an LLC in Illinois?
You should form an Illinois LLC before signing contracts, hiring employees, or opening a business account. Without an LLC, all business liabilities attach to your personal assets. Illinois's highly litigious commercial environment — particularly in Chicago — makes liability protection valuable for any business.
Illinois requires proper LLC registration before you can obtain a state business license for regulated industries, apply for an employer account with the Department of Employment Security, or qualify as a foreign LLC in other states. Maintaining good standing with the Secretary of State requires timely Annual Report filing.
What's Unique About Illinois LLCs?
Illinois is one of the only states in the US that imposes a Personal Property Replacement Tax (PPRT) on LLCs. The PPRT is a 1.5% tax on net income for LLCs taxed as partnerships (multi-member LLCs and single-member LLCs that have elected partnership taxation). It is paid with Form IL-1065 and is separate from the regular income tax. The PPRT was originally designed to replace the property tax on personal property — businesses and LLCs were the replacement mechanism.
Illinois's Annual Report is due on the first day of your LLC's anniversary month — meaning if you formed in October, your Annual Report is due October 1 every year. This earlier deadline (the first of the month, not the last) is unusual compared to states that allow filing throughout the anniversary month. Missing this date triggers a $100 penalty if unpaid within 60 days.
Illinois assumed names (DBAs) are registered at the county level — not with the Secretary of State. This means if you plan to operate under a trade name in Illinois, you must register with the county clerk in each county where you conduct business. Fees vary by county ($30–$150) and the process differs from state-level registration.
Key facts:
- Illinois is one of the only states that imposes a Personal Property Replacement Tax (PPRT) at 1.5% on net income for LLCs taxed as partnerships — an additional tax beyond the standard income tax
- Annual Report filed annually
- Annual Report $75 due on the first day of the anniversary month — earlier than most states
- Personal Property Replacement Tax (PPRT) 1.5% on net income — additional tax unique to Illinois for pass-through entities
Selecting a Name for Your Illinois LLC
Your Illinois LLC name must be distinguishable from all existing entities in the Secretary of State database. It must include 'Limited Liability Company,' 'LLC,' or 'L.L.C.' Search at ilsos.gov before filing. You can reserve a name online for $25 (90-day hold — shorter than most states' 120-day standard) to secure it while preparing your Articles of Organization.
If you operate under a name different from your LLC's legal name, Illinois Assumed Names are registered with the county clerk — not at the state level. Fees vary by county ($30–$150). Check with the county clerk in the county where your LLC's principal office is located.
When Should You Consult an Attorney for Your Illinois LLC?
You don't typically need a lawyer for a simple, single-member Illinois LLC. But professional advice is essential if you have multiple owners, complex ownership percentages, high-liability risks, intellectual property, or are seeking outside funding. A lawyer makes sure your operating agreement fully protects your interests from day one.
It is highly recommended to seek professional counsel in the following scenarios:
- Multiple members or investors: You need a customized operating agreement to outline ownership stakes, voting rights, dispute resolution, and exit strategies. Off-the-shelf templates rarely cover these contingencies.
- High-risk industries: If your business faces significant liability exposure (manufacturing, construction, consulting), an attorney helps ensure the corporate veil is not pierced.
- Complex assets and IP: If your business will own patents, trademarks, or real estate, a lawyer ensures these assets are properly transferred and protected under the LLC.
- Raising capital or adding partners: If you plan to seek venture capital or issue equity to employees, you may need a different business structure entirely, such as a C-Corporation.
- State and local requirements: Illinois's complex tax structure — including the Personal Property Replacement Tax and local sales tax patchwork — creates compliance challenges. Chicago-area LLCs face additional city taxes and licensing requirements. An attorney can help structure your Illinois LLC correctly.
Unlike formation-only services, LLC Attorney gives you on-demand access to licensed attorneys: flat-fee consultations in 30-minute increments, no retainer. You can talk to a licensed attorney about Illinois's specific requirements before and after you file.
Designating a Registered Agent
Every Illinois LLC must have a registered agent with a physical Illinois street address. The registered agent receives service of process and official state correspondence during business hours. P.O. boxes are not acceptable as registered agent addresses in Illinois.
