How to Start a Business in Illinois (2026)

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

To start a business in Illinois, choose a structure, then register with the Illinois Secretary of State: an LLC files Articles of Organization (Form LLC-5.5). Get a free EIN from the IRS, register for taxes with the Illinois Department of Revenue through MyTax Illinois, and add any professional or local licenses. Illinois has no single general state business license.

Quick Answer

Entity filing
Illinois Secretary of State; an LLC files Articles of Organization (Form LLC-5.5)
EIN
Free from the IRS on Form SS-4
Tax registration
Illinois Department of Revenue via MyTax Illinois
Sales tax
Certificate of Registration; Retailers' Occupation Tax on taxable sales
General state license
None; professional and local licenses apply by activity
Ongoing
Annual report to the Secretary of State for LLCs and corporations

Choose Your Business Structure

The first decision is your business structure, because it drives your liability, taxes, and paperwork. A sole proprietorship or general partnership is simple and needs no state formation filing, but the owners are personally liable for business debts. An LLC or corporation is a separate legal entity that, run correctly, shields your personal assets, at the cost of a state filing fee and ongoing reporting. Many Illinois small businesses choose the LLC for its balance of protection and flexibility.

Taxes follow structure too. By default, the IRS taxes a single-member LLC as a disregarded entity and a multi-member LLC as a partnership, with profits flowing to the owners' returns. Either can elect S-corporation treatment as it grows. A corporation is taxed as its own entity unless it makes an S-election. Weigh liability risk, how you will raise money, and self-employment tax before you commit, since changing structure later takes additional filings.

It also helps to think one step ahead about names. Whatever structure you pick, your business name should be distinguishable from existing entities on record and, ideally, clear of conflicting trademarks. If you plan to operate under a name different from your legal or entity name, you will register an assumed name, Illinois's version of a DBA, at the appropriate level. Checking name availability with the Secretary of State's business search before you file avoids a rejected filing and a wasted fee.

Register Your Business With Illinois, Step by Step

Once you have chosen a structure, the registration sequence below gets your Illinois business legally set up. Steps two through five apply to most new businesses; a sole proprietor without a trade name may skip the entity filing.

  1. Choose a business structure. Decide between a sole proprietorship, partnership, LLC, or corporation based on liability and taxes, as described above.
  2. Register with the Secretary of State. To form an LLC, file Articles of Organization, Form LLC-5.5, with the Illinois Secretary of State and appoint a registered agent with an Illinois address. A corporation files Articles of Incorporation. Confirm the current filing fee on the Secretary of State fee schedule.
  3. Get an EIN. Apply for a free federal EIN from the IRS. You need it to hire employees, open a bank account, and complete your state tax registration.
  4. Register for Illinois taxes. Register your business with the Illinois Department of Revenue through MyTax Illinois for sales tax, withholding, and any other tax that applies to your activity.
  5. Get licenses and permits. Obtain any professional license through the Illinois Department of Financial and Professional Regulation (IDFPR) and any local business license your city or county requires before you open.

Keep your filed formation document, EIN confirmation, and tax registration together. Banks and vendors typically ask for all three when you open accounts or apply for credit in the business name.

Get an EIN From the IRS

An Employer Identification Number (EIN) is a free federal tax ID from the IRS, and it is central to almost every later step. You apply on Form SS-4, and the IRS online assistant issues the number immediately. You need an EIN if your business has employees, is a multi-member LLC, or is a corporation or partnership. A sole proprietor with no employees can technically use a Social Security number, but an EIN keeps your SSN private and is usually required to open a business bank account. If you lack a US Social Security number, an ITIN can help in certain cases.

Beware of websites that charge a fee to "get" an EIN; the IRS never charges for it, and you can apply yourself at no cost. Once issued, the EIN is used on your Illinois tax registration, your payroll accounts, and your federal returns, so get it before you register with the Department of Revenue. See how to get an EIN for the full walkthrough. If you form the entity first, apply for the EIN in the entity's exact legal name so every downstream record, from your bank account to your Illinois tax registration, lines up cleanly under one name and number.

Register for Illinois Taxes

After forming the entity and getting an EIN, register your business with the Illinois Department of Revenue (IDOR) through the MyTax Illinois portal. This single registration sets up the tax accounts your business needs. If you sell taxable goods at retail, IDOR issues a Certificate of Registration, and you collect and remit the Retailers' Occupation Tax, which functions as Illinois sales tax. If you have employees, you register for Illinois income tax withholding as well.

