How to Start a Corporation in Illinois
To start an Illinois corporation, you must file Articles of Incorporation with the Department of Business Services and pay a minimum of $175 in fees. While this filing creates your business, it’s really just the first step to launching your Illinois corporation. The complete steps to incorporating in Illinois are as follows:
- File Illinois Articles of Incorporation
- Pay the Illinois Department of Business Services $175 (minimum)
- Wait to receive your approved Articles
- Get a federal tax ID (EIN) for the corporation
- Create Illinois corporate bylaws
- Take these documents to the bank and get an Illinois corporate bank account
- Register with the Illinois Department of Revenue
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Illinois Articles of Incorporation free download. When you're done filling out the form, submit it to your state.
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1 Day Illinois Corporation For $510 Total
How to File Illinois Articles of IncorporationTo form an Illinois corporation, you file the Articles of Incorporation in the following steps:
What is the Cost of an Illinois Corporation?
At least $175. The base filing fee is $150, but the state’s initial franchise tax is also due upon filing. The tax is $1.50 per $1K of paid-in capital in the state with a minimum tax of $25. If filing online, there’s also a “payment processor fee” of a few dollars.
Hire Northwest and your total, out-the-door cost is $405, including the state filing fees and minimum franchise tax fee. Need it expedited? Your total cost is $510 for 1-day filing.
How Much Does a Corporation in Illinois Cost Each Year?
At least a $100. The Illinois Annual Report ($75) and Annual Franchise Tax (minimum $25) are paid together each year.Get Started
What is the Illinois Annual Report and Franchise Tax?
A confusing mess. More specifically, your Illinois Annual Report and Franchise Tax is an unnecessarily complicated form you file with the Department of Business Services each year. We list a step-by-step guide to the form on our Illinois Annual Report page, but boy is this form a doozy.
The first half of the form is the Annual Report part, so it’s fairly straightforward. You update information on directors, officers and shares. You must also confirm your registered agent and office (but you can’t actually update this information here—that requires a $25 fee and a Statement of Change form). The second half of the form helps you calculate your franchise tax, which can either be based on paid-in capital (at a rate between 0.1% and 0.15%) or an “allocation factor,” which takes into account your gross assets and revenue.
If you’re like most people, a headache set in just reading the previous sentence. Not exactly eager to pour over tax forms? Hire Northwest to file your Illinois Annual Report and Franchise Tax form for you each year. For $100 plus the report and tax fees, we’ll take on this annoying task, so your time can be better spent running your business.Get Started
What are the Taxes for an Illinois Corporation?
Besides the annual franchise tax discussed earlier, Illinois corporations have two more major taxes to contend with: a corporate net income tax and a personal property replacement tax.
The corporate income tax rate is a flat 7%. The personal property replacement tax (which has nothing to do with property) also taxes net income. The rate is 2.5% for regular corporations and 1.5% for S corporations. Essentially, this means a regular corporation pays a combined 9.5% rate on their net income.
The Illinois sales tax is 6.25%. City, county and specialty sales taxes can be tacked on as well, making the average total sales tax 7.651%.
Is Registration with the Department of Revenue Required?
Yes. Illinois is pretty heavily invested in making sure businesses meet all of their tax obligations. If you conduct business in Illinois, you must register with the Illinois Department of Revenue. You can register online with MyTaxIllinois or by filing an Illinois Business Registration Application.
Is a Registered Agent Required for an Illinois Corporation?
Yes, you’re required to list an Illinois registered agent when you submit your Articles of Incorporation. This doesn’t necessarily mean you have to hire someone. You could do it yourself—but know that you’d have to publicly list an Illinois street address that would become part of the permanent record of your Illinois corporation. Goodbye privacy, hello junk mail. You’d also have to be regularly available at that address during business hours to accept legal notices—not out wooing investors or sitting in business meetings. And, every time you upgrade your office to a new location, you’ll have to shell out $25 for a Statement of Change.
A better option? Hire Northwest. As your registered agent, our address will go on your Articles of Incorporation. We’re in the business of being available so you don’t have to be—we’re ready and waiting to scan and send you your legal notifications the same day. And while your business grows and changes, our address stays consistent.Get Started
Illinois Corporation Versus Illinois LLC:
Taking taxes out the equation, Illinois corporations and LLCs cost the same to form and maintain: $150 for Articles and $75 for Annual Reports.
The annual franchise tax, however, means that corporations (including entities taxed as S corporations) pay a bit more—although typically not much. Over 80% of corporations pay less than $30 a year in franchise taxes; they’re mostly just a headache to file. One perk of LLCs taxed as partnerships is that they get to avoid the franchise tax (and the hassles of filing).
When it comes to taxes, it’s not all bad news for corporations. While tax rates for regular Illinois corporations are admittedly pretty high, those that choose the S corp election don’t pay corporate net income tax. They also pay the same rate as a regular LLC for the personal property replacement tax: 1.5% of net income (better than the 2.5% regular corporations pay).
Money aside, an Illinois corporation can be beneficial for large businesses or those that hope to scale quickly. Their formal structure, familiarity and the flexibility of stocks all make large businesses a bit easier to manage. LLCs are often preferred for small businesses that value simplicity. Considering an LLC? Here’s information on starting an LLC in Illinois.
Do I Need a Tax ID Number (EIN) for an Illinois Corporation?
Absolutely. The IRS requires corporations to get an EIN for their federal tax filings, and the Illinois Department of Revenue requires an EIN for their business registration. You can get an EIN directly from the IRS. Can’t bear to fill out yet another application? Hire Northwest to get your EIN for you. Just add on EIN service during checkout when you sign up for our formation services.
Does an Illinois Corporation Need a Business License?
There’s no general, statewide business license required in Illinois, but some cities and counties have local requirements. For example, while Chicago only licenses specific business activities, Evanston requires all businesses to obtain a license and renew it each year.
Illinois Corporation Articles of Incorporation Requirements
Your name must include “Corporation,” “Incorporated,” “Limited,” or an abbreviation for one of these words. Tip: Many corporations opt to keep it simple with “Corp” or “Inc.”
You can list an individual Illinois resident (like someone in your Illinois corporation) or a business that provides registered agent service (like Northwest). Tip: We recommend Northwest.
This Illinois street address is where your registered agent will be available during business hours to accept legal notifications for your Illinois corporation. Tip: When you hire Northwest, our address will go here.
Your Articles already list a general purpose, which is sufficient for most corporations. However, some corporations—namely professional and medical corporations—are required to list a specific purpose as well, such as “practicing medicine.” Tip: Just a regular business corporation? You can skip this section.
List the number of shares you want to create and how many shares you propose to be issued. (You don’t actually issue any shares at this time; you can issue shares at your organizational meeting.) You’ll also need to include the “consideration” (money) to be received in exchange for the shares you plan to issue. Tip: Online filings only permit one class of shares—if you want multiple classes of shares, you’ll need to file a paper form.
Directors and Estimated Values
These sections are optional, but if you want, you can include the names and addresses of directors, estimates for the value of property in and out of the state, and estimates for the amount of gross business that will occur in and out of the state. Note that everything in your Articles becomes part of the permanent record of your Illinois corporation, so if you don’t really want to give your competitors easy access to your financial details, you’re free to skip these sections. Tip: Most corporations skip these sections.
Your incorporator is the person who signs and submits your Articles of Incorporation. Incorporators must include their name and address. Your incorporator doesn’t have to be director, officer, or anyone in the corporation—just a legal adult you authorize to sign off on your form. Tip: We’ll be your incorporator when you hire Northwest to form your Illinois corporation.