A professional registered agent keeps your personal address off the publicly searchable ilsos.gov database. If your registered agent becomes unavailable without updating the SOS, Illinois may administratively dissolve your LLC. LLC Attorney provides Illinois registered agent service as part of its formation package.
If the state is unable to deliver legal notices to your registered agent, Illinois can administratively dissolve your LLC without additional warning.
Filing the Necessary Formation Documents
To form an Illinois LLC, file Articles of Organization (Form LLC-5.5) with the Illinois Secretary of State online at ilsos.gov. The filing fee is $150. Online filings process same business day. Your Articles must include the LLC's name, registered agent name and Illinois physical address, and the organizer's signature.
After approval, the Secretary of State issues a Certificate of Organization. Save this document — you will need it to open a business bank account and for most business license applications. If your LLC is taxed as a partnership, you will also need to register with the Illinois Department of Revenue for PPRT reporting.
Member-Managed vs. Manager-Managed: What to Choose
When you file Form Form LLC-5.5, you must choose a management structure. This decision cannot be left blank.
Member-managed means all LLC owners share authority over day-to-day decisions. Every member can sign contracts, open accounts, and act on behalf of the company. This is the right choice for small teams where all owners are actively involved in running the business.
Manager-managed means one or more designated managers run the company's operations. Managers can be members or outside appointees. This structure works best when your LLC has passive investors, when operational roles differ significantly between members, or when you want to limit decision-making authority to a smaller group.
Your management structure is declared on Form Form LLC-5.5 and can be modified later through your operating agreement. If you are the only member and you will run the business yourself, choose member-managed. If you have investors who are not involved in operations, choose manager-managed.
Filing an Initial Annual Report
Illinois LLCs do not have a separate initial filing after formation. Your first Annual Report is due on the first day of your anniversary month approximately 12 months after formation.
The Annual Report fee is $75, filed online at ilsos.gov. Missing the anniversary-month first-day deadline does not trigger immediate dissolution, but a $100 penalty applies if the report is unpaid within 60 days of the due date. Set a calendar reminder for the first of your anniversary month each year.
Your Illinois LLC Operating Agreement (Strongly Recommended)
Your operating agreement does not need to be filed with the Illinois Secretary of State. Keep it with your company records and give a copy to every member.
A complete operating agreement covers: member rights and responsibilities, ownership percentages, profit and loss distribution, management structure, voting procedures, and dissolution rules. Illinois permits written or oral operating agreements, but a written agreement is essential for banking, establishing member authority, and protecting the LLC's liability shield in Illinois courts.
A generic national template may not address Illinois's specific tax considerations — particularly the PPRT, which applies to partnership-taxed LLCs and must be addressed in the operating agreement's profit distribution and tax allocation provisions. Illinois courts apply default statutory rules under 805 ILCS 180 when no operating agreement governs a dispute. LLC Attorney drafts operating agreements tailored to Illinois's requirements.
Obtaining an EIN and Setting Up a Business Bank Account
An EIN from the IRS is required for Illinois LLCs with more than one member, for LLCs that hire employees, and for opening a business bank account. Apply free at irs.gov/ein. The IRS online application processes immediately, Monday–Friday, 7 a.m.–10 p.m. Eastern.
Open a dedicated Illinois business bank account as soon as your EIN is issued. Bring your Articles of Organization, EIN confirmation letter, and operating agreement to the bank. Keeping personal and business finances separate is essential to maintaining the LLC's liability protection in Illinois courts.
Registering for Illinois State Taxes and Business Licenses
Your federal EIN does not automatically register you with Illinois state agencies. Depending on your business type, you may need to register for:
- Illinois sales and use tax (IL Department of Revenue, if you sell taxable goods or services in Illinois) — tax.illinois.gov
- Illinois employer payroll taxes (IL Department of Employment Security, if you are hiring Illinois employees) — ides.illinois.gov
- Illinois Personal Property Replacement Tax (PPRT) 1.5% on net income — applies to LLCs taxed as partnerships, paid with the IL-1065 return
Failure to register when required results in back taxes, penalties, and interest.