Illinois also imposes a state individual income tax and a corporate income tax, so your business profits flow into your Illinois returns according to your structure. Depending on your industry, additional taxes such as excise or specialized use taxes may apply. Because rates and thresholds change, verify your obligations on the IDOR site, and register before you begin taxable activity so you are collecting and remitting correctly from day one. See business tax for the broader picture.

State, Local, and Professional Licenses

Illinois does not issue a single general statewide business license that every company must hold. Instead, licensing is layered. Regulated professions and trades, from cosmetologists to accountants to contractors, are licensed through the Illinois Department of Financial and Professional Regulation (IDFPR). If your work requires a professional license, you must hold it before offering those services.

On top of any professional license, many cities and counties require a local business license or permit to operate within their limits. Chicago, for example, administers its own business licenses through the city. Zoning, signage, health, and fire permits can also apply depending on your location and industry. Check with your municipal and county governments in addition to the state so nothing is missed. See business licenses for how state and local requirements interact.

Finally, plan for the recurring obligations that keep your business in good standing. An Illinois LLC or corporation files an annual report with the Secretary of State and pays the associated fee; missing it can lead the state to administratively dissolve the entity, which strips away the liability protection you formed it to get. Your tax accounts also run on their own schedules: sales tax and withholding returns are filed on the frequency IDOR assigns, and income tax follows the annual cycle. Maintaining a valid registered agent, filing the annual report on time, and keeping your tax registrations current are the three habits that prevent most compliance problems. When you eventually wind the business down, dissolve the entity formally and close your tax accounts rather than letting filings lapse; see how to dissolve an LLC for that side of the lifecycle.

Frequently Asked Questions

Do I need a general business license in Illinois?

Illinois has no single general statewide business license. Instead, you register with the Department of Revenue for the taxes that apply, and you obtain professional licenses and local city or county business licenses based on your activity and location.

How do I register an LLC in Illinois?

You form an Illinois LLC by filing Articles of Organization, Form LLC-5.5, with the Illinois Secretary of State and appointing a registered agent. Confirm the current filing fee on the Secretary of State fee schedule before filing.

How do I register for Illinois sales tax?

Register your business with the Illinois Department of Revenue through MyTax Illinois. Retailers receive a Certificate of Registration and collect the Retailers' Occupation Tax (sales tax) on taxable sales.

Do I need an EIN to start an Illinois business?

You need an EIN if you have employees, form a multi-member LLC or corporation, or file certain taxes. The IRS issues it free. A sole proprietor with no employees can often use an SSN but usually gets one anyway.

How much does it cost to start a business in Illinois?

The main state cost is the entity filing fee if you form an LLC or corporation, plus any local license fees. A sole proprietorship has no formation fee. Check current fees with the Secretary of State and your local government.

Does an Illinois LLC file an annual report?

Yes. An Illinois LLC files an annual report with the Secretary of State each year to stay in good standing, with a filing fee set by the state. Missing it can lead to administrative dissolution of the LLC.

Related

More Illinois business guides

Form An Llc In Business License In Dissolve An Llc In Annual Report Articles Of Organization Business Entity Search Get An Ein In Llc Tax Filing Operating Agreement Registered Agent

Sources

  1. Illinois Secretary of State - Business Services (entity filings).
  2. Illinois Secretary of State - Forming an LLC (Articles of Organization, Form LLC-5.5).
  3. Illinois Secretary of State - LLC Annual Report.
  4. Illinois Secretary of State - Business Entity Search (name availability).
  5. Illinois Department of Revenue - Register a New Business (MyTax Illinois).
  6. Illinois Department of Revenue - Sales and Use Taxes (Retailers' Occupation Tax).
  7. Illinois Department of Revenue - Withholding Income Tax (employers).
  8. Illinois Department of Financial and Professional Regulation - Professions and Licenses.
  9. Illinois General Assembly - Limited Liability Company Act (805 ILCS 180).
  10. Illinois General Assembly - Business Corporation Act (805 ILCS 5).
  11. IRS - Get an Employer Identification Number (free EIN).
  12. IRS - Limited Liability Company (LLC) (default classification).
  13. IRS - Business Structures.
  14. Cornell Legal Information Institute - Limited Liability Company (LLC).
  15. Cornell Legal Information Institute - Sole Proprietorship.

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Laws, fees, and thresholds change; verify current requirements with the Illinois Secretary of State and the Illinois Department of Revenue before acting.