What to Do After Forming Your Illinois LLC
After forming your Illinois LLC, your key compliance obligations are:
- Annual Report: $75 due on the first day of anniversary month at ilsos.gov — $100 penalty if unpaid within 60 days
- Illinois income tax: flat 4.95% on LLC pass-through income
- Personal Property Replacement Tax (PPRT): 1.5% on net income for partnership-taxed LLCs — filed with Form IL-1065
- Illinois sales tax registration: required if selling taxable goods or services; Chicago-area combined rates can reach 10.25%
Cost to Start an LLC in Illinois
Illinois LLC formation and compliance costs are moderate, with the PPRT adding an additional layer. The table below covers all state fees you are likely to encounter:
| Fee | Amount | Notes |
|---|---|---|
| Articles of Organization (Form Form LLC-5.5) | $150 | Standard processing: Online: same business day; mail: 2–4 weeks; verify at Illinois Secretary of State for current times |
| Annual Report (Online (ilsos.gov)) | $75 | Due within First day of the LLC's anniversary month each year; $100 penalty; dissolution if not paid within 60 days of due date late penalty |
| Articles of Organization | $150 | One-time formation fee paid to the Illinois Secretary of State |
| Annual Report | $75 | Due the first day of anniversary month; $100 penalty if unpaid within 60 days |
| Personal Property Replacement Tax (PPRT) | 1.5% | 1.5% of net income for partnership-taxed LLCs; paid with IL-1065 return |
| Registered Agent (professional service) | $100–$300/yr | LLC Attorney registered agent service available |
| Business Name Reservation | $25 | Holds name for 90 days |
| Assumed Name (DBA) / DBA | $30–$150 (county-level fee varies) | Illinois assumed names are registered with the county clerk — not at the state level.; fee varies |
| Certificate of Amendment (Form LLC-5.25 / Online (ilsos.gov)) | $50 | To change LLC name later |
| Legal / Tax Advisory | Varies | On-demand attorney consults at LLC Attorney |
How to Form a Illinois LLC Step by Step
If You Do It Yourself
Choose a business name that meets Illinois's requirements.
Reserve your name if you need time to prepare (optional).
Designate your Illinois registered agent.
Decide your management structure before you open the form.
Download the current version of Form Form LLC-5.5 from the Illinois Secretary of State website.
Complete Form Form LLC-5.5 carefully.
Submit Form Form LLC-5.5 and pay the $150 filing fee.
Wait for your Articles of Organization to be approved.
Receive and store your stamped Articles of Organization.
Draft your operating agreement.
File your initial Annual Report (Online (ilsos.gov)) within First day of the LLC's anniversary month each year.
Apply for your federal EIN with the IRS.
Open a dedicated business bank account.
Register for Illinois state taxes.
Pay your Illinois annual state taxes and fees by the correct deadlines.
Set annual compliance reminders for every year going forward.
- Annual Report: $75 due on the first day of anniversary month at ilsos.gov — $100 penalty if unpaid within 60 days; dissolution risk
- Illinois income tax: flat 4.95% on LLC pass-through income
- Personal Property Replacement Tax (PPRT): 1.5% of net income for partnership-taxed LLCs — paid with IL-1065
- Illinois sales tax registration: required if selling taxable goods or services; Chicago-area combined rates up to 10.25%
If LLC Attorney Does It for You
Submit your information
Name, management structure, registered agent preference, and target formation date. No forms to find or download.
We handle everything
LLC Attorney files your Articles of Organization, drafts your operating agreement, handles your EIN application, and covers same-day filing if needed.
Receive your documents
Approved Articles of Organization, EIN confirmation, and operating agreement through your client portal. Annual compliance reminders included.
What You Actually Get When You Form Your Illinois LLC with LLC Attorney
A $0 filing offer is never really free in Illinois. Before any service markup, Illinois itself charges $150 at formation for the Articles of Organization, and then $75 annually for the Annual Report due the first day of your anniversary month. Once you add a professional Illinois registered agent, an operating agreement that addresses the state's unique 1.5% Personal Property Replacement Tax, and the EIN you'll need for a business bank account, the all-in price typically lands in the $150 to $475 range.
Included with LLC Attorney formation:
- Same-day or 24-hour Illinois filing at no markup on the state fee. Most services charge extra to expedite.
- An attorney-drafted operating agreement, customized, not an auto-generated template.
- Access to attorney-trained Business Success Advisors at no charge, to guide entity and structure decisions.
- Optional flat-fee attorney consultations (no retainer) when your situation needs a licensed attorney.
- One account to manage ongoing Illinois compliance: annual report filing and mail scanning.
An experienced Illinois formation service helps you navigate the state's distinctive tax structure and compliance calendar, so your LLC is built right from day one.
Starting Your Illinois LLC with LLC Attorney
Illinois LLC formation costs $150 upfront, processes same business day online, and requires a $75 Annual Report due on the first of your anniversary month. LLCs taxed as partnerships must also account for the 1.5% Personal Property Replacement Tax — a tax unique to Illinois. LLC Attorney handles Illinois LLC formation and registered agent service starting at $49.
LLC Attorney handles Illinois LLC formation starting at $49. Same-day filing is available at no markup on state fees. On-demand, flat-fee attorney consultations in 30-minute increments — no retainer — cover operating agreement drafting, entity type questions, and state tax planning. Everything you need for Illinois, without a traditional law firm retainer. See our full pricing for all service tiers.
Frequently Asked Questions
Illinois online filings at ilsos.gov process same business day. Mail filings take 2–4 weeks. Illinois online filing is the recommended method — it is faster, more reliable, and processes immediately without a separate expedited fee.
Illinois LLCs taxed as partnerships owe two state taxes: the flat 4.95% income tax and the Personal Property Replacement Tax (PPRT) at 1.5% of net income (paid with Form IL-1065). The combined effective Illinois rate on LLC partnership income is approximately 6.45%. Members pay the income tax portion through their individual Illinois returns. If your LLC sells taxable goods or services, register for Illinois sales tax.
Single-member Illinois LLCs are disregarded entities federally — income flows to the sole member's Illinois and federal returns at the flat 4.95% Illinois income tax rate. Single-member LLCs typically do not file Form IL-1065 and therefore do not owe PPRT. The LLC still owes the $75 Annual Report to the Secretary of State.
Illinois has no statewide general business license. Chicago and other Illinois municipalities have their own business licensing requirements — Chicago's business licensing system is particularly comprehensive. Certain industries require state-level licenses through the Illinois Department of Financial and Professional Regulation (idfpr.com). Check both state and local requirements.
A Illinois LLC can hire employees. You will need an EIN from the IRS, register with IL Department of Employment Security for payroll taxes, and comply with Illinois employment law requirements. LLC Attorney's formation packages include EIN filing.
To change your Illinois LLC name, file an amendment (Form LLC-5.25) online at ilsos.gov. The filing fee is $50. Update any county-level Assumed Name registrations separately with the county clerk where you operate. The form is Form LLC-5.25 / Online (ilsos.gov) and the fee is $50.
To dissolve an Illinois LLC, file Articles of Dissolution (Form LLC-35.5) online at ilsos.gov. Ensure all Annual Reports are current and close Illinois tax accounts with the Department of Revenue. Illinois processes online dissolution filings same business day.
Missing the Annual Report deadline triggers a $100 penalty if unpaid within 60 days of the due date. Illinois may administratively dissolve the LLC after that period. Failure to pay the PPRT triggers penalties and interest from the Department of Revenue. Reinstatement requires filing all delinquent reports, paying all outstanding fees and penalties, and submitting a reinstatement application to the Illinois Secretary of State.
If the Illinois Secretary of State cannot deliver legal notices to your registered agent, the state can administratively dissolve your LLC without additional warning. A professional registered agent service ensures a qualified person is available at a physical Illinois address during business hours to receive any legal documents on your behalf.
Illinois does not legally require an LLC operating agreement, but it is strongly recommended. Without one, your LLC is governed by Illinois's default LLC statute (805 ILCS 180), which may not reflect your intended management structure or profit-sharing arrangement. Banks require a written operating agreement to open a business